India may well be on track to becoming the third largest economy in the world in the coming years, but a number of factors including the performance of other countries, skilling of our workforce as well as a sustained revival in domestic consumption demand would play a key role in achieving this. The Indian economy, however, has the potential to grow by a robust 6.5–7% per annum, according to economists.
“India is very much on target to becoming the third largest economy based on the IMF’s projections as well as domestic estimates. Our real rate of investment is about 33%, the current account deficit is lowering and our demographic dividend is coming into play,” said DK Srivastava, Chief Policy Adviser, EY, while noting that India has also managed to meet the challenges thrown up by the Russian-Ukraine war that has led to supply side bottlenecks for many countries.
He, however, stressed that creating productive jobs for the labour force while adopting new technologies such as AI to enhance the productivity must be taken up. “A large part of the government budget would have to be spent on training and re-skilling the labour force,” he said.
However, climbing mountains always comes along crossing hurdles. The journey might seem glorified but here is what we think India should focus on to become the world powerhouse, perhaps the World Number 3 :
Need to increase per capita income
Bandhan Bank Managing Director Chandra Shekhar Ghosh on Tuesday said there is a need to increase per capita income to make India third largest economy in the world. The per capita income of the fifth largest economy, as per the government data, stood at Rs 98,374 in 2022-23.
India ranks 130th globally in terms of Human Development Index comprising per capital income, education and health parameters, Speaking at an event organised by CII here, Ghosh said, to make India third largest economy in the world or to achieve $5 trillion size, per capita income has to increase.
We need to focus on per capita income improvement so that people have higher income and therefore spending would increase. Ghosh said financial inclusion and access to institutional credit play an important role in improvement of per capital income. Under the PMJDY, around 51 crore zero balance bank accounts have been opened so far. It aims to ensure comprehensive financial inclusion in the country by providing universal access to banking facilities and basic bank accounts to every unbanked adult.
He acclaimed that the Government launched numerous schemes in order to achieve the ultimate feat but the country demands more.
Better Skillset and Education
There have been incentives and helps provided by the government to improve the standards for skills being embedded into the youngsters but the fact remains Indians as a student always hunt for universities and educational institution abroad and the workers tend to employ themselves abroad which results in brain drain.
In fact India’s education system ranks 32nd in the world with the literacy rate of just above 70%. Government’s primary aim should be to develop talented minds within the vicinity of the country and trying to keep them. The reason China is light years ahead of India in terms of labour and skillset and even education for that matter is seamlessly based on their investments done in the past.
The latest scenario demands a reshuffle or a reboot in these sectors. A heap of incentives and a rejuvenated labour force programme should be inculcated in the country which not only helps the labour section of the society but also provides a helping hand to all the working class of the country.
Need for Entrepreneurial Ambitions and Startups
Since 2016 there have been many startup incubator centres and the Government is keen on investing in this sector and has many incentives launched but the area where question arises is; the Government is wholeheartedly supporting the quest but have there been opportunities for the same?
The country registered over 1,00,000 startups this year which is more than exponential growth when compared to just 450 startups in 2016. The Government needs to provide and prioritise these startups over the foreign companies. USA has huge tech startups such as Meta, Google, Apple and others; similar on that lines India needs to create their own legends and have to think beyond the country’s current major players.
Other nations like Japan and USA are tech savvy. Their inventions and creativity is beyond human imagination. India has the talent but lacks the exposure. Even though India is taking strides in AI declaration and formulating governing rules for the same; somewhere the country needs to implement AI and startups and other home-grown countries to compete with the world.
In a nutshell, India needs to reduce dependency on abroad and start manufacturing in-house only then can it replace falling China as the manufacturing and production hub of the world.
Better and efficient Infrastructure in India :
Government has made tremendous strides in bettering the country’s infrastructure but we are still below the quality of roads USA, Dubai, Germany and other few country possess. Roads can be a great use to India considering the behemoth lengths and widths of the country.
However, there are many commutable roads in the country which lack connectivity and quality. Especially the ones in Rajasthan. Many states in the country still struggle to find unhindered electricity. Even after spending billions in this area; it seems untapped.
Bringing EVs and other innovative green methods in the transport and communication of the country will prove to be an attractive point for the foreign MNCs trying to enter in India.
Union Minister, Nitin Gadkari has worked out a brilliant plan and according to reports the country is building 40 kms worth of commutable road everyday. That kind of speed and development is a rare sight in the country.
Apart from roads the country needs to invest in buildings like the Surat’s latest Diamond Business Complex. Huge capital projects should be sanctioned in the country which would lower the property cost for home-grown and other foreign companies trying to grow.
The country needs to set up a proper irrigation system in the country so that the farming sector can produce maximum yield and maximise their profits. Since, farmed products are also exported from the country optimised yield and profits would only better the stats.
Mumbai, Bangalore and other tier 1 cities should be prioritised 2nd and other states and cities with loads of space and huge upside potential should be considered primarily for investing and creation of business complexes and other facilities.
Need for Eradication of Unemployment & Poverty:
Unemployment and poverty has been the biggest foes of the country since the independence. Governments changed but the problem remained constant. The country needs to address this as the population of the country will keep growing and if the unemployment persists; the unemployment rate will never decrease.
However, the country has managed to keep the percentage down this year and will remain on the same trajectory the next year as well. If unemployment is not resolved, the government will keep spending huge amounts in incentives for all the youth which will indirectly affect the GDP of the country.
The current Government has managed to keep the poverty rate below however have not been able to eradicate the problem from its roots. The country has witnessed a significant drop of 9.89% in the poverty rate from 2020-2023 and according to the data only 3% of the country’s population is below the extreme poverty line.
Albeit, India cannot be overconfident because of the positives and needs to aim the complete eradication of poverty. The Government has many schemes afloat to break the shackles of poverty; but it still persists. This shows that somethings are lacking and that should be covered with utmost urgency.