India becoming 5th largest economy overtaking UK economy at a time of celebration of 75 years of Independence from British colonial rule is a proud moment for every Indian. The significance being India was able to achieve such progress despite the international crisis due to COVID-19 and the ongoing Russia -Ukraine war. India is now expected to attain 3rd position by 2029. Bloomberg analysed the data of the International Monetary Fund (IMF) and prepared a report. The United States remains the world’s largest economy with highest Gross Domestic Product (GDP) followed by China, Japan, Germany and India. India was in 11th position of GDP in 2014. In 10 years, India made significant progress ranking 5th with GDP of 854.7 billion dollars.
Bharat Ahead While World Recedes
Many developed countries are facing inflation and economic recession. GDP of the UK stands at 816 billion dollars. Inflation hit a record level in the UK. The UK recorded just 1 per cent growth of GDP in the second half of the financial year of 2021-22. China is facing a real estate, banking and financial crisis. Europe is having the highest inflation, climate crisis and facing economic recession. The depreciation of the Pound value of the UK, Yen of Japan, Yuan of China, Euro and other currencies are more compared to depreciation of Rupee with Dollar.
India is the fastest growing economy at present. In the April-June quarter of the Financial Year 2022-23, India recorded a growth of 13.5 per cent in GDP. After the COVID-19 crisis and relaxation of protocol guidelines vis a vis the pandemic, there was spurt in consumption and demand in all fields, especially in service sectors. Contribution of India to GDP which was 2.6 per cent in 2014 increased to 3.5 per cent in 2022 and is expected to rise to 4 per cent by 2027. At this growth rate India is anticipated to overcome Germany by 2027, Japan by 2029 and become 3rd largest economy by 2029.
The Journey To Top Five
When Shri Narendra Modi became the Prime Minister of India in 2014, India was in top five fragile economies – the group of “Fragile Five” alongside Brazil, Turkey, South Africa and Indonesia. The policy paralysis of the United Progressive Alliance Government was responsible for double digit inflation, bad impact on business confidence and economic recession. The fragile five had a bad current account deficit, lesser foreign exchange reserves, more external debt, crash of rupee value, higher double-digit inflation above 10 per cent and a slump in growth to below 6 per cent. Investors were moving money out of India, mainly into the US and the currency value was falling. It was not an easy path for the Modi Government.
With a strong determination to set right the Indian economy, the Modi Government took various measures and steered the country on a right path resulting in a more stable currency, falling inflation rates and a well-controlled fiscal deficit. All these actions made India a better place to invest in. Within 1,000 days, the Indian GDP growth rose to 7.4 per cent, highest among large economies of the world. By 2017, India was dropped off the list of Fragile Five and became the fastest growing economy. India was referred to as the “bright spot in the gloomy global economy” and a macro sweet pot. India’s stocks and currencies performed better than most of the world’s largest economies. It was clearly predicted in 2017 that “Due to changes in its political structure, India is on the rise as an economical power and is not likely to return to Fragile Five status”
Policies of Modi Government
The Central Government has made constant efforts to incentivise domestic manufacturing, as compared to the import and sell model. “Make in India” initiative was launched on September 25, 2014. Concessions were provided on import of raw materials needed for manufacture in India. Customs duty has been increased on some finished items to encourage domestic MSMEs. “Vocal for Local” initiatives exposed India’s manufacturing domain to the world. “Start UP India” scheme was launched with a corpus of Rs.10,000 crores to meet funding needs of Start-Ups. India now ranks 3rd in the global start-up ecosystems with more than 4,200 new-age companies. The Government liberalised investment restrictions, eliminated regulatory barriers, nurtured international relations and improved business relations. India jumped by 79 positions in 5 years (2014 to 2019) from 142nd to 63rd place in ease of doing. FDIs (Foreign Direct Investments) have increased across various sectors.
While the entire world is grappling COVID-19, the Modi Government launched “Aatmanirbhar Bharat” worth Rs 20 lakh crores to turn crisis into opportunity. ECLGS scheme sanctioned collateral free loans amounting to Rs 3.48 lakh crores benefitting nearly 1.19 crore MSMEs. Through PM Garib Kalyan Yojana, the largest food security programme in the world, 5kg cereals and 1 kg pulses per person were provided to 80 crore poor from March 2020 till today
In Financial Year 2021-22, Foreign Direct Investment has been reported from 101 countries. India received the highest ever FDI inflow of Rs 6,31,050 crores in FY 2021-22.
Tax Reforms Resulted In GST Replacing Indirect Tax System
Goods and Service Tax (GST) was the biggest ever tax reform and a game changer for the Indian economy. Over 17 taxes and multiple cesses were subsumed into GST combining central taxes like excise duty, services tax and state taxes. GST simplified and replaced the complicated indirect tax system and increased the compliance and number of indirect tax payers and made them more accountable. It also created a unified common national market for India boosting foreign investment and “Make in India” campaign.
