Discover the 6 key facts on how India plans to achieve its goal of becoming a USD 7 trillion economy by 2030, through strategic investments in various sectors and initiatives.
India’s growth story is at a turning point. It is uniquely positioned among major economies with its large and growing middle class and a young working-age population. Currently, the world’s largest democracy is maintaining its lead over the UK as the fifth-largest economy in the world. The government, on its part, is taking steps to make India a $5 trillion economy earlier than the International Monetary Fund’s forecast year of 2026-27.
As per the recent analysis by global brokerage firm Deutsche Bank, the Indian economy seems set to double its current annual GDP of close to USD3.5tn to USD7tn by 2030. Achieving such high growth consistently over a medium-term time frame will need more than demographics or consumption, often recognized as India’s twin strengths.
The brokerage looked at a multitude of other factors that will continue to drive India’s growth trajectory through the current decade. It said that the likely positive impact of a young population will be complemented by a slew of policy measures to spur on growth. Furthermore, digitization has added to productivity, financialization has vastly reduced the parallel economy and the transition to clean energy will also increase efficiency.
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Overview of India’s Plan to Achieve a USD 7 Trillion Economy by 2030:
1. Per capita GDP
In 2006-07, China’s per capita GDP was at the same level as India’s current per capita GDP. This indicates that while India has made significant progress in the past decade, China has also seen substantial growth since then, becoming the world’s second-largest economy.
2. Demographic dividend
India has now overtaken China to become the most populous country in the world. The country is forecast to add 97 million people to its working population over the next 10 years. With the current median age at 28.4 years and rising to just 31.7 by 2030, the demographic advantages of young populations are ready to be utilized.
Surprisingly, India’s working-age population is exactly the same as China’s in 2007. In this comparison, the overall GDP and per capita GDP are also comparable.
Over the next decade, India will enjoy the largest workforce growth of any single country in the world and account for 22 percent of global workforce growth.
India has also become home to the largest middle class in the world, now estimated at 371 million, which will continue to provide purchasing power from within. The combination of a young population and a huge middle class bodes well for consumption over many decades to come.
The report said that a number of reforms have also paved the way for women in rural areas to participate in economic activities rather than only do household-related activities – a major demographic change.
3. Policy-led transformation
Creating jobs for such a large population can be a challenge for any government, perhaps more so in a democracy. A string of reforms have been executed which have increased productivity, reduced subsidy leakage, provided welfare and created opportunities for economic enterprise.
Fingerprinting and iris scanning a billion people for Aadhaar, linking it to the financially inclusive low-cost bank account (Jan Dhan) and connecting this to a mobile phone number for communication was only the beginning.
This JAM Trinity (Jan Dhan account, Aadhaar, Mobile) has plugged subsidy leakage and through the Direct Benefit Transfer has helped millions. This also forms the backbone of identity-proof systems across platforms nationally.
A massive push to create a road network is ongoing, with a daily construction of 36 km. A total of 73,000 km of roads has been built over the past 10 years.
The Production Linked Incentive scheme for the manufacturing industry has incentivized new investments across sectors with an aim to create 6 million jobs. Electronic manufacturing has been the first sector to benefit with many more global corporations opening their shops.
4. Shifting to clean energy
India is in the process of executing an ambitious plan for a shift to cleaner energy sources. Renewable energy promises to be an enabler of several key strategic objectives such as: advancing sustainable economic development, improving energy security and mitigating climate change.
In recent years, India has made remarkable progress in providing access to electricity and clean cooking methods for its population. Nearly 100 percent of household access to electricity was achieved in 2019. In parallel, the share of biomass in the energy mix has declined by more than half.
In terms of renewable energy targets, India has become the only G20 nation to achieve its 2030 targets from COP21 – and no less than nine years ahead of schedule in 2021. As regards the new national energy pledges from COP27, India is poised to add over 340 GW of renewable capacity by 2030, taking renewable capacity contributions above 60 percent.
5. Digital revolution
Aided by its large and thriving information technology sector, the government has digitized not only most of its services but also enabled stacks for vertical services like payments and e-commerce marketplaces. On the UMANG app, a massive 1,682 services are available to citizens. Decades-old land records are being digitally converted for minimizing litigations and improving ease of transfer.
The latest initiative through the Ayushman Bharat Digital Mission is to integrate digital health infrastructure including personal health records. In fact, the world’s largest-ever vaccination drive happened through the digital channel on the Aarogya Setu app which was created in a matter of weeks.
The UPI (Unified Payments Interface) is probably the most successful digital payment stack worldwide. Linking all banks and account holders through mobile numbers enables individuals to transfer money to each other or to businesses seamlessly. It has now the highest payment transaction volumes globally – 2-10 times those of many developed nations.
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Open Network for Digital Commerce (ONDC) aims to revolutionize e-commerce, by offering a network-centric model for connecting buyers and sellers, irrespective of the platforms they originate from, a UPI for online marketplaces.
Each of these initiatives has boosted productivity, sharply reduced transaction costs and leapfrogged the country into a digital era in a way unparalleled across the world.
6. Financialization
Enabled by the JAM trinity, millions of people have been integrated into the banking system. The Goods and Services Tax (GST) was implemented with many hurdles and snags but now contributes almost USD 20 billion on a monthly basis to the government’s coffers. Banking formalization, increasing compliance through digital payments and Covid-induced low-interest rates has led to higher allocation into equity markets, both through mutual funds and directly.
The number of Demat accounts now exceeds 108 million – having doubled just in the last two years. Participation in equity mutual funds through Systematic Investment Plans (SIPs) has increased, making the domestic retail investor the largest public participant in the markets, eclipsing foreign portfolio investors, whose actions had previously determined market direction for years.
(Copy Right @ India CSR)
