In the broad landscape of global economies, India stands out for its rapid development and constant resolve to scale new heights. With a long tradition of culture and a population of over 1.4 billion, India has evolved as an economic powerhouse, continually demonstrating its prowess on a worldwide scale. 2023 has proven to be a watershed moment, with India’s GDP surging and cementing its status as a worldwide economic leader.
India’s economy is globally significant. It features a huge, young population, as well as an open, democratic political system. It is presently the world’s third largest economy (PPP) and a major contributor to global economic growth, yet there is still significant untapped potential. With more than one-sixth of the world’s population, India accounts for barely 7 per cent of global output.
India’s achievements under PM Modi will have a tremendous impact on its global economic and strategic weight. The global economy is expected to be increasingly weighted towards Asia by 2035, as India, China, and the ASEAN nations catch up with slower-growing advanced economies. Even with an average annual growth rate of 6%, India’s economy would be more than twice as large as it was in 2017. In terms of purchasing power parity, India’s share of the global economy is expected to rise from 7 per cent in 2016 to about 13 per cent , putting it on par with the United States. According to government data, India’s GDP growth rate exceeds that of major nations such as Russia, the United States, China, and Japan.
India is the only Asian economy that has increased its investment-to-GDP ratio since the pandemic began. Its reliance on imports has also decreased as remittances have increased and global competence centers have emerged, building on India’s past success in business process outsourcing. Remittance volumes have also increased significantly since 2022.
Rather than the closed-economy realities that once defined India, the economy is today more open than China’s at a similar level of development. Trade has accounted for over 50% of India’s GDP over the last decade, up from less than 15 per cent in 1990.
Poverty reduction and rise in employment rate
Both the World Bank and the International Monetary Fund praised India’s world-class digital public infrastructure, which has allowed the government to better focus social programmes and enhance tax compliance.
The World Bank defines poverty according to the International Poverty Line, which sets extreme poverty at $2.15 per person per day, lower-middle income at $3.65, and upper-middle income at $6.85. According to a World Bank estimate, India’s poverty rate was 22.53 percent in 2011 and has dropped significantly even after the terrible pandemic, to 11.9 per cent in 2021.
Human development indices reflect comparable trends of advancement. Access to flushing toilets and cooking gas, infant mortality, and household electricity have all improved substantially during the last decade. A decade ago, 40 per cent of households lacked power; today, that figure has dropped to less than 3%.
India is home to 111 unicorns, with a combined valuation of $349.67 billion. In 2021, 45 unicorns were born with a total worth of US$ 102.30 billion, while 22 unicorns with a total valuation of $ 29.20 billion were born in 2022. India currently has the third-largest unicorn base in the world. The government is also working on renewable energy, aiming to generate 40% of its energy from non-fossil sources by 2030.
According to government estimates, as of December 31, 2023, the Department for Promotion of Industry and Internal Trade (DPIIT) had acknowledged around 117,254 startups, including an estimated 111 unicorns. These startups have collectively created about 1.24 million employment, which has had a substantial economic impact.
EPFO is a social security institution in charge of providing social security benefits in the form of provident, pension, and insurance funds to the country’s organised workforce under the rules of the Employees’ Provident Funds & Miscellaneous rules Act, 1952. In September 2023, the formal job creation under the Employees’ Provident Fund Organisation (EPFO) increased to 1.72 million, up from 1.69 million in August of this year. Over 0.89 million new EPFO members enrolled in September, with 58.9 percent of those aged 18 to 25. This illustrates that the majority of individuals joining the country’s organised sector workforce are young people, many of whom are first-time workers.
Monday, February 12, 2024, Prime Minister Narendra Modi stated that his government has created 1.5 times as many employment in the last ten years as the previous administration.
