Indian economy at a glance: Leading stable, holistic economic growth

Indian economy: In the past nine years, India has rapidly advanced itself from the 10th largest economy to its current standing as the fifth largest economy in the world. Backed by several initiatives such as digital transformation and innovation, a favourable environment for businesses, and infrastructural development, the country has taken strides in placing itself among the biggest stakeholders of the world, with it today hosting the prestigious G20 Summit in New Delhi, having welcomed world leaders such as US President Joe Biden, UK Prime Minister Rishi Sunak, Japan Prime Minister Fumio Kishida, and German Chancellor Olaf Scholz, to name a few. 

However, even though the country has come a long way in achieving its economic goals and sustaining the standards, there is still a long way to go before achieving better numbers for economic equality, financial accessibility, employment, and infrastructure. 

Foundations of a better future

With developments encompassing every aspect of the life of common citizens, India has achieved significant milestones despite multiple challenges. According to the Indian Economy@75 Report by the Institute of Studies in Industrial Development, India has lifted more than 50 crore people out of extreme poverty with a continuous decline in the poverty headcount ratio.

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Apart from that, India has also made steady progress in human development with focus on health and education with adult literacy and life expectancy at birth both increasing consistently over time. In 1995, not more than 50 per cent of the population of the country had access to electricity. Today, 99.6 per cent of the total population has access to electricity, according to the World Bank, with every village in the country having been electrified.

Growing Indian market

S&P Global in its report on India’s future said, “Our answer to India’s sustained growth question is a conditional yes. We expect India to grow 6.7 per cent per year from fiscal 2024 to fiscal 2031, catapulting GDP to $6.7 trillion (Rs 5,56,93,750 crore) from $3.4 trillion (Rs 2,82,62,500 crore) in fiscal 2023. Per capita GDP will rise to about $4,500 (Rs 3,74,100).”

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The Indian consumer market will more than double by 2031, surging to $5.2 trillion (Rs 4,32,25,000 crore) from $2.3 trillion (Rs 1,91,18,750 crore) in 2022, according to S&P Global Market Intelligence’s Global Consumer Markets Service. This expansion in the local consumer market is likely to be driven by the increasing population and a change in Indian spending habits over time. 

According to the same report, consumer spending on food is likely to rise to $1.4 trillion (Rs 1,16,37,500 crore) by 2031 from $615 billion (Rs 51.12 lakh crore) in 2022. On the other hand, the expenditure on financial services will climb to $670 billion (Rs 55.69 lakh crore) from $280 billion (Rs 23.28 lakh crore).

India is a leading marketplace for software and business process outsourcing, consistently leading the list of Asian Countries in AT Kearney’s Global Services Location Index. The employment and revenue generated by international businesses operating in Indian borders directly benefit India’s long-term economic ambitions. 

“Multinationals are now buoyant about the prospects of investing in India, and the government is helping their cause by investing in infrastructure as well as supplying land for building factories,” says Upasana Chachra, Chief India Economist, Morgan Stanley.

India is also a prominent player in the production of compact cars and two-wheelers, additionally, India is the world's largest milk producer along with the second-largest producer of several crucial agricultural commodities. India is a leading producer of wheat, sugarcane, groundnut, vegetables, fruit, and cotton.

Persisting challenges

While world-leading financial institutes are optimistic about the future of India’s economy in upcoming years, some key challenges still persist which need rigorous collective efforts to improve on. Despite being the fifth largest economy in the world, India ranks 107th out of 121 countries in the Global Hunger Index. The decline in India’s ranking in food security indexes is in stark contrast with the fact that India is the world’s second-largest wheat producer, according to the International Grains Council’s July report. 

India ranks 107th position in the Global Hunger Index | Image credit: Unsplash

India is the world leader in the production of protein-rich milk and pulses and ranks second in the production of sugarcane, groundnut, vegetables, and fruit. However, undernourishment, child stunting, child wasting, and child mortality are on a concerning level.

The growth of the Indian economy also includes the harsh reality of unequal distribution of resources. According the to report by the Institute of Studies in Industrial Development, “Income and wealth in India are getting concentrated at the top one per cent of the population while the bottom 50 per cent of the population is getting marginalised over the years.” The share of the top one per cent of India's wealth has increased to 42.5 per cent from 11.9 per cent between 1961 to 2020, while the share of The bottom 50 per cent has gone down to just 2.8 per cent from 12.3 per cent.

Investing in India’s decade

While we are dealing with these long-persisting challenges, foreign investors are excited about the future of the Indian economy. In Morgan Stanley’s India’s Impending Economic Boom 2022 report, Chetan Ahya, Morgan Stanley’s Chief Asia Economist said, “In the coming decade, as India’s economy transforms, we think that it will be increasingly relevant for global investors in a similar way that China is today.”

“We think that India offers the most compelling growth opportunity in Asia in the coming years,” Ahya added. 

S&P Global in its India’s Future report published on August 2023 also said, “A massive domestic market, along with gradually improving global competitiveness, is helping India draw foreign investment. The country has one of the largest domestic markets worldwide, and growth is poised to surpass most other emerging nations.”