india-to-become-second-largest-economy

CONTEXT

According to the IHS Markit Report, India is likely to overtake Japan as Asia's second-largest economy by 2030 when its GDP is also projected to surpass that of Germany and the UK to rank as world's No 3.India's nominal GDP measured in USD terms is forecast to rise from $2.7 trillion in 2021 to $8.4 trillion by 2030

RECHARGING ECONOMY AFTER THE PANDEMIC

  • The pandemic has left many economies in a bad shape, the fear of a high probability of serious breakdown of the health infrastructure has pushed the countries to impose various measures on industrial as well as societal level to control the destruction the pandemic may infuse
  • Various developed as well as developing countries have seen the consequences and its after effects
  • The numerous important segments contributing significantly towards the sustenance and growth of the economy got affected and were failing to make any progress and terms of business or revenue
  • Overall the economies were falling into the dismaying state especially the MSMEs most vulnerable to such slowdown in the economy
  • All financial and economic resources of the country were being focused to provide assistance to the people working in in health ecosystem
  • India has the second highest population in the world and with limited financial resources as well as medical infrastructure, the country was looking most vulnerable to the economic turmoil
  • The major hit sectors of the economy consisted of areas like local manufacturing units, recreation, real estate, education, hospitality, logistics, information technology, retail, aviation etc
  • The services industry contributes highest to the Indian GDP, the state of services during the pandemic was leading to the collapse of economic growth
  • The MSME sector was also one of the worst to get affected by the restricted business activity in terms of import export, transport, supply chains ultimately leading to negligible industrial and retail consumption
  • However, the required government assistance and relief packages provided to the sectors or industries susceptible to the loss turn to be the most important step for controlling the escalation of the disaster

Atmanirbhar Package 

  • When the Indian economy was badly affected due to continuous restrictions on various businesses and social activities, it was the need of hour for the Indian government to come out with a robust economic relief and financial assistance measures
  • The government came out with the comprehensive all inclusive stimulus package- 'Atmanirbhar Bharat Abhiyaan' containing special economic provisions aimed to provide assistance up to Rs. 20 lakh crore for various segments of the society
    • It is almost equivalent to the 10% of country's GDP
    • It included driving focus towards local production and pushing the nation towards self sustenance and uplifting the country's global economic positioning 
  • It was phase wise program focusing on five pillars:
    • Indian economy
    • Infrastructure in the country
    • System
    • Vibrant demography
    • Demand
  • Special focus areas included:
    • Businesses including MSMEs
    • Poor, including migrants and farmers
    • Agriculture
    • New horizons of growth
    • Government reforms and enablers

INDIA'S JOURNEY TOWARDS ECONOMIC GROWTH

  • 75 years after India became a republic, it is poised to rise steadily on the path of becoming a global power, our actions hold tremendous possibilities both for people and world in general
  • It represents India with both opportunity and mandate to envision New India we aspire to create and the world order we wish to shape
  • India's rise is an opportunity to re-imagine an India in consonance with our highest civilizational ideals-joy, sustainable prosperity, responsible freedom, inclusive growth, peace and mutual respect

Focus on MSME Sector

  • The government has implemented numerous ambitious reforms like agricultural supply chain improvements, rational tax systems, simple and clear laws, capable human resources and a strong financial system for reviving the MSME sector post pandemic
  • Collateral free automatic loans for business, including MSMEs guaranteed emergency credit line (GECIL) Scheme has helped businesses including MSMEs with the revenue of upto 100 crore and outstanding credit of up to 25 crore
  • The change in categorisation of micro, small and medium firms in 2020 would help in growth of the MSME sector  without fearing of size and investment limits 

Focus on Agriculture sector 

  • 66% of India's population lives in rural areas and is mostly engaged in agriculture
  • The government has committed to double the farmers' income by 2022
  • The focus has shifted from increasing per acre productivity to gainfully employing farm households to other farm related activities and to improve post production value addition by pooling of land and aggregation of farmers' produce to give growers better bargaining power in the market

Focus on Services sector

  • Services sector contribute to 56.5 percent of GDP but creates only 30% of jobs
  • The government has focused to develop expertise in innovative and emerging technologies like IoT(internet of things), AI (artificial intelligence), VR (virtual reality), ML (machine learning) and their applications
  • The focus on better delivery of infrastructure, education and essential services would also help in creating a large number of jobs and growth

A trillion dollar opportunity in Digital India

  • India's digital consumer base is second largest in the world and growing at the second fastest rate among the major economies
  • Inclusive digital model is narrowing the digital divide within the country and bringing the benefits of technology to all segments of the people
  • India can create upto $1 train of economic value from the digital economy by 2025

WAY FORWARD

  • Ease of doing business: It is absolutely essential to work on a framework that provides ease of business and predictability
  • Private sector participation:It is also a time to redirect energies and providing the environment to encourage private sector investments and innovation

 

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