News Highlights:
India’s Economic growth: According to International Monetary Fund (IMF) Managing Director, India will alone account for 15% of the global growth in 2023, maintaining its status as a relative “bright spot” in the global economy.
Key takeaway:
India’s performance has been quite impressive, with a high growth rate of 6.8% making India the fastest growth rate among major economies.
Key Points:
- GDP Projection:
- In terms of value, the size of the Indian economy stood at USD 2.7 trillion in 2021, which is projected to grow to USD 8.4 trillion by 2030.
- This boom is enough to overtake Japan, making India the second-largest economy in the Asia-Pacific region by 2030.
- India’s growth rate is projected to be 8.2% in 2021-22, compared to a decline of 7.3% in the previous fiscal.
- However, the momentum of the current financial year(FY) will also continue in 2022-23, and India will achieve 6.7% growth.
- Role of Different Sectors:
- The manufacturing, infrastructure and services sectors, along with the e-commerce sector, significantly boost India’s growth rate.
- Not only this but due to increasing digitisation, the e-commerce market will become bigger in the coming times.
- According to a report, 1.1 billion Indians will have internet by 2030; in 2020, this number was 500 million.
- Growth Rate:
- Overall, the future of the Indian economy looks solid and stable, making it the fastest-growing country for the next decade.
- In the long term, technological developments like the infrastructure sector and startups will also play a significant role in sustaining India’s rapid growth rate.
- Being one of the world’s fastest-growing economies will make India one of the most critical long-term growth markets for multinationals in a wide range of industries, including manufacturing industries such as autos, electronics and chemicals, and services industries such as banking, insurance, asset management, healthcare and information technology.
- FDI Inflows:
- The significant increase in Foreign Direct Investment (FDI) inflows to India that has been evident over the past five years continues with strong momentum in 2020 and 2021.
- It is being boosted by large inflows of investments from global technology Multinational Companies (MNCs) such as Google and Facebook that are attracted to India’s large domestic consumer market.
- Current State of India’s Economy:
- India’s GDP at current prices stood at USD 694.93 billion in the first quarter of FY22, as per the provisional estimates of gross domestic product for the first quarter of 2021-22.
- India is the fourth-largest unicorn base in the world, with over 21 unicorns collectively valued at USD 73.2 billion.
Issues Related to the Indian Economy:
- Slowing Exports and Rising Imports:
- The slowing growth of the manufacturing sector at 4.8% is an area of worry.
- Also, imports being higher than exports is a matter of concern.
- Rising Inflation:
- There has been a continuous rise in inflation of about 6% for seven straight months.
- The Indian economy faces headwinds from higher energy and commodity prices that will likely weigh on consumer demand and companies’ investment plans.
Pic Courtesy: Freepik
Content Source: The Hindu