The central government’s goal to make India a $5-trillion economy over the next five years can be achieved if the growth rate is enhanced from the current 6.5-7% to around 8%, said chief economic advisor (CEA) Krishnamurthy Subramanian, identifying private investment and exports as the key drivers. Speaking at a conference on ‘Financial Distress, Bankruptcy and Corporate Finance’, Subramanian said that it took almost 55 years to make India a $1-trillion economy, that too at a lower exchange rate of Rs 10 per one dollar.

“Our economy further progressed from $1.7 trillion to $2.7 during 2014 to 2019. However, the exchange rate was much higher at Rs 65 per dollar. What we need now is sustainable growth of around 8% to push economy to achieve the goal in next five years,” he added.

For the purpose, the country would require to enhance private investment and exports, he said, adding that the by-product of these two factors would be creation of jobs as investment automatically enhances productivity. “Private investments are linked with saving and lesser domestic consumption. Fostering exports is the key to bring large chunk of money into the economy,” he said.

Subramanian said that Indian MSMEs might be in large number but they are not growing due to over protection. On an average, four decade old firms in the US provide employment to nearly 750 people, but in the case of India the number is hardly 140 to 150, he said. “Our labour laws are responsible. If a firm is having more than 100 employees, it would have to adhere with too many labour laws. As a result of it, entrepreneurs would prefer to start a new firm in the name of their relatives rather than expanding the existing business to bypass too many labour laws,” he said, adding that larger firms have greater potential for employment generation as compared to MSMEs.