PM Modi Government Initiatives
Over the years, the Indian government has launched numerous measures to enhance the country’s economy. The Indian government has been effective in implementing policies and programmes that benefit citizens’ financial stability as well as the overall growth of the economy. Over the last few decades, India’s tremendous economic growth has resulted in a significant increase in export demand. Aside from that, a number of the government’s flagship projects, such as Make in India, Start-up India, Digital India, the Smart City Mission, and the Atal Mission for Rejuvenation and Urban Transformation, are designed to create enormous opportunities in India. In this sense, some of the government’s measures to improve the country’s economic situation are listed below:
On January 22, 2024, Prime Minister Narendra Modi introduced the ‘Pradhan Mantri Suryodaya Yojana’. This plan would provide rooftop solar installations to one crore households.
On September 17, 2023, Prime Minister Narendra Modi introduced the Central Sector Scheme PM-VISHWAKARMA in New Delhi. The new scheme intends to recognise and encourage traditional artists and craftsmen who use their hands and simple tools. This effort aims to improve the quality, scale, and reach of their products, as well as incorporate them into MSME value chains.
India’s economic story during the first half of the current fiscal year showed the government’s unwavering support for capital investment, which in 2023-24 was 37.4 per cent greater than the same period the previous year. Capital expenditure took the lead in the 2023-24 budget, with a 37.4% increase in BE 2023-24 to Rs.10 lakh crore (US$ 120.12 billion), up from Rs. 7.28 lakh crore (US$ 87.45 billion) in RE 2022-23. In the current fiscal year, the revenue expenditure to capital outlay ratio grew by 1.2 per cent, indicating a significant shift toward higher-quality expenditures.
India has a tremendous economic opportunity if it can foster an atmosphere that encourages education, training, and job development for the millions of young Indians who are about to enter the labour field. Over the next two decades, India’s working-age population is expected to grow by about 200 million, to more than one billion, becoming the world’s largest. While the rate of increase is predicted to reduce, the working-age share of the population will continue to rise through 2035.
The Modi government’s New Education Policy prioritises job creators over job seekers, skilled youths, and cultivating a research and innovative attitude during graduation. Such actions will further reduce the unemployment rate.
India has made greater strides in innovation and technology than some people realise. Yes, demographics benefit the country, but they will not be the exclusive generator of GDP. Innovation and raising worker productivity will be critical for the world’s fifth-largest economy. In technical words, this means more output per unit of labor and capital in India’s economy.
Following two years of high economic development in 2021 and 2022, the Indian economy has continued to grow strongly during the calendar year 2023. The near-term economic expectation is for continued rapid expansion in 2024, supported by a high increase in domestic demand.
FDI under PM Modi
Over the previous four years, India’s net foreign direct investment as a share of GDP has been three times that of China. Fifteen years ago, flows into China were frequently four times higher than into India. Expats with international knowledge are frequently attracted to foreign direct investment.
Foreign direct investment inflows into India have increased over the last decade, reflecting the Indian economy’s positive long-term growth forecast, which is aided by a youthful population composition and rapidly expanding urban family incomes. India’s nominal GDP in USD terms is projected to increase from USD 3.5 trillion in 2022 to USD 7.3 trillion by 2030. This rapid economic expansion would cause Indian GDP to exceed Japanese GDP by 2030, making India the second largest economy in Asia-Pacific.
According to the UN World Economic Situation and Prospects 2024 study, South Asia’s GDP is expected to grow by 5.2 per cent in 2024, led by India’s steady rise.
The IDU, the Bank’s main half-yearly assessment of the Indian economy, notes that, despite severe global concerns, India was one of the fastest-growing major economies in FY22/23, at 7.2 per cent. India’s growth rate was the second highest among G20 countries, nearly doubling the average for developing market economies. This resilience was supported by strong domestic demand, significant public infrastructure investment, and a growing financial industry. Bank credit growth accelerated to 15.8% in the first quarter of FY23/24, up from 13.3% in FY22/23.
Given the challenges of policymaking in such a huge, diversified country with a federal government, PM Modi has demonstrated his dedication to the development of 1.4 billion people by implementing timely decisions and policies despite harsh conditions and non-supportive opposition on several occasions. The sluggish economy he inherited in his first term was a significant challenge, but he converted it into a source of positive growth and will be an excellent pathfinder if he remains Prime Minister.
Not only India, but the entire globe, needs him; think before voting and avoid choosing the NOTA option.
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