Introduction
India's economic renaissance over the past decade has been nothing short of extraordinary, catapulting the nation from the 10th largest economy in the world to the precipice of becoming the third-largest by 2030. With an imposing $4.11 trillion GDP, India is entering an exhilarating yet uniquely challenging phase, as Prime Minister Narendra Modi declares the nation's audacious ambition to achieve developed country status by 2047. This bold vision is not mere rhetoric; it is a testament to India's unwavering determination to unleash its vast potential and cement its position as a global economic juggernaut.
Modi Ji's Transformative Vision
Prime Minister Modi's vision for India's economic transformation is ambitious, yet attainable. PwC's projections indicate that India could surpass the United States to become the world's largest economy by 2060, underscoring the nation's immense potential. However, realizing this ambition requires a profound paradigm shift from a predominantly agrarian, informal economy to a services, advanced manufacturing, and knowledge-led powerhouse, positioning India to capitalize on the world's increasing technological sophistication and drive for sustainability.
India's population, expected to overtake China's in the year ahead, represents both its greatest opportunity and its greatest challenge. Harnessing the creative energies of its 1.4 billion-strong workforce and equipping them with the necessary skills and opportunities will be crucial in propelling this transformation and turning Prime Minister Modi's dream into reality. Only by unlocking the full potential of its human capital can India navigate the complexities of this transition and provide a model for inclusive, sustainable economic growth that the world can emulate.
Seizing Opportunities of the Green Revolution
India is at the vanguard of the global transition towards a low-carbon economy, nurturing new sectors ranging from renewable energy to biofuel. The National Hydrogen Mission, a bold initiative, aims to establish India as a hub for the production and export of green hydrogen, leveraging the country's abundant solar power resources. India is also striving to scale up emerging technologies like low-carbon steel, cement, and fertilizers, positioning itself as a potential global leader in renewable batteries and green hydrogen, with projected revenues of $80 billion, according to the International Energy Agency.
India's commitment to transitioning its economy to a low-carbon model is evident, supporting the growth of its green industries while aligning with the global demand for net-zero emissions. Already the world's third-largest producer of renewable energy, India sources 40% of its electricity from renewables and is adding renewable energy capacity faster than any other major economy. This concerted effort not only positions India as a champion of sustainability but also ensures its resilience in the face of climate-related challenges, such as the threat of drought to vast swathes of its farmland.
CEBR Report
According to the latest World Economic League Table report by the Centre for Economics and Business Research (CEBR), India is poised to become the largest economic superpower by the end of the century. The report predicts that India's gross domestic product (GDP) will be 90 percent larger than China's and 30 percent larger than that of the US.
India's robust growth is expected to continue, averaging 6.5 percent from 2024 to 2028. This growth trajectory is projected to surpass Japan and Germany, making India the world's third-largest economy by 2032. The report also suggests that India is likely to overtake both China and the US after 2080, driven by demographic estimates and projections.
Emerging as a Preeminent Tech Powerhouse
India's technological prowess is often underestimated, but the nation is rapidly emerging as a tech pioneer, rivaling the United States and China. India is a leader in digital transactions, processing about as many digital payments within its borders as Visa processes globally. The country has also successfully rolled out biometric identification to 99% of its population, even in rural areas, and is boldly adopting cutting-edge technologies like the digital rupee, which could enhance the efficiency, security, and inclusivity of India's financial system.
With a young, digitally-savvy population, rapidly expanding internet connectivity, the impending national launch of 5G, and among the lowest data costs in the world, India is poised to become an even more formidable tech contender in the coming years. Prime Minister Modi's declaration of the 2020s as India's "techade" ('technological decade') underscores the nation's commitment to embracing innovation and leading the charge in the digital revolution.
