Gear up for the $2-trillion economy
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With the Union Budget projecting gross domestic product (GDP) to be R89,80,860 crore in 2011-12, the size of India's economy is now poised to touch $2 trillion in the year. If one assumes the current exchange rate of R45 per US dollar to hold in 2011-12, the size of the Indian economy would be $1,996 billion at dollar rates.
But the Budget estimate, which assumes a 14% growth in GDP at market prices, is likely to be an underestimate. If one assumes a 9% GDP growth, as estimated last month by the C Rangarajan-led Prime Minister's Economic Advisory Council (PMEAC) and earlier by the World Bank, and assume an inflation rate of around 7%, GDP at market prices is more likely to grow at 16%, which would ensure that the size of India's GDP would be R91,38,419 crore or $2,031 billion in 2011-12. In fact, the PMEAC, in its Review of the Economy done as early as February 2010, had estimated the size of India's GDP to touch $1,999 billion in 2011-12.
But what is really impressive is the pace at which the size of the economy has doubled from $1 trillion to $2 trillion. India's GDP touched the first trillion in dollar terms in 2007-08, when the size of the economy grew from $949 billion in 2006-07 to $1,241 billion in 2007-08. And now, in just four years, the economy is projected to move up and touch $2 trillion.
And the bigger GDP will increase the per-capita wealth. According to PMEAC estimates, per capita GDP when the economy touched the first trillion-dollar mark was $1,090 or R43,817. And now, when the GDP touches the second trillion in 2011-12, the per capita GDP would be around $1,662 or R74,780. So the big question is when the size of the economy will double yet again and touch $4 trillion mark. Will we repeat the feat in another four years and hit the the $4 trillion mark in 2015-16 or would we reach there even earlier?