The Growing Economy of India and its Impact

In 2023, at the G20 conference, India is said to be the hope for the future. The current progress of India is monitored by every economy in the world and every partner nation looks at India as the flag bearer of the age of globalization India as a nation has set its primary target to become a developed economy by 2047. However, to reach this exciting era, it has taken a monumental effort by the citizens of India to expand their possibilities and to search for them beyond their limits.

The worldwide economy is facing challenges in sustaining its recovery after the COVID-19 pandemic due to ongoing shocks. In 2024, issues like supply chain disruptions have resurfaced, potentially affecting global trade, transportation expenses, overall economic output, and inflation. While India is not immune to these challenges, is has successfully navigated through the trials of COVID-19 and the energy and commodity price shocks in 2022, and remains cautiously optimistic about handling the emerging disturbances.

India as a country has made significant strides in this era of uncertainty, the Union government has made tremendous investments in the public sector, fairly close to 3X than what was done historically. Infrastructure investments have made the corridor very easy to attract international investments for setting up business in India. The financial sector is healthy. India’s balance sheet is stronger. It is willing to lend and is lending. Non-food credit growth, excluding personal loans, is growing at double-digit rates. Jobs have been generated, leading to a significant reduction in the unemployment rate from the peak levels observed during the Covid period. The participation of the workforce has notably increased, particularly among women. There has been a consistent rise in new subscribers to the Employee Provident Fund (EPF) after the COVID period, particularly among the younger demographic.

Source: World Bank

Factors Making the transformation possible

 

1. Domestic Initiatives - Measures like the Goods and Services Tax (GST) and the Insolvency and Bankruptcy Code (IBC) have optimized procedures, improving the general business climate. India's demographic advantage is another pivotal element in its prosperity. The youthful and dynamic population acts as a catalyst for economic development. With a substantial portion of its citizens falling within the working-age category, India possesses the capability to boost productivity, foster innovation, and drive consumption, making a substantial contribution to overall economic growth.

2. Digital Transformation – Multiple Initiatives such as Aadhar which has given a digital identity to every citizen of India, e-KYC which has streamlined the entire transparency procedures in the Indian context, Digilocker which has made the storing and issuing of credentials easier than ever and UPI which has created a massive impact in terms of the digital payments systems to which the entire world wants to try out a hand have been integral components of the digital infrastructure transformation model which has helped it towards more inclusion and better standard of living for all in the country. Involvement of futuristic technologies such as AI and Blockchain to name a few have spearheaded the advancement track of financial technology in India.

3. Sustainability initiatives - In the face of developmental hurdles, India has established ambitious sustainability objectives, particularly in the fight against climate change. The Lifestyle for Environment (LiFE) initiative, unveiled during COP26, underscores the importance of sustainable living and has become an integral part of India's energy transition strategy. The incorporation of the LiFE initiative into various policies within the energy transition strategy provides valuable insights for the global community, showcasing a comprehensive and cost-effective approach to addressing climate change.

How is this fast-paced economy of INDIA changing the dynamics of the people?

 

India has seen an upcoming trend in terms of the rise of the younger workforce which is more financially equipped in terms of managing personal finances and creating a more subtle investment decision paradigm for themselves. The plethora of information available in this decade as compared to the time before this, has been a boon for the change in understanding the domain of finance and its importance. The financial literacy rate has grown substantially.

From mobile banking to online payments and insurance; the country has a huge number of online financial services users. This helped improve India’s financial literacy as the awareness and ease of insurance and banking increased. The number of transactions concerning digital payments in India grew 5x from 1,004 crores (10.04 billion) in 2016-17 to 5,554 crores (55.54 billion) in 2020-21. Furthermore, the value of fintech transactions has risen at a CAGR of nearly 20% to US$ 138 billion in 2023 from US$ 66 billion in 2019. This increasing trend will be the biggest active ingredient for the ambitious project of India becoming a developed economy by the 100th year of its Independence.

Impacts of the Growing economy on its future

India’s growth has been a major factor in attracting newer businesses from developed economies. India has all the necessary attributes, right from abundant space, diversified workforce and advancement on the technological front. The FDIs have been substantially rising over the past few years which has helped India tackle the problem of Inflation, Unemployment which it has gone through in the past. India is increasing its foothold for becoming the prime destination for businesses. It is also fostering the development of homegrown Indian brands to showcase their pure talent to the entire world.

India along with this growth has to go toe-to-toe on several fronts to cope with the increasing demand, in terms of building strong and resilient infrastructure looking towards the future, upskilling the workforce for building new talent and balancing out its overall economic outlook for achieving its vision 2047. India is one of the only nations with an abundance of possibilities ahead and is on the path to success in the coming years. With the number of investments coming in and the uproar of the Indian companies abroad, it is only a few years from now when everyone will see the Indian economy standing tall amongst the other giants of the world!!