Reduction of corporate tax for domestic companies and new manufacturing firms costing Government around Rs 1.45 lakh crores was another major reform for “Make in India” making India country with lowest tax rates in Asia. Reforms in Income Tax resulted in simplicity in filing and increased compliance. India recorded highest ever Income tax collections of 13.63 lakh crores and around 5.83 crore in IT returns in Financial Year 2021-22 despite the pandemic.
The Pradhan Mantri Jan Dhan Yojana Scheme was launched in September 2014 and 44.23 crore bank accounts were opened for the poor at zero balance. Benefits like subsidies, scholarships, pensions and COVID-19 relief funds are being credited to the bank accounts including Jan Dhan accounts through Direct Benefit Transfer. “Digital India” scheme increased digital literacy in citizens, digital infrastructure and digital delivery of Government and non-government services. Under UPI (United Payment Interference), UPI transactions stood at 73 lakh crores in 2021 and the value is increasing every year significantly. In July 2022 UPI transactions value stood at 10.63 lakh crores.
Over 3 crore houses were built for poor under PMAY scheme with over 4.47 lakh crore rupees since 2015. Over 10.9 crore toilets have been built under the Swachh Bharat Mission since 2014. Seven crore rural families were given piped water connections in 3 years since 2019 through Jal Jeevan Mission which was budgeted at 3.6 lakh crores. The important point here is schemes of Modi Government provided necessary amenities to the underprivileged in a useful way which created jobs and put money into hands of people along with improving the quality of lives of the deprived. MUDRA scheme was launched by Modi Government on April 8, 2015 to provide loans up to 10 lakhs to non-corporate non-farm small and micro enterprises in a hassle-free manner. Since the launch, over 34.42 crore loans worth Rs 18.6 Lakh crores were sanctioned.
Since 2014 ,157 medical colleges were allotted by the Modi Government which are under different stages of implementation. In 2014 -2019, 2 lakh kms of rural roads and 35,000 kms of highways were built. Hundred airports were made operational by 2019 and the Government is planning to make 200 airports, heliports and water ports operational in the next three to four years. Hundreds of railway stations were modernised and 400 to be done next. National Infrastructure Project was devised for 5 years from 2020-2025 with Rs 111 lakh crores to provide world-class infrastructure and improve quality of life. Money spent on infrastructure created jobs, giving money to people and increasing the spending capacity of the people.
Fillip To Agriculture
India is an agriculture-based economy. Various schemes were launched to support farmers in the Modi regime. Through the PM Kisan, Rs 6000 amount is being transferred to farmers every year. Subsidies on urea, saplings, seeds were given. Through PM Krishi Sanchay Yojana and Saubhagya, various equipment like drip sets, bore wells and solar panels were given. Rs 1.25 lakh crore was allotted for developing infrastructure for agriculture like warehouses, cold storages and rural roads. Kisan rail and Krishi Udaan helped faster delivery of perishable goods. Food produce organisations were developed with Rs 20,000 crores.
While the entire world is grappling COVID-19, the Modi Government launched “Aatmanirbhar Bharat” worth Rs 20 lakh crores to turn crisis into opportunity. ECLGS scheme sanctioned collateral free loans amounting to Rs 3.48 lakh crores benefitting nearly 1.19 crore MSMEs. Through PM Garib Kalyan Yojana, the largest food security programme in the world, 5kg cereals and 1 kg pulses per person were provided to 80 crore poor from March 2020 till today. Money of Rs 500 was transferred per month to women having Jan Dhan accounts during lockdown. Over 200 crore COVID-19 vaccine doses were given free of cost to citizens. PLI (Production Linked Incentives) scheme aimed at offering Rs 2.4 lakh crore incentives in key businesses manufacturing in India have got good response from electronics, auto components and pharma and is expected to add 4 per cent annually to India’s GDP. One example being mobile manufacturing units went up from 2 units in 2014 to 200 units in 2021 and production from 6 crores in 2014 to 30 crores in 2021.
Way ahead to Become Vishwa Guru
The Modi Government inherited India as a part of Fragile Five in 2014. India is now the 2nd largest manufacturer of mobile handsets. India recorded highest ever merchandise export value of nearly Rs 53 lakh crores (676 billion dollars) in 2021- 2022. From just being importer India is now exporter of defence equipment with exports of Rs 13,000 crores in 2021. India’s agricultural exports crossed Rs 3.95 lakh crores registering 19.92 per cent growth. Fiscal consolidation in budgets brought down fiscal deficit to 3.2 per cent and current account deficit to 1 per cent. From having meagre forex reserves in 2014, India became the fourth largest forex reserve holder as of December 2021 ahead of China, Japan, and Switzerland. On June 4, 2021, India became 5th country in the world to have Forex reserves exceeding 600 billion dollars. Those who heckled about usage of UPIs by coconut vendors now realise that coconut vendors to car vendors are easily using UPI services. Manufacturing growth, inflation, fiscal deficit, forex reserves and FDIs showed better performance in 2014 -2019 than 2009-14.
The Modi Government has ensured the welfare of the needy along with launching development-oriented welfare measures that were designed to boost development. India has now become the fastest growing and fifth largest economy in the world. This transformation happened in just 6 years. Determined India now aims to become