India is expected to become a worldwide economic giant in the future

Although there is less chance of a worldwide recession now, worries about inflation are growing, which raises new concerns about the viability of the world’s financial system.

This year, the IMF, World Bank, and well-known rating agencies have forecasted a further slowdown in global growth. Downside risks to the global economy include the escalation of the current Middle East war, financial strain, ongoing inflation, and a downturn in international commerce.

In addition, a possible debt catastrophe is hanging over the world economy. According to the Global Debt Monitor published by the International Monetary Fund (IMF), the combined sum of public and private debt worldwide has reached USD 235 trillion, or 238 percent of the world’s gross domestic product.

Due to the fact that almost half of the world’s population is voting in this year’s elections, there is also a serious fear that financial responsibility may suffer.

Despite all of this negativity, international organizations and top rating agencies see India as a global economic giant on the rise.

In its monthly economic assessment, the central bank of India states that “there is a growing optimism that India is on the cusp of a long-awaited economic take-off.” India is well-positioned to continue being the major economy with the quickest rate of growth, exhibiting resilience in the face of supply chain headwinds and geopolitical obstacles.

Global growth is predicted by the Organization for Economic Cooperation and Development (OECD) to be 3.1% in 2024 and 3.2% in 2025.

Nonetheless, India is expected to develop at the quickest rate among the main emerging countries, at 6.6%. Brazil’s GDP is expected to increase by 1.9% and China’s by 4.9%.

The growth of the advanced economies of the US, UK, and Euro area is estimated to be only 2.6%, 0.4%, and 0.7%, respectively.

India’s growth has recently been revised higher by the IMF, the World Bank, and several other rating agencies, including Moody’s and S&P.

Strong domestic demand and an increasing working-age population are the main reasons for the Indian economy’s predicted strength in 2024 and 2025, according to the IMF’s April 2024 World Economic Outlook.

The RBI’s monthly economic report brought attention to the sharp decline in poverty in India, drawing attention from observers across the world. In his electoral speeches, Prime Minister Modi claimed that 23 crore Indians have lifted themselves out of poverty in the previous ten years.

According to data released by the World Bank, just 12.9% of Indians were living on USD 2.15 per day, the threshold for severe poverty, at the peak of the COVID-19 epidemic in 2021.

According to recent estimates, India’s severe poverty may be almost dead, which would be a stunning change for a nation that was previously known for its lack of.

If we discuss the development projects carried out in the last 10 years,. India’s electricity industry has reached 100% electrification in terms of infrastructure.

Government data shows that although metropolitan regions have 23.5 hours of daily electricity availability, rural areas now have 20 hours. Furthermore, India has emerged as the fourth-largest generator of renewable energy globally.

India is driving innovation and research in green hydrogen energy with great vigor. Numerous incentive programs for investment in the industry have been introduced by the government.

based on estimates from the World Economic Forum (WEF), by 2030, 50 million net jobs and a $1 trillion economic effect will come from green energy.

India’s road and highway industry has expanded quickly during the last 10 years. India will have the second-biggest road network in the world by the end of December 2023, with around 66.71 lakh kilometers of road network.

Another area in which India has led the way is the digital revolution; seven nations, including France, the United Arab Emirates, Sri Lanka, and Mauritius, have embraced India’s UPI for financial transactions.

With more than 93% of villages having broadband connections and the world’s biggest number of digital transactions, India is quickly rising to prominence in the digital space.

The Open Network for Digital Commerce (ONDC) and other e-commerce platforms are enabling small enterprises to access internet markets.

The government’s focus on digital public infrastructure is increasing employment, productivity, and efficiency while also bringing in more unreported income for the coffers of the state.

In terms of commerce, India reached a record high of USD 778 billion in exports in FY24, even if global trade has slowed down.

India is now the second-largest developing country and the seventh-largest service exporter in the world. India outperformed the global average in 2023 for service exports, according to UNCTAD.

India is predicted by fDi intelligence to rank among the top 10 economies in terms of the pace of foreign direct investment (FDI) in 2024.

