Indian economy moving fast towards $ 2 trillion mark

The Indian economy would grow to $ 1.72 trillion in 2011-12, moving closer towards the $ 2 trillion mark, according to an assessment by the Prime Minister’s Economic Advisory Council (PMEAC).

The country’s gross domestic product (GDP) at the market and current prices was measured at $ 1.31 trillion in 2009-10 and is estimated to be $ 1.52 trillion in the current fiscal, the PMEAC said in its latest economic outlook.

Pegging the GDP growth at nine per cent, the economy would reach a level of $ 1.72 trillion in 2011-12, it said.

If the nine per cent growth trend is maintained, India would become $ two trillion economy in 2013-14 fiscal.

In the assessment, the PMEAC, headed by noted economist C. Rangarajan, said that it is imperative for India “to preserve conditions that will enable it to return to the 9 per cent growth trajectory”.

After slowing down to 6.7 per cent in 2008-09 and 7.4 per cent in 2009-10, the Indian economy is projected to expand at 8.5 per cent this fiscal and by nine per cent in 2011-12.

According to experts, services and manufacturing sectors will remain the key drivers pushing the coveted growth to two trillion dollar mark.

“Services sectors particularly transportation and telecom sectors will lead the growth. Rising income levels and aspirations of people will further the industrial output,” CRISIL’s chief economist D. K. Joshi said.

In the first two months of current fiscal, the industrial production recorded an annual growth of 14 per cent. “The lead indicators of service sector also suggest increased economic activity,” Reserve Bank Governor D. Subbarao said in the first quarter credit policy review.

If the tax reforms are implemented as planned from next fiscal, the economy would get further push.

“The gain from GST will propel the country from one-trillion dollar economy to two trillion-dollar economy in a short span of time,” Finance Minister Pranab Mukherjee recently said.

Before the global economic slowdown since 2008, the Indian economy grew by over nine per cent for three years in a row from 2005-06 to 2007-08 and expansion was maintained by industry and services sectors.