Key Trends Paving the Way for India to Become the World's Third Largest Economy
CA Rishabh Kumar Sawansukha
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India is on the cusp of a significant economic milestone: becoming the world's third-largest economy. The Economic Survey 2023-24 highlights several key trends and economic indicators that underscore this remarkable growth trajectory. Here are five key trends to watch:
1. Structural Reforms and Policy Initiatives
The Indian government has implemented substantial structural reforms over the last decade, focusing on the supply side of the economy. These reforms have been pivotal in restoring economic health, enhancing potential growth, and alleviating supply-side constraints. Going forward, a shift towards bottom-up reforms and strengthening governance is necessary to sustain strong, inclusive growth.
2. Infrastructure & Agri Development
Infrastructure & Agri investment has been a major driver of growth. The government's emphasis on infrastructure has boosted construction activities, which in turn have created numerous jobs, despite many being informal and low-paid. This infrastructure push is crucial for economic resilience and long-term growth.
3. Technological Advancements
Technology is emerging as a strategic differentiator in economic prosperity. India's focus on technology, including Artificial Intelligence (AI) and digital infrastructure, is enhancing productivity and driving growth. However, the social impact of such technologies, particularly on the labor market, remains a challenge that needs to be addressed.
4. Climate Change and Energy Transition
Integrating climate change strategies into national development is essential for sustainable growth. India's approach to balancing adaptation and mitigation efforts, while ensuring energy security and economic development, is a key trend. The transition to low-carbon energy sources and the establishment of a market framework to price carbon are significant steps in this direction. Wastelands 2 Bestlands in Cooperative model can add up 10 Trillion $ in the economy over few years. Climate financing model and cooperative private partnership need bigger push and empowerment.
5. Global Economic Integration and Self-reliance
The global trust deficit and increasing geoeconomic fragmentation are prompting countries to adopt self-reliance policies. India is balancing inward-looking policies with global integration, focusing on becoming self-reliant in strategic sectors while remaining resilient to external shocks. This nuanced approach is critical for sustaining growth amidst global uncertainties.
Economic Indicators Supporting India's Growth
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Several economic indicators reflect India's robust growth trajectory:
1. GDP Growth: India's GDP has grown significantly, with a marked increase from less than USD 300 billion in 1993 to an estimated USD 3.6 trillion in 2024.
2. Employment: The Indian economy needs to generate nearly 7.85 million jobs annually in the non-farm sector to cater to the growing workforce, highlighting the importance of productive employment for sustained growth.
3. Per Capita Income: There has been a substantial improvement in India's standard of living, with per capita GDP increasing from USD 301.5 in 1993 to USD 2,484.8 in 2023.
4. Trade Resilience: Despite global trade turmoil, India's trade sector has shown resilience, contributing positively to the economy.
5. External Debt Stability: India's external debt position remains stable, indicating efficient capital utilization and economic resilience.
Conclusion
India's journey to becoming the world's third-largest economy is underpinned by significant structural reforms, infrastructure development, technological advancements, a balanced approach to climate change, and strategic economic policies. These trends and indicators highlight the resilience and potential of the Indian economy, setting a robust foundation for future growth.
By focusing on these key areas, India is well on its way to achieving this historic milestone, driving economic prosperity and improving the quality of life for its citizens.
By incorporating these insights from the Economic Survey 2023-24, this article provides a comprehensive overview of the trends and indicators propelling India's economic growth.