India is currently a $ 3.1 trillion economy. It took India 60 years since Independence to become one trillion-dollar economy, but the next trillion dollars was added only in 7 years. The 3rd trillion was added in just 5 years in 2019. The growing momentum could see India add on average 1 trillion dollar to its economy every two years for the next 14-15 years. According to the report of the Centre for Economics and Business Research (CEBR), India will become a $ ten trillion economy by 2035.
Pierre-Olivier Gourinchas, chief economist of the IMF recently pointed out that India has emerged as “a bright light” at a time when the world is facing imminent prospects of a recession. This optimism is a result of certain fundamentals that have allowed India the scope for high growth in coming years.
Reforms taken up in 1991 have been furthered with structural reforms such as introduction of Goods and Service Tax (GST) and Insolvency and Bankruptcy code. Decriminalisation of laws, simplification of compliances has enabled ease of doing business which has shown result as every year India is accounting higher FDI inflows. India recorded the "highest ever" annual FDI inflow of $83.57 billion in 2021-22
According to UNCTAD, digital economy’s prime value lies in creation of new economic opportunities for masses by facilitating transactions and networking. Post pandemic world economy will be particularly dependent on digitization of value chains and India’s digital trajectory places it at a favourable position in shifting global supply chains. In the current decade India will benefit from major global investments going into technology domain. These technologies have the potential to create millions of well-paying, productive jobs and helping millions of Indians to enjoy a decent standard of living. As the per capita incomes grow with the GDP, it will cross the $3000+ threshold, which is seen as a consumption inflexion point.
India has emerged as the third-largest start-up ecosystem in the world with more than 84,400 such businesses operating across 656 districts in the country. Entrepreneurs boost economic growth by introducing innovative technologies, products, and services. The ecosystem has potential to unlock tremendous appetite for scalability, alternate funding options, expansion into the global market and the capacity to enable millions of jobs. The Government with an intent to build a strong ecosystem for nurturing innovation and startups in the country launched Startup India initiative in 2016.
Pro-active policy stance from the government could allow India to gain ‘first and fast mover’ advantage in many of the emerging technologies and sectors. A Bloomberg report recently predicted that hydrogen could meet up to 24 per cent of the world’s energy needs by 2050, creating a market worth $ 600 billion. National Hydrogen Mission is expected to incentivise various approaches which can help India become a sizeable player in green energy.
India is expected to get a structural push to manufacturing coming from corporate sector’s strategy of diversifying the supply chain and not depend on a single country. The government has introduced PLI schemes to kickstart Indian manufacturing in over 14 sectors. Further, investment in infrastructure development through National Infrastructure Pipeline (NIP) will help reduce logistics cost and improve India’s competitiveness. The recent FTA agreements with Australia, UAE will help expand the markets even as India partners with like minded countries in forums like I2U2.
To move up the value stack and become a large manufacturing base, India is investing in its human resource especially in time of changing needs and environments. It is also ensuring that the external environment is conducive for its growth and its economy is cushioned as much as possible from external shocks such as the recent pandemic and geopolitical conflict.
As India takes up G20 Presidency, it offers India a great opportunity to showcase its strength to the world and further the momentum towards the goal of 10 trillion-dollar economy.