HYDERABAD: Stating that India needs to grow at the rate of 9 per cent per annum for at least five consecutive years to achieve the US$ 5 trillion economy, former RBI governor C Rangarajan on Wednesday predicted that the impact of the Russia-Ukraine war would be severe on the country’s economy to the extent that the growth rate could be around 7 per cent and not 8 per cent as estimated.
Addressing the first BPR Vithal memorial lecture on “India’s Recent Growth Experience” at the Centre for Economic and Social Studies (CESS) here, Rangarajan said, “Some years ago, there was talk about India becoming a $ 5 trillion economy. We are today a $2.7 trillion economy. To reach the goal of $5 trillion, India needs to grow at 9 per cent per annum for at least five consecutive years. That is the challenge before us, as growth is the answer to many of our socioeconomic problems. It was only during the high growth period that the poverty rate came down fast. High growth enabled the government to introduce several social safety nets”.
Rangarajan said that India’s growth story cannot be complete without reference to the two recent events -- Covid-19 and Russia-Ukraine war. “The economic impact of Covid-19 is largely because of the actions taken to contain the spread of Covid-19 such as lockdown. The net result has been a decline in growth rate by 6.6 per cent in 2021 and a rise in growth rate by 8.9 per cent in 2021-22. The result is that the economy is where it was in April 2020. We have lost two years,” he said.