Indian Economy:
Indian economy has transformed from a mixed planned economy to a mixed middle-income developing social market economy with a significant public sector in strategic sectors. It is the world’s fifth largest economy by nominal GDP and third largest by purchasing power parity (PPP).
According to the International Monetary Fund (IMF), on the basis of per capita income, India ranks 139th in terms of GDP (nominal) and 127th in terms of GDP (PPP). From independence in 1947 until 1991, successive governments followed the Soviet model and promoted protectionist economic policies with extensive Sovietization, state intervention, demand-side economics, natural resources, bureaucrat-run enterprises, and economic regulation. This is known as license raj as indiscipline. The end of the Cold War and the serious balance of payments crisis in 1991 led to the adoption of comprehensive economic liberalization and token planning in India.
Since the beginning of the 21st century, annual average GDP growth has been 6% to 7%. The economy of the Indian subcontinent was the largest in the world for most of recorded history until the beginning of colonialism in the early 19th century. India’s share in the global economy will be 7.2% in 2022 in PPP terms, and about 3.4% in nominal terms in 2022.
In an optimistic declaration, Commerce and Industry Minister Piyush Goyal revealed on December 8 that India is on track to evolve into a $30 trillion economy by 2047. Speaking at the Global Economic Policy Forum organized by the Confederation of Indian Industry (CII), Goyal underscored the collaborative efforts of both the government and industry as the driving force behind this ambitious growth trajectory.
Goyal highlighted the remarkable progress of the Indian economy that India has made, transitioning from the Fragile 5 to the world’s 5th largest economy, bolstered by robust fundamentals. The minister showcased India’s resilience, citing the nation’s $600 billion in foreign exchange reserves that remained stable even during tumultuous times such as geopolitical conflicts and the global pandemic. Notably, investors exhibited unwavering confidence in India, choosing to stay put rather than seeking safer havens elsewhere. Foreign bankers, too, acknowledged the Indian currency as one of the safest globally.
Emphasizing the strength of India’s foreign exchange position, Goyal assured that it could comfortably sustain the country’s imports at the prevailing current account deficit for the next five to six years. This financial stability serves as a testament to India’s attractiveness on the global economic stage.
The Indian economy’s remarkable resilience and growth during a period of global economic slowdown have garnered respect from nations worldwide. Given the substantial size of India’s market, other countries are eager to engage in free trade agreements, further elevating India’s international standing.
Goyal shed light on Prime Minister Narendra Modi’s dedication to infrastructural development, a pivotal component of India’s growth strategy for the Indian economy. He disclosed that capital expenditure (capex) on infrastructure has tripled through government spending alone, excluding the contributions from public-private partnership projects. This underscores the government’s commitment to fostering a robust foundation for sustained economic expansion.
The minister outlined three key pillars propelling India’s growth:
- Prudent Economic Management: India’s economic prowess is managed with prudence, ensuring stability and reliability, even in the face of global challenges. Goyal’s assurance regarding the resilience of India’s foreign exchange reserves reinforces the nation’s commitment to sound economic management.
- Meeting Basic Needs: The government is actively addressing the fundamental needs of its citizens. By ensuring that basic requirements are met, such as healthcare, education, and social welfare, India is creating a strong foundation for inclusive growth.
- Infrastructure Investment: Massive investments in infrastructure signify the government’s forward-looking approach. By focusing on the development of roads, bridges, and other critical facilities, India is not only enhancing connectivity but also laying the groundwork for sustained economic growth.
Goyal’s vision aligns with Prime Minister Modi’s agenda on the Indian economy, emphasizing the importance of a holistic and well-rounded approach to economic development. The substantial increase in infrastructure spending, combined with the government’s commitment to sound economic principles, positions India on a trajectory to become a global economic powerhouse.
As India continues its upward trajectory, the world watches with interest, recognizing the nation’s potential to shape the future of the global economy. The collaborative efforts of government and industry, coupled with a strategic focus on economic pillars, paint a promising picture of India’s journey towards a $30 trillion economy by 2047.
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