Economy

Published: Jan 11, 2023
Updated: Jan 11, 2023

India's Accelerated Ascent to a $10 Trillion Economy

On Way to the Ambitious Goal

India, currently a $3.1 trillion economy, has been making remarkable strides towards becoming a $10 trillion economy. It took India 60 years since Independence to become a one trillion-dollar economy, but the next trillion dollars was added in only 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.

Reasons for the optimistic outlook

The reasons for this optimistic outlook can be attributed to several factors. The structural reforms such as the introduction of Goods and Service Tax (GST) and Insolvency and Bankruptcy code have streamlined processes and made it easier to do business in India. Decriminalization of laws and simplification of compliances has further enabled ease of doing business, which has resulted in India recording the highest ever annual Foreign Direct Investment (FDI) inflow of $83.57 billion in 2021-22.

The Role of Digital Economy

The digital economy also holds great potential for India. The UNCTAD has stated that the prime value of digital economy lies in the creation of new economic opportunities for masses by facilitating transactions and networking. With the world economy set to become increasingly dependent on digitization of value chains, India's digital trajectory puts it in a favorable position to tap into the global supply chain. The current decade is also expected to see major global investments in technology, which could create millions of well-paying, productive jobs and help millions of Indians to enjoy a decent standard of living.

Budding Entrepreneurs

India also has a thriving startup ecosystem, with more than 84,400 startups operating across 656 districts in the country. These entrepreneurs are instrumental in boosting economic growth by introducing innovative technologies, products, and services. The government, with an intent to build a strong ecosystem for nurturing innovation and startups in the country, launched the Startup India initiative in 2016.

Role towards achieving a sustainable economy

The government's pro-active policy stance is also expected to 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% of the world's energy needs by 2050, creating a market worth $ 600 billion. The National Hydrogen Mission is expected to incentivize various approaches that could help India become a sizable player in green energy.

India is also expected to get a structural push to manufacturing from corporate sector's strategy of diversifying the supply chain and not depending on a single country. The government has introduced Production-Linked Incentive (PLI) schemes to kickstart Indian manufacturing in over 14 sectors. Further, investment in infrastructure development through the National Infrastructure Pipeline (NIP) will help reduce logistics costs and improve India's competitiveness. The recent Free Trade Agreement (FTA) agreements with Australia and the UAE will help expand the markets even as India partners with like-minded countries in forums like I2U2.

Move from Consumption to Production based Economy

To move up the value stack and become a large manufacturing base, India is investing in its human resource especially in the changing needs and environments. The government is also ensuring that the external environment is conducive for its growth and its economy is cushioned.

An exciting journey ahead

India's journey towards a $10 trillion economy is an ongoing one and it is an exciting time to watch its progress as it charts a course for sustained growth and development.