The Union finance ministry, in its report titled ‘Indian Economy — A Review,’ anticipates a robust economic growth for India, projecting a rate above 7% in the coming years. This growth is attributed to the strength of the financial sector and ongoing structural reforms. The report also envisions India becoming a $7 trillion economy by 2030.
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Ambitious Goals and Global Ranking
According to the report, India is expected to secure the position of the third-largest economy globally within the next three years, boasting a GDP of $5 trillion. The government, however, has set an even higher goal of achieving ‘developed country’ status by 2047. Despite global challenges and the COVID-19 pandemic, India has climbed to the 5th largest economy with a GDP of $3.7 trillion (estimated for FY24).
Decade of Reforms and Economic Resilience
The report underscores the continuity of economic reforms, especially if the current government secures a third term. Over the past decade, India has implemented substantive and incremental reforms that have contributed to economic resilience. The report credits these reforms for the country’s ability to withstand global shocks and maintain a 7% plus growth rate in the last three years.
Driving Forces Behind Indian Economy Growth
Highlighting the factors driving economic growth, the report emphasizes the strength of domestic demand fueled by private consumption and investment. The government’s policies have also bolstered the supply side through investments in physical and digital infrastructure. Projections for FY25 suggest a real GDP growth of around 7%.
Positive Impacts of Reforms and Global Comparisons
The report cites positive impacts of the 10-year reforms, including the Goods and Services Tax (GST), digitization, technological advancements, and human capital formation. Despite global challenges, India remains the fastest-growing major economy. International agencies like the International Monetary Fund (IMF) recognize India’s resilience, showcasing its ability to grow even amidst unfavorable global economic conditions.
Collaborative Growth and Identified Challenges
To accelerate growth and ensure equity, the report emphasizes collaboration between the Centre and states. However, it acknowledges external challenges, with geopolitical conflicts posing a potential risk. The report suggests that involving state governments in comprehensive reforms, especially at the grassroots level, will make them more citizen-friendly and supportive of small businesses.
Future Reforms for Accelerated Growth
The report outlines key areas for future reforms, including skilling, learning outcomes, health, energy security, and reducing compliance burden for micro, small, and medium enterprises (MSMEs). It also highlights the importance of gender balancing in the labor force. The government’s focus on these areas, combined with favorable assumptions regarding inflation differentials and exchange rates, could propel India towards achieving a $7 trillion economy by 2030.