India’s Rise: A New Era of Economic Prosperity
Kartavya Desk Staff
- •Syllabus: Economics*
- •Source: PIB*
Context: At the Annual India Leadership Summit in New Delhi, discussions centered on India’s rising economic influence in comparison to China’s historical dominance. With a projected 7% GDP growth and over 151,000 startups, India’s reforms and digital innovations are driving its rapid ascent.
Data points from the report:
• GDP growth projections: India’s GDP is projected to grow at 7% in FY 2024-25, maintaining its status as the fastest-growing major economy (World Bank, 2023).
• Market performance: Indian stock markets delivered a 15% compound annual growth rate (CAGR) over the last five years, while Chinese markets underperformed, with near-zero or negative growth (Ananth Narayan, SEBI, 2024).
• Digital growth: UPI transactions surged from 92 crore in FY 2017-18 to 13,116 crore in FY 2023-24, illustrating rapid digital adoption (Digital India, 2024).
• Startup ecosystem: India is the third-largest startup ecosystem, with 151,000 recognized startups and a 15x increase in investments from 2015-2022 (Startup India, 2023).
• Inclusive financial growth: The PMJDY has facilitated over 53 crore bank accounts, bringing millions into the formal financial system (Government of India, 2024).
Factors pushing India towards a new economic era:
• Digital revolution: Initiatives like Digital India and UPI have driven India’s shift towards a digital economy, making financial transactions seamless and inclusive (Digital India Initiative, 2015).
• Strong market performance: Consistent stock market growth and economic reforms have attracted domestic and international investments (SEBI, 2024).
• Startup boom: Government initiatives like Startup India have fostered innovation and entrepreneurship, driving job creation and economic diversification (Startup India, 2023).
• AI and technology integration: Programs like AI for India 2.0 are positioning India as a future leader in AI, creating a skilled workforce for the future (Global IndiaAI Summit, 2024).
• Inclusive growth policies: Schemes like PMJDY and PMAY-U have promoted financial inclusion and affordable housing, benefitted millions and supported broader economic growth (PMJDY, 2024).
Case Study: India vs. China comparison:
Aspect | India | China
GDP Growth (2024-25) | Projected at 7% (World Bank, 2023) | Projected at 4.8% (World Bank, 2023)
Market Performance (5-Year CAGR) | 15% growth in stock markets (SEBI, 2024) | Stagnant/Negative growth (SEBI, 2024)
Digital Finance | 13,116 crore UPI transactions (FY 2023-24) | Advanced, but slower transaction growth compared to India
Startup Ecosystem | 151,000 startups; 3rd largest globally (Startup India, 2023) | Slower growth due to regulatory crackdowns
Demographics | Younger population with favorable dependency ratio (UN, 2024) | Aging population, posing economic challenges (UN, 2024)
Limitations faced by India:
• Infrastructure deficiency: Despite rapid growth, India still faces significant infrastructure gaps, especially in rural areas, affecting overall productivity (World Bank, 2023).
• High unemployment: A growing working-age population means India must address unemployment and underemployment issues, particularly in the formal sector (ILO, 2023).
• Income inequality: While growth has been robust, wealth distribution remains uneven, with large sections of the population still excluded from economic benefits (Oxfam, 2023).
• Educational gaps: Despite progress, India’s education system continues to struggle with quality and access, particularly in rural and underprivileged areas (UNICEF, 2024).
• Environmental concerns: Rapid industrialization and urbanization have led to environmental degradation, which poses risks to sustainable long-term growth (UNEP, 2024).
Way ahead:
• Skilling programs: Expand programs aimed at upskilling the workforce, particularly in AI and emerging technologies, to address unemployment and underemployment (AI for India, 2024).
• Reducing income inequality: Implement policies that promote inclusive growth and equitable wealth distribution, ensuring that economic benefits reach all sections of society (Oxfam, 2023).
• Educational reform: Strengthen the education system by focusing on quality, accessibility, and alignment with market demands, especially in tech-related fields (UNICEF, 2024).
• Climate-resilient policies: Prioritize policies that promote sustainable industrialization and urban development to mitigate environmental risks (UNEP, 2024).
Insta Links:
• Economic-survey-2024
• “Industrial growth rate has lagged behind in the overall growth of Gross-Domestic-Product (GDP) in the post-reform period” Give reasons. How far the recent changes in Industrial Policy capable of increasing the industrial growth rate? (UPSC – 2017)
• Normally countries shift from agriculture to industry and then later to services, but India shifted directly from agriculture to services. What are the reasons for the huge growth of services vis-a-vis the industry in the country? Can India become a developed country without a strong industrial base? (UPSC- 2014)