Fostering the Industries of the Future
While a significant portion of India's population remains dependent on the agrarian and informal economies, the country is making concerted efforts to nurture the industries of tomorrow, spanning manufacturing and services. The Indian government has committed a staggering 10% of GDP, or £270 billion, to the Self Reliant India initiative, aimed at achieving a range of development goals, including building the infrastructure and technology to support a vibrant, modernizing economy.
Public-private partnerships are funneling massive amounts of capital into economy-growing projects like building roads and airports, while production-linked incentives (PLI) are attracting manufacturing to India and supporting domestic producers, positioning the country as a global manufacturing and export hub. The government's efforts to streamline regulations, such as scrapping 39,000 compliances and 1,500 archaic laws, have further bolstered India's appeal as a lucrative investment destination. India is well-positioned to attract companies seeking to diversify their global supply chains, spurring the growth of its industries. Initiatives like the Make-in-India campaign, aimed at promoting manufacturing and entrepreneurship, and the Startup India program, which offers incentives and support to budding entrepreneurs, underscore India's shift towards nurturing innovation and fostering a business-friendly environment.
Building a Future-Ready Workforce
Ensuring that its people possess the necessary skills for the future, from creativity to tech know-how, is a formidable challenge for India, given the sheer size of its population and the majority currently working in agrarian or informal roles. However, addressing this challenge is imperative for India's continued economic growth and sustained competitiveness in the global arena.
The government's New Education Policy aims to upskill the working-age population nationwide, preparing them for the jobs of the 21st century. The policy moves away from rote learning towards flexible, creative thinking, offers a strong vocational education program, and emphasizes modular and lifelong learning to help people update their skills in a rapidly changing economy. Organizations like PwC are also supporting initiatives to upskill India's youth, aiming to equip 300 million young people with the skills needed to compete in the digital era.
Unlocking the Potential of India's Demographic Dividend
India's demographic dividend, with a rapidly expanding working-age population expected to be the largest in the world by 2030, presents a significant opportunity for accelerated economic growth. However, this potential can only be realized if these people can find employment opportunities, underscoring the importance of the government's efforts to help youth build relevant skills and create an environment conducive to job creation.
Moreover, women represent another untapped engine of economic growth for India. Currently, less than 20% of Indian women work outside the home. Achieving employment parity with men could provide India with more extra workers than the entire European Union, potentially making the country at least 27% richer, according to the International Monetary Fund. The government is taking steps to address this issue, such as removing laws that inhibit women from working, recognizing that empowering women is not only a matter of social justice but also an economic imperative.
Infrastructure and Connectivity
India has taken significant strides in modernizing its infrastructure, with a major push in building roads, highways, railways, waterways, and enhancing air connectivity. The ambitious GatiShakti initiative, followed by the National Logistics Policy, has laid a solid foundation for sustained growth by enhancing infrastructure and improving logistics efficiencies. The pace of road building in India has improved to an average of 27 km per day, up from 24 km per day over the last two years. The government has also stated its intention to increase the number of airports from the current 148 to 200 within the next four years, further bolstering India's connectivity and positioning it as a hub for trade and commerce.
These infrastructure developments have not gone unnoticed on the global stage, with India ranking 38th out of 139 countries in the World Bank's Logistics Performance Index, improving its ranking by six places and underscoring the nation's commitment to creating a conducive environment for economic growth.
Digital Transformation
India has shifted gears by preparing for the new frontier of the digital ecosystem, embracing technology and witnessing rapid transformation. The central nervous system of this digital revolution has been the 'Digital India Initiative,' which has played a pivotal role in breaking barriers and bringing all citizens into the digital mainstream.
One of the key achievements has been the Unified Payments Interface (UPI), which has revolutionized the way India transacts. Another significant development is the Aadhaar-based identification and verification system, bringing authenticity and ease for individuals to access government services. This digital infrastructure has enabled the government to directly transfer benefits to millions of individuals from lower economic groups, enhancing financial inclusion and reducing leakages.
