The Narendra Modi government continues to throw up a torrent of numbers to ignite a warm glow of optimism around the Indian economy while seeking to dispel the sombre truths in the bleak-to-caustic narratives put forth by its most trenchant critics.

In a 65-page report released on Monday, the finance ministry said India could “aspire to become a US $7 trillion economy in the next six to seven years (by 2030)”.

The report, prepared by the ministry’s chief economic adviser, V. Anantha Nageswaran, also said that real GDP growth in the next fiscal (2024-25) “will likely be closer to 7 per cent”.

The National Statistical Office (NSO) has projected a real GDP growth of 7.3 per cent this year. This comes on top of the 7.2 per cent growth in 2022-23, and 8.7 per cent in 2021-22.

“There is… considerable scope for the growth rate to rise well above 7 per cent by 2030,” the report added.

The big macro number kindles visions of wealth and prosperity for all and tries to reawaken hope in a glorious tomorrow. Just like Charles Dickens’s Mr Micawber, who, though poor, lived in optimistic expectation of better fortune.

“Many young Indians not only aspire to a better life but are also confident that it will happen in their lifetime,” Anantha Nageswaran writes in his preface to the report.

The report, titled “The Indian Economy: A Review”, comes just days before finance minister Nirmala Sitharaman presents her vote-on-account budget on February 1.

“This is not the Economic Survey of India…. That will come before the full budget after the general elections,” the CEA says.

The review reads more like a background note for the BJP’s election manifesto than a sincere economic analysis.

Freed from the time-bound bookends of an annual survey, the report is able to take a decadal perspective and wax eloquent about the reforms initiated by the Modi government to shepherd the economy on “a journey from fragility to stability and strength”.

The chief economic adviser also labours to make the point that the 7 per cent economic growth in India comes at a time when “the world economy is struggling to grow at 2 per cent”. The report asserts that this is qualitatively superior to the time when the Indian economy grew at 8-9 per cent while the world economy trundled along at 4 per cent.

The report conveniently glosses over the fact that the world economy is not growing at 2 per cent but is projected to grow at 3 per cent in 2023 and 2.9 per cent in 2024, according to the International Monetary Fund’s World Economic Outlook report released in October last year. The IMF is due to update its growth forecasts on Tuesday (today).

Ananth Nageswaran and his cohorts reel off several statistics to underscore the fact that India has dragged itself out of the morass it had found itself in before 2014. Indian industry is likely to record a robust 8 per cent growth per annum during the triennium ending March 2024, an achievement that is attributed to the strategic initiatives undertaken by the government.

It also makes some unsubstantiated claims. “The economy has created jobs,” the report asserts and uses proxy indicators to buttress the claim.

Employment — or the lack of it — is the area where the government is already under fire from its opponents. So, the report suggests that the rapidly growing economy is generating jobs, as a result of which the urban unemployment rate has declined to 6.6 per cent after the pandemic.

“Since May 2023, the number of net new subscribers to the Employment Provident Fund Organisation (EPFO) in the age group 18-25 years has consistently exceeded 55 per cent of the total net new EPF subscribers,” the report says.

It speaks glowingly about the expansion of roads, rail and air networks. “India built 74 airports in the first 67 years after independence. It doubled that number in the last nine years,” it adds.

The reforms in the financial sector — recapitalisation and merger of the public sector banks, amendment to the SARFAESI Act, and the enactment of the Insolvency and Bankruptcy Code (IBC) — “helped clean up the balance sheets of banks and corporates”.

The report completely shuts out the noise around the imperfections in the IBC and the clamour for reforms to ensure better outcomes and swifter recoveries of money that has been locked up in defaults and litigation.

Shifting goalposts

The biggest sleight of hand, however, is the manner in which the government strives to shift the goalposts on its grandiose promises. India was supposed to become a $5 trillion economy at the end of 2025 — an objective articulated in the budget for 2019-20. The pandemic has turned out to be a good excuse for slipping up. The Indian economy is currently just over $3 trillion and it will not grow to become a $5 trillion economy until 2027.

Several ministers within the government have said in the past that India would become a $10-trillion economy by 2030. That has now been moderated to a more realistic $7 trillion.

But the report also throws up a new, vague and woolly objective: the government, it says, has set a higher goal of becoming a “developed country” by 2047. There is no attempt to define the attributes of a developed economy.

It merely says: “The focus on reaping the gender dividend makes profound economic sense in terms of utilising the best talent and is crucial for India to become a developed country by 2047”.

Not everyone will be chuffed by these claims.

Raghuram Rajan, former governor of the Reserve Bank of India and a sharp critic of the Modi government, has said that per capita income in India would hover around $10,000 (Rs 8.3 lakh approximately) in 2047.

Last week at the Tata Steel Literary Meet in Calcutta, the economist who is now a tenured professor at the University of Chicago’s Booth School of Business, said: “That can still put us in the lower-middle income in comparison to the rest of the world today. So, we need to grow faster. But not just faster at the top. We are doing very well among the upper middle class in this country today. But we need to grow everybody. That is the only way we will grow rich; when everybody grows, India grows.”

Anantha Nageswaran talks about three distinct trends that will play out in the coming years: first, the era of hyper-globalisation manufacturing is over. This will persuade the government to pursue “onshoring and friend shoring of production” which will impact logistics and costs, thereby affecting final prices of products.

The Red Sea crisis has exposed the vulnerabilities of global supply chains which will further aggravate the slower growth in global trade in 2023. “Exporting one’s way to growth will not be easy,” he says.

Two other significant trends that will influence markets include the advent of artificial intelligence which could remove the cost competitiveness that countries exporting digital services currently enjoy.

The other is labelled as the energy transition challenge — which has sparked persistent demands from rich nations to force developing nations to embrace greener energy options.

“There is a trade-off between economic growth and energy transition…countries can ill afford to sacrifice the former for the latter,” he says while suggesting that India is walking the fine line between the two more skilfully than the others.