Based on the report from Information Handling Services (IHS) Markit, an organization globally recognized for delivering information, analytics, and solutions across major industries, India is projected to surpass Japan as Asia’s second-largest economy by 2030. Currently ranked as the sixth-largest economy in the world, India is preceded by the U.S., China, Japan, Germany, and the U.K.
GDP Projection: A Promising Growth Rate
The gross domestic product (GDP) is a measure of a country’s economic performance. In 2021, India’s GDP was valued at USD 2.7 trillion, showing substantial promise for future expansion. It is projected to augment to USD 8.4 trillion by 2030, placing India as the second largest economy in the Asia-Pacific region. The growth rate for 2021-22 is expected to be 8.2%, a significant increase from a decline of 7.3% in the previous fiscal year. This positive momentum is predicted to continue into 2022-23 with a growth rate of 6.7%.
Sector Contributions to Growth: Manufacturing, Infrastructure, and More
India’s robust growth can be attributed to several sectors. The manufacturing, infrastructure, services, and e-commerce sectors have significantly boosted the country’s growth rate. As digitization increases, the e-commerce market is expected to expand even further. Projections show that by 2030, the number of internet users in India will rise to 1.1 billion, over double the 500 million users recorded in 2020.
Projections for Future Growth: A Pioneering Economy
Economists are optimistic about India’s economic stability and growth. Emphasizing technological advancements, startups, and the infrastructure sector, India is poised to maintain a high and stable growth rate. As one of the fastest-growing economies, India will be seen as an important long-term growth market for multinationals across diverse industries, including manufacturing sectors such as autos, electronics, chemicals, and services sectors such as banking, insurance, asset management, healthcare, and information technology.
Support from the Middle Class: A Driving Economic Force
India’s vast middle class plays a significant role in driving the economy, serving as the primary consumer force. Predictions show that Indian consumer spending will double in the next decade, growing from USD 1.5 trillion in 2020 to USD 3 trillion by 2030.
Foreign Direct Investment (FDI): A Boost for the Indian Economy
An impressive increase in FDI inflows to India has been evident over the past five years. This trend continued in 2020 and 2021, with large-scale investment from tech multinationals like Google and Facebook attracted by India’s expansive domestic consumer market.
Current State of India’s Economy: Unicorns and Initiatives
As of FY22’s first quarter, India’s GDP at current prices was valued at USD 694.93 billion. India currently hosts over 21 unicorns, start-ups valued over USD 1 billion, collectively valued at USD 73.2 billion. This puts India as the fourth-largest unicorn base globally.
Governance for Economic Growth: Policies and Missions
The Indian government has launched several strategies to spur economic growth. Initiatives like ‘Make in India’ and the National Policy on Electronics 2019 (NPE 2019) aim to promote domestic production. The government also approved major telecom sector reforms in September 2021, designed to encourage employment, competition, and safeguard consumer interests.
Investing in the Future: Renewable Energy Sources and Collaboration
To combat climate change, India is shifting its focus to renewable energy sources. The country aims to generate 40% of its energy through non-fossil sources by 2030. A ‘Roadmap 2030’ was also jointly launched with the United Kingdom in May 2021 to foster collaboration against climate change.
Challenges and Opportunities: Securing Steady Recovery
While sectors like manufacturing and construction witnessed a steady recovery in 2021, low-skilled individuals, women, self-employed people, and small firms are yet to catch up. Infrastructure and manufacturing must be harnessed as catalysts for structural growth. The Indian economy’s recovery boils down to the steady recovery of household incomes and normalizing activity in the informal sector and smaller firms. Improving ease of business and living for the private sector to generate wealth over time is paramount. Increasing women’s participation in the workforce also remains a crucial growth driver.