Based on the government’s capital investment strategy, India’s economy could grow at an annual rate of 8% over the next 20 years, creating up to 1.5 crore new jobs and outputting 3.5 crore of people out of poverty, according to Union Minister Ashwini Vaishnaw. . In his address to Assocham’s annual general meeting, he said the government had set itself the target of increasing capital investment in the budget from 27% to 35% of GDP over the next few years. “If we continue to invest in capital for another 5-6 years, we can grow at an annual rate of 8% over the next 20 years.”
The minister said that the country’s nominal GDP at the end of the financial year 2021 was 198 trillion rupees and the target was to reach 225 trillion rupees. In this economy of 198 trillion rupees, nearly 116 trillion rupees came from consumption, which accounts for about 59% of GDP, and 53 trillion rupees came from investment, which accounts for only about 27% of GDP, said the Minister. The government, after analyzing that its liability is around 60 percent of GDP, has decided to increase capital investment. Vaishnaw said the Center receives around Rs 20 trillion while the gross tax revenue and net tax revenue after removing the state government share is around Rs 15 trillion and the revenue not taxes of about 3 trillion rupees.
Eight percent growth over the next 20 years means nearly 1 to 1.5 crore new jobs each year, 30 to 35 million people lifted out of poverty. This is the change we can bring to our society through this thought process,” Vaishnaw said. The minister said India was a consumption-driven economy in the past and the prime minister took a “path of faith” to increase capital investment despite the reluctance of several economists. “Many European countries have followed the prescription of the noble laureates and they are in a very bad situation. We decided to choose the path that had three elements: public investment, highly targeted consumption, and reforms and incentives for private industries,” Vaishnaw said. He said Germany, the United States, Japan, China and South Korea have been following the same path of capital investment for several years.
“About Rs 18 trillion is the total revenue the Indian government gets from the revenue side,” he said. The minister said that the government in last year’s budget made a capital investment of Rs 5.5 trillion. He said the GDP target has exceeded the Rs 225 trillion target and reached Rs 232 trillion. The minister said that the result of Rs 5.5 trillion is now visible and based on the result, the government has decided to increase the capital investment to Rs 7.5 trillion. “It will add 22.5 trillion rupees to the Indian economy,” Vaishnaw said.
He said the way our economy is structured, 13 trillion rupees will go to the MSME sector and almost 10 trillion rupees will go in the form of wages and salaries, which will induce people to spend in several sectors. The minister said people working in the brick and mortar industry may have seen that the plant’s capacity utilization was around 60-70% a year ago, which has now reached around 80-85 (%) and in some areas it has reached 90-95% where people are now considering new facilities.
Summary of news:
- With the current investment plan, India can grow at an annual rate of 8% for the next 20 years.
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