According to Goldman Sachs's estimate, India will surpass both the US and Japan as the second-largest economy in the world by 2075. The investment bank analysis predicts that India’s GDP would increase significantly as its 1.4 billion-person population overtakes all other countries in the world. India currently has the fifth-largest economy in the world, after Germany, Japan, China, and the USA.
Over the next 20 years, India will have one of the lowest dependency rates among advanced nations “That is the window for India to get it right in terms of setting up manufacturing capacity, continuing to grow services, and continuing the growth of infrastructure.” The fifth-largest economy in the world will need to innovate and boost worker productivity.
Future growth will also be significantly influenced by capital investment. Due to favorable demographics, India`s saving rate is anticipated to increase with declining dependency ratios, increasing incomes, and deeper financial sector growth. The administration has recently performed strenuous work on this front. However, the circumstances are favorable for the private sector capex cycle given the strong balance sheets of Indian private corporations and banks.
In addition, if the labor force participation rate does not rise, it would be a major risk to India’s economic growth. Over the past 15 years, India`s labor force participation rate has decreased, Given that women`s labor force participation rate is much lower than men`s having more opportunities will help us maintain our labor force participation rate, Which will improve our potential growth.
According to the research, net exports have slowed growth because India has a current account deficit. But the Export of services had aided in reducing current account balances. India`s economy is driven by local demand, with up to 60% of its growth given to domestic Consumption and Investment. Unlike several more export-dependent economies in the area. According to Piyush Goyal, In the fiscal year 2022-23, India`s export rose by 6% to a “record” of $447 billion which shows healthy growth in the sector of Pharmaceuticals, Petroleum products, chemicals, and marine products. And simultaneously, the country`s imports also grew by 16.5% to 714$ billion in 2022-23 as compared to 613$ billion in 2021-22. Exports of goods and services together reached “new heights” and have accumulated a total of mind-boggling 770$ billion in 2022-23.
India`s GDP growth rate in fiscal year 2022-23:-
Q1 - 13.1%
Q2 - 6.2%
Q3 - 4.5%
Q4 - 6.1%
India`s now one of the fastest major growing economies in the world. India`s GDP expanded by 6.1% in the final quarter of the preceding fiscal year, beating all the analyst Estimation. In Fiscal year 2023, India`s overall growth rate will be 7.2% according to MOSPI Statistics. India`s manufacturing sector output increased by 4.5% in the March quarter compared to the same period last year, up from a 1.1% contraction, while agricultural output increased by 5.5%, up from 3.7% growth.
According to preliminary estimates of Gross Value Added (GVA), the manufacturing sector expanded by 1.3% in FY23 after expanding by 11.1% in FY22, while agriculture, forestry, and fishery expanded by 4% in FY23 compared to 3.5% growth in the previous fiscal year. Moreover, S&P Global and Morgan Stanley predict that India will surpass Japan and Germany to become the Third-Largest economy in the world. The prediction from S&P is based on the assumption that through 2030, India`s nominal yearly gross domestic product (GDP) growth will average 6.3%.
There are many initiatives taken by India for economic development. Some of these are:-
Ø FREE TRADE AGREEMENT:- the trade agreement India struck with the United Arab Emirates(UAE) and Australia was praised by Export Promotion Councils(EPCs). The deal will Aid India in expanding exports by allowing preferential access to those markets for Indian goods. The UAE had granted the nation privileged market access on more than 97% of its tariff lines, which in value terms account for 99% of Indian exports to the area. Within 5 years, it is anticipated that the CEPA with the UAE will boost bilateral commerce in goods to over 100$ billion and in services to over $15 billion.
The Economic Cooperation and Trade Agreement (ECTA) between India and Australia is anticipated to increase Indian exports of goods to Australia by $10 billion and generate 10 lacks new employment. This trade pact helped to raise the bilateral trade to 45$ billion in 5 years. And Indian officials are considering a Pan-Africa FTA. “India trades with Africa for $98 billion. A pan-Africa wider continental free trade agreement is in the work.
Foreign Direct Investment (FDI):- According to the United Nations committee, India was the third largest beneficiary of foreign direct investment in Greenfield projects worldwide. USA and UK are the only countries that received more FDI than India. This enhances India`s standing as a major economic power.
Booming Manufacturing Industry:- In India, the covid-19 epidemic has unleashed a universe of incredible options that are enticing to both employers and job seekers In this changing environment, the import-export of electronic goods has experienced a radical transformation, with India currently dominating the world as the center of smartphone production. Observant major corporations like Apple and Samsung set up manufacturing facilities in the nation during the previous three years. Apple iPhone exports from India alone soared to a surprising 10,000 crore in May 2023, bringing the country`s total smartphone exports to an astonishing 12,000 crore. And also India is becoming a significant manufacturer of semiconductors.
India`s Tourism Booms:- According to the Ministry of Tourism, In 2022, 6.19 million foreign tourists arrived in India, up from 1.52 million during the same period in 2021. The country`s tourism0- related foreign exchange receipts surged by 107% from 65,070 crore in 2021 to 1,34,543 crore in 2022.
Aatmanirbhar Bharat:- In Defense, from just 686 crore in 2013-2014, India`s defense exports soared to an all-time high of about 16,000 crore in 2022-2023. India`s advancement in the world`s Defense manufacturing industry is reflected by its 23-fold growth. And also India has now more than 100 Unicorns which encourages and promotes the startup culture in India. India’s Defense export to Armenia, the Philippines, and African country has also significantly increased.
Road Infrastructure:- In 2013-2014, the total length of the National Highway was 91,287 KM; by 2022-2023, it had expanded to 1,45,240 km, an increase of more than 59%. India presently boasts the second-largest road network behind the USA as a result of this expansion. In the northeast region, Projects worth more than 2 lakh crore rupees are being carried out which helps to improve connectivity and trade. And made a logistic chain in the country.
The estimate is being driven by the nation's advancements in innovation and technology, increased capital investment, and improved worker productivity in addition to a growing population.
India's government has prioritized building infrastructure, particularly when it comes to building highways and railroads. To encourage investments in infrastructure, the nation's most recent budget
plans to maintain the 50-year interest-free lending programs to state governments which help India for sustainable and long-term economic growth.