The digital infrastructure's prowess was further demonstrated during the COVID-19 pandemic when the CoWin platform facilitated a large-scale vaccination drive, even reaching remote areas. Remarkably, this platform was subsequently deployed in other countries such as Indonesia, Philippines, and Sri Lanka, showcasing India's technological prowess on the global stage.
Rising Consumption Powerhouse
Interestingly, while the world grapples with inflation-induced woes, India has found a driving force within its burgeoning middle class and increasing purchasing power, fueling economic growth. According to findings from the People Research on India's Consumer Economy (PRICE), the size of India's middle class will nearly double to 61% of its total population by 2047, up from 31% in 2020-21. This burgeoning middle class in India represents a vast consumer base with evolving aspirations and demands. This trend not only stimulates domestic investment but also attracts foreign investments, driving economic expansion and fostering innovation. India's growing consumer market, coupled with its demographic dividend, makes it an increasingly attractive destination for businesses seeking to tap into this immense potential.
Reforms Shaping Economic Resurgence
The Indian government has undoubtedly made the country a lucrative investment destination thanks to the progressive reforms undertaken. The meteoric rise of 79 ranks, from 142 to 63, in the World Bank's Doing Business Report in 2020, speaks volumes about the mammoth undertaking to improve the ease of doing business in India. The government's initiative to scrap 39,000 compliances and 1,500 archaic laws in 2023 has further streamlined the regulatory landscape, while the introduction of the Goods and Services Tax (GST) in 2017 has ensured standard indirect tax rates and structures, making India a viable growth market for global companies.
Resilience in the Face of Global Challenges
India's economic resilience has been tested by global challenges, but the nation has emerged stronger, showcasing its inherent strengths and adaptability. Despite headwinds from the COVID-19 pandemic, India's economic activity in the fourth quarter of 2023 exceeded expectations, with an 8.4% growth compared to the previous year, supported by increased investment and government consumption. India's composite purchasing managers' index (PMI) stood at 60.6 in February, well above the global average of 52.1, indicating robust expansion. Inflation has remained within the Reserve Bank of India's (RBI) target range, and financial conditions have remained accommodative. Domestic credit issuance to the commercial sector grew by 14% year-on-year in December 2023, with financial soundness indicators showing improvement. Foreign reserves increased by 8% in the year to January 2024, further bolstering India's economic resilience.
Global Recognition and Outlook
The World Bank projects India's output growth to reach an impressive 7.5% in the fiscal year 2024, before moderating to a still-robust 6.6% in the fiscal year 2025. This expected slowdown mainly reflects a deceleration in investment from its elevated pace in the previous year. However, over the medium term, India's fiscal deficit and government debt are projected to decline, supported by robust output growth and consolidation efforts by the central government.
In its latest South Asia Development Update, released on April 2, the World Bank predicts a robust growth of 6% in South Asia for 2024, primarily attributed to India's strong performance. The international community is taking note of India's economic strides, recognizing the nation's potential to drive regional and global growth.
Conclusion
India's economic resurgence is a testament to the nation's unwavering determination, ambitious vision, and resilience in the face of global challenges. By embracing the green revolution, establishing itself as a tech powerhouse, fostering the industries of tomorrow, building a future-ready workforce, unlocking the potential of its demographic dividend, modernizing infrastructure, and driving digital transformation, India is well-positioned to achieve Prime Minister Modi's dream of becoming a developed nation by 2047. As India continues to capitalize on its rising middle class, increasing purchasing power, and the implementation of progressive reforms, the world must take notice of this emerging economic juggernaut. India's strides are evident, and its potential is vast, making it a beacon of global development and a model for inclusive, sustainable economic growth.
The journey ahead is not without challenges, but India's resilience, adaptability, and commitment to embracing change position it to navigate these hurdles and emerge as a leading force in shaping the global economic landscape. The world eagerly awaits India's continued ascent, as the nation unleashes its full potential and etches its name as an economic powerhouse of the 21st century.
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