Page 124 - Abhivruddhi

to 2027 by an announcement at a post-budget press conference by V
Anantha Nageswaran, the newly appointed Chief Economic Advisor. He
stated:
“If we continue to retain the path of 8 per cent of real GDP growth, it
will translate into even 8 per cent dollar GDP growth. If we extrapolate
it, we should be a $5 trillion economy in terms of nominal GDP in the
Financial Year 2025-26 or the Financial Year 2026-27,” (Source:
However, he did not provide a proper basis for these projections.
Justifications for the implicit values of real GDP growth, inflation, and
exchange rate obviously could not be provided in such a short statement.
Nevertheless, broad guidelines about the values of inflation and exchange
rate should have been provided. Further, Dr. Anantha Nageswaran has
assumed 8% real GDP growth which, in our view, is far too optimistic. As
of early February 2022, the time of his statement, our projection for real
GDP growth would be 7%, incorporating the numerical impact of the
bounce back from the covid lockdowns.
We shall provide some broad projections for what can be characterised
as a post covid world. There is likely to be a permanent downward impact
on GDP due to lifestyle adjustment entailing less travel for conferencing,
less tourism, less daily eating out, more Work From Home etc. Also
there will be severe deglobalization getting manifest in 2022 and beyond.
The economic fallout of the Ukraine invasion, which occurred in late
February 2022 after his projected target date for the PM’s goal, is likely to
be a huge negative for global growth.
Our estimate of India’s potential real GDP growth is a pessimistic 4%.
With the same inflation and Rs. projection as in 2019, Rs. NGDP growth
will be 10% and 8.8% in $. Based on the calculations in the Table below,
we estimate the target will be met in 2028.

Table III: Revised Target Date Projection (with actual bolded data
as of mid 2021)
Growth $
Year Rs NGDP EXR
Rate % NGDP
2018 188869.6
2019 203510.1 7.8 70.9 2870.4
2020 197456.7 -3.0 74.2 2661.1
2021 223126.1 13 75.1 2971.1
2022 245438.7 10 76 3229.5

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