Since gaining independence in 1947, India’s economic revolution has been nothing short of astounding. With a GDP of $2.9 trillion in 2019, the country has transitioned from a primarily agricultural economy to a fast-rising industrial and service-based economy.
Several factors have contributed to India’s economic growth, including its vast and young population, rising urbanization and consumption levels, and openness to trade and investment.
India’s anticipated ranking as the world’s third-largest economy by 2028 indicates its vast economic potential, but it also provides substantial difficulties and possibilities for its future growth.
India’s economy has grown at an exceptional rate recently, averaging 7.5% yearly growth between 2014 and 2019. However, the COVID-19 epidemic has significantly hurt the economy, which will shrink by 7.7% in 2020–21.
The epidemic has made it clear that India has to diversify its economy and lessen its reliance on specific industries, including tourism and hospitality, which were negatively impacted by the pandemic.
India has four significant obstacles that might seriously impede its development prospects if it is to meet its ambitious target of having a $5 trillion economy by 2028. Which are:
The country’s infrastructure has always constrained India’s economic development and competitiveness. In India, issues include bad roads, a lack of ports and airports, erratic power supplies, and low internet penetration.
These elements increase the cost of doing business, reduce the effectiveness of logistics and transportation, and restrict access to markets and opportunities for millions of Indians.
The Indian government has started several infrastructure development projects including Bharatmala Pariyojana, Sagarmala, and UDAN to encourage connectivity and mobility throughout the nation. These actions aim to improve India’s manufacturing sector, create jobs, and entice international investment.
The growth of a knowledge-based economy that can compete in the global market depends on education. To make sure that its workforce has the knowledge and abilities needed for the twenty-first century, India’s educational system has to be updated, made more accessible and made inclusive.
India’s education industry has a number of difficulties, including low enrolment and retention rates, poor teaching and learning results, a lack of resources and facilities, and an imbalance between the need and supply of skills.
To improve worker employability and close the skill gap, the government has introduced a number of skill development initiatives, including Pradhan Mantri Kaushal Vikas Yojana and Skill India. These programs also need to reach out to the underserved groups of society, guarantee quality standards, and adapt to the changing demands of the sector.
More than half of India’s population depends on the agricultural sector for their livelihood, which also accounts for 15% of the country’s GDP. However, agriculture is also dealing with a number of issues that have an impact on its sustainability, profitability, and productivity.
Low agricultural yields, poor irrigation and storage systems, reliance on monsoon rains, effects of climate change, market distortions, and farmer suffering are a few of these.
The Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Act is one of the agricultural reforms that the government has put into place in an effort to boost farm revenue, enhance the effectiveness of the supply chain, and lessen the effects of climate change on agriculture. These changes must, however, also take into account the farmers’ worries about their rights, pricing, and security.
India has to address the rising wealth disparity that poses a danger to its social stability and cohesiveness. With a Gini coefficient of 35.7 in 2019, India is among the most unequal nations in the world in terms of income distribution. Due to a variety of causes, including unequal access to social security programs, work prospects, education, and healthcare, the gap between the affluent and the poor has been wider over time.
To minimize economic disparity and guarantee inclusive growth, the government has introduced a number of programs, including Ayushman Bharat (health insurance), PM-KISAN (income assistance), National Rural Livelihoods Mission (poverty alleviation), etc. To make sure that these programs reach their intended recipients, they must be efficiently targeted, monitored, and reviewed.
India will need to take advantage of four important possibilities that have a great deal of potential for development and innovation. Which are:
India has a sizable and expanding digital economy, which offers several chances for expansion and innovation. To encourage digital literacy, upgrade digital infrastructure, and make use of the potential of the digital economy to spur growth and innovation, the government has launched a number of digitalization programs, including Digital India.
India may benefit from digitalization in a number of areas, including government, service delivery, education, health care, agriculture, and other fields. Millions of Indians might benefit from the creation of new markets, goods, services, and employment as well.
India has the potential to become a major worldwide producer of goods, especially in industries like electronics, autos, and textiles. To stimulate local manufacturing, draw foreign investment, and increase exports, the government has created a number of programs, including Make in India and the Production Linked Incentive Scheme.
India’s economy can be diversified, more employment can be created, income levels can rise, and the trade imbalance can be reduced through manufacturing. Additionally, it might increase India’s technological prowess and marketability internationally.
India is already a top source of services, particularly those related to IT, BPO, and medical travel. These industries have a great deal of room for expansion. The National Health Stack and the National Digital Health Mission are two of the government’s recent efforts to support the expansion of the healthcare industry.
India can raise its value addition, improve its standard of living, and make use of its educated and skilled labor population by utilizing services. Additionally, it may enable India to increase its power and impact globally.
India has established aggressive goals for renewable energy, including 450 GW of capacity by 2030. This offers the renewable energy industry some considerable growth prospects. To encourage renewable energy, draw in investment, and lessen the nation’s carbon footprint, the government has established a number of measures, including the National Solar Mission and the National Wind-Solar Hybrid Policy.
India can use renewable energy to fulfill its rising energy needs, improve its energy security, and lessen the impact it has on the environment. In the green economy, it may also open up new doors for innovation and entrepreneurship.
India must overcome a number of challenges if it is to reach its objective of being the third-largest economy in the world by 2028. The provision of necessary resources, services, and opportunities for all may be hampered by India’s population increase, to start.
Second, if the workforce lacks the necessary training and employment opportunities, India’s demographic dividend might also become a demographic burden.
Third, a problem of congestion, pollution, and inequality may arise as urbanization increases.
The fourth issue is that India’s emphasis on digitization and renewable energy may run into issues with price, accessibility, and security.
India has a promising future as a global economic force, but it will need consistent work to navigate the challenges and seize the development prospects. The administration is moving in the correct path by emphasizing digitization, manufacturing, services, and renewable energy.
The implementation, monitoring, and evaluation of these projects must be done well in order for them to be successful. Additionally, dealing with issues like bureaucratic red tape, corruption, and regulatory barriers will be necessary.