The country’s foreign currency reserves have grown by USD 21.7 billion in 2024, the largest among major reserve-holding countries, despite a net outflow of USD 1.1 billion from Indian stocks in April.

With USD 644.2 billion in forex reserves as of the end of December 2023, it is enough to pay almost all of the country’s foreign debt as well as more than ten months’ worth of anticipated imports for 2024–25.

In 2023–24, gross inbound foreign direct investment (FDI) was steady at USD 71.0 billion, down from USD 71.4 billion the previous year.

According to RBI statistics, manufacturing, power and other energy, computer services, financial services, retail and wholesale trade, and other sectors accounted for more than 60% of the FDI equity flows.

More than 80% of the flows came from Singapore, Mauritius, the US, the Netherlands, Japan, and the UAE. Net foreign direct investment (FDI) decreased to USD 10.6 billion in 2023–24 from USD 28.0 billion in the previous year, mostly due to increased repatriation.

Finance Minister Nirmala Sitharaman urged the sector not to disregard manufacturing, as some economists advise, during her speech at the CII annual summit on May 17.

“India needs to boost its manufacturing share in global value chains through policy support,” the speaker said. The IMF predicted that India would contribute 18% to global growth over the next five years, starting in 2023, so between 2023 and 2028, we can expect a dynamic India that will contribute 18% to global growth. As a result, we need to increase the sophistication of our product manufacturing and investigate how best to support this with policy.”

Respected banker K V Kamath responded to FM’s call for manufacturing by saying, “Manufacturing will happen on its own if India grows at 7–7.5 percent.” It will occur naturally. When I consider everything that has been done—clean bank balance sheets, prospects for development, and so on—I think the Indian economy is going to perform really well.”

Ajay Piramal, Chairman of the Piramal Group, commented on India’s success story, saying, “We’ll be the third-largest economy, maybe a USD 40 billion economy.” Even today, in the next few years, we will have the third-largest economy, I believe, by 2029. We will only be ahead of the United States and China. So that’s a significant advancement for the nation.

Government initiatives are encouraging the emergence of new, creative industrial sectors. The 14 designated sectors’ Production-Linked Incentive (PLI) programs, which have a total estimated cost of Rs 1.97 lakh crore, are now varying in their phases of implementation.

EVs, EV batteries, hydrogen electrolysers, pharma, food processing, and electronics are a few of the industries that benefit.

A significant disruptor in the manufacturing area is the electric vehicle (EV) market. The government unveiled a new EV policy in March in an effort to spur investment in the industry.

Under the new EV policy, companies that spend USD 500 million to establish a manufacturing unit in India are eligible to import fully built units (CBUs) at a concessional 15 percent charge for a period of five years.

By the end of July, the new policy is probably going to be put into effect. Businesses will have 120 days to submit an application under the program. This will provide a window of opportunity for foreign electric vehicle makers, such as Tesla, to join the Indian market.

India’s mobile phone market has grown significantly in the electronics industry. The manufacture of mobile phones in India has increased 21 times in the previous 10 years, from Rs 18,900 crore in 2014–15 to Rs 4.1 lakh crore.

India is now the fifth-largest mobile phone exporter in the world, with USD 29.1 billion in FY24 compared to USD 11.1 billion in FY23, mostly due to iPhone shipments.

Recent India CPI data shows that consumer demand from the rural market is growing at a faster rate, suggesting more growth potential in the years to come.

April 2024 saw a year-over-year increase in goods and services tax (GST) receipts of 12.4%, breaking the Rs 2 lakh crore barrier for the first time.

According to the S&P Global Outlook Report, the Indian consumer market is projected to grow by 100% by 2031. In India, it is predicted that consumer expenditure on food will reach USD 1.4 trillion, while spending on financial services will reach USD 670 billion.

All of this suggests that India has emerged as a major force in the international economy over the last ten years, drawing attention from investors, decision-makers, and companies across the board.

reduced tariffs, reduced labor costs, and special incentives from the Indian government will all continue to draw in a lot of investors, especially given the country’s growth rate, which is more than double that of other developing market nations.