Friday, Mar 15 2024
Source/Contribution by : NJ Publications
“In the rapidly changing world order, India is going ahead as ‘Vishwa Mitra’. India has given hope to the world that we can decide on common goals and achieve them.” - PM Shri Narendra Modi.
India’s rise to the 5th largest economy in the world, with a GDP of $3.73 trillion*, has gained attention all over the world. A report published by S&P states that India is set to become the 3rd largest economy of $7.3 trillion by 2030. This rise is driven by the resilience shown by the economy and the policy initiatives taken over the last decade. Despite the challenges of the pandemic and geopolitical conflicts, the Indian economy has shown its ability to handle the challenges appropriately and stay on track with the growth momentum.
In the last year, India has displayed steady growth, making it the fastest-growing economy amongst G20 economies. With a current growth rate of 7.3%, 7.2% in FY23, and 9.1% in FY22, India has by far outperformed the global growth rate, which is struggling to grow at 2%**. This year, India has written its name in history by becoming the first country to soft land on the south pole of the moon, successfully launching Aditya L-1 to orbit around the sun, its G20 presidency, UPI users reaching 800 million, excellent performance at Asian Games, 2 Oscar awards, the fastest rollout of 5G in the world and more such achievements. These achievements are a testament to the bright future of our beloved country. Let’s dig deeper into the Indian growth story.
The Post-Independence Story (1947-2014)
India was ruled by the British for about 200 years until it finally got its independence in 1947. However, this resulted in India plummeting from being one of the wealthiest countries in the world to becoming a struggling economy. In 1700, India’s share in the global economy was 22.6%, which dropped to a mere 3.8% in 1952**. The period from 1952 to 1960 saw a growth rate of 3.9%. However, the Indian economy slumped in the 1960s due to the Sino-Indian war in 1962, the India-Pakistan war of 1965-66, and the drought of 1965.
The 70s were marked by a severe devaluation of the Indian rupee by 57%. The late 70s and early 80s were tumultuous not just for India but for the world. In the 80s, the GDP growth rate was 5.7%**, driven by modest liberalisation and government spending. In 1990-91, the Iraq-Kuwait war and the collapse of the Soviet Union impacted trade and current account balances, leading to a Balance-of-Payments (BoP) crisis. To uplift India from the shackles of this crisis, the Indian economy was liberalised and globalised in 1991.
The early 2000s were marked by a sustained upward economic trend. With global growth, the Indian economy too experienced expansion in capital inflows. However, the global financial crisis of 2008 led to the accumulation of bad debts in banks, reaching double-digit percentages. During this period, inflation remained persistent, and the annual depreciation rate of the Indian rupee averaged 5.9%, leading to a stagnation in economic growth**.
The Decade of Explosive Growth - 2014-2024
The year 2014 was a game-changer for India, for it was the year when the seeds of explosive growth had been sown. With the new government in power in India, it was a year of structural reforms which were highly effective in strengthening macroeconomic fundamentals. In the last decade, India has strengthened its transportation facility and education system, handled a pandemic efficiently, improved local infrastructure, worked towards affordable and wholesome health, helped entrepreneurs, provided basic amenities and improved social security.
This decade, India doubled the number of airports that were built in the first 67 years of independence. Three major railway corridors have also been set up to improve logistics efficiency and reduce costs. Since 2014, 7 IITs, 16 IIITs, 7IIMs, and 15 AIIMS have been set up among new colleges established in India. In STEM (Science, Technology, Engineering and Mathematics) courses, women constitute 43% of enrolment, one of the highest in the world. Under the Pradhan Mantri Awas Yojana, 2.5 crore houses have been constructed for the poor. Under the PM Jan Dhan Yojana, 51.4 crore accounts have been opened, and subscriptions for Atal Pension Yojana have reached 6.1 crore. Under Stand-Up India, 2.1 lakh loans have been sanctioned to aspiring entrepreneurs, out of which 84% were women entrepreneurs**. Now, let’s look at how India is expected to perform in the future.
India in Amrit Kaal - A Futuristic Outlook
In 2047, India will finish 100 years of independence. The period from now until 2047 is known as the Amrit Kaal. This period is defined as a highly auspicious time associated with good luck, positivity, healthy growth, and high energy. The goal of Amrit Kaal is to build a holistically developed India which is technology-driven and knowledge-based, with modern infrastructure, strong public finances, and a solid financial sector.
In the interim budget disclosed by Finance Minister Nirmala Sitharaman on 1st February 2024, it was announced that to make India ‘Viksit’ (Developed) by 2047, we need to focus on the upliftment of 4 major areas, i.e. ‘Garib’ (Poor), ‘Annadata’ (Farmers), ‘Mahilayen’ (Women), and ‘Yuva’ (youth). Moreover, seven priorities will be acting as ‘Saptarishi’ to guide Amrit Kaal's vision. These 7 priorities are inclusive development, reaching the last mile, infrastructure and investment, unleashing the potential, green growth, youth power, and financial sector. Moreover, the country is expected to meet ‘Net Zero’ emissions by 2070, and the country is fully committed to attain all the UN Sustainable Development Goals. To promote tourism in the country, States will be encouraged and empowered to develop iconic tourist sites, hence attracting business and promoting local entrepreneurship. Moreover, long-term interest-free loans will be given to states to promote holistic development.
The coming years in India are expected to exhibit robust growth. The resilience shown by our country during the tough period of Covid-19 is a testament to the strength and potential of our country. Despite facing unprecedented challenges, India demonstrated remarkable adaptability and innovation, leveraging technology and fostering a spirit of unity. The challenges now confronting the growth of India’s economy are managing this highly integrated global economy efficiently, handling the geopolitical, technological, fiscal, economic, and social issues, deploying Artificial Intelligence (AI), and ensuring that the workforce is placed appropriately. In the past, India has shown resilience and progress despite risks and uncertainties, and hopefully, through efficient and effective policy measures, it will continue to do so. India now embarks on its Amrit Kaal journey with confidence, trust, and unity to build a prosperous and ‘Atmanirbhar’ country.
**(Source - The Indian Economy - A Review - Jan 2024), *(Source - IMF, as in 2023)
