India is set to make economic history as it is projected to surpass the United Kingdom and become the fifth-largest world economy in 2019. This finding, revealed in a recent report, places India at the forefront of the global economy with an estimated Gross Domestic Product (GDP) of $5.9 trillion by 2025. This economic feat puts India ahead of Japan, consequently making it the third-largest economy globally.
The Indian Consumer Market Expansion
The report further details a forecasted increase in the size of the Indian consumer market. Valued at $1.9 trillion in 2019, the market size is expected to grow to $3.6 trillion by 2025. The rapid expansion of this sector positions India as a significant economic growth engine in the Asia-Pacific region.
Key Factors Sustaining India’s Economic Growth
The report identifies investment, savings, and exports as crucial drivers of India’s continued economic growth.
Investment serves as an essential enabler for innovation, rapid productivity growth, and the introduction of new technologies. These aspects contribute significantly to job growth. The Economic Survey emphasizes the role of creating a favorable ecosystem for private investment and the importance of value-added and skilled job growth through startups.
On the other hand, savings are equally critical in that the level of savings equals the level of investment. Higher savings enable banks to lend more to firms for investment purposes.
Exports also play a pivotal role in influencing the level of employment and balancing the payments, which in turn accelerate the economic growth of the nation.
Challenges Facing Economic Development in India
Despite the promising projection, the report also outlines significant challenges that could hamper India’s economic development, including infrastructure, ageing population, and the legal system.
The total population projection for India between 2015 and 2050 is around 350 million people. This significant number poses fiscal challenges in terms of delivering basic services like electricity, sanitation, affordable housing, and public transport.
Ageing is another issue as a slowdown in India’s population growth rate over the next two decades will result in an older population. This demographic shift will bring additional fiscal challenges relating to healthcare, pensions, and social welfare for senior citizens.
Lastly, India’s legal system – particularly its low ranking (163) in contract enforcement on World Bank’s Ease of Doing Business Report – is of concern. The Economic Survey underscores the need for reforms in the legal system and recommends hiring additional judges to reduce the number of unfilled vacancies and clear long backlogs in the court system.
Table of Key Facts
| Categories | Data |
|---|---|
| Gross Domestic Product (2025 projection) | $5.9 trillion |
| World Economy Ranking (2019) | 5th |
| Indian Consumer Market (2025 projection) | $3.6 trillion |
| Total Population Projection (Between 2015-2050) | 350 million people |
| Ease of Doing Business Rank | 163 |