Decoding India's decade of growth: A comprehensive review of economic drivers

Drivers of India's growth: As India navigated the past decade, several key drivers propelled its economic growth, marking a transformative era for the nation. The recently published "Indian Economy: A Review" report by the Department of Economic Affairs sheds light on the factors shaping India's remarkable economic journey.

Financial sector rejuvenation

The government's strategic focus aimed at restoring growth potential commenced by reviving the financial sector. Addressing the aftermath of the credit boom until 2020, the report highlights the significant reforms undertaken to strengthen the sector, including the recapitalisation and merger of Public Sector Banks (PSBs) and the enactment of the Insolvency and Bankruptcy Code 2016 (IBC). As of September 2023, the IBC has successfully rescued 2,808 corporate debtors.

Regulatory simplification

Simplification of regulatory frameworks has been a cornerstone of reforms since 2014. The introduction of the Real Estate (Regulation and Development) Act 2016 has fostered transparency in transactions, reducing black money circulation. Regulatory reforms extend to decriminalising minor economic offenses under the Companies Act of 2013, enhancing the ease of doing business.

Taxation overhaul

India witnessed substantial changes in its taxation ecosystem post-2014. Key reforms include the adoption of the Goods and Services Tax (GST), reduction in corporate and income tax rates, and the removal of the Dividend Distribution tax. The GST system has shown improved buoyancy, with rising monthly gross collections from Rs 0.9 lakh crore in FY18 to Rs 1.5 lakh crore in FY23.

Public-private collaboration

A paradigm shift in government-private sector engagement has been pivotal. Initiatives under Aatmanirbhar Bharat and Make in India aim to boost manufacturing capabilities. Production Linked incentives (PLI) attract domestic and foreign investments, while strategic sectors like defense, mining, and space have opened up for private sector participation.

Corporate law reforms

Decriminalisation of minor economic offenses under the Companies Act of 2013 and the elimination of unnecessary compliances and archaic laws have created a business-friendly environment. Repealing the Angel tax and removing retrospective taxation showcase the government's commitment to reducing policy uncertainties.

MSME sector support

The government's focus on progressive reforms for Micro, Small, and Medium Enterprises (MSMEs) has been instrumental in supporting smaller businesses. Initiatives such as the Emergency Credit Line Guarantee Scheme (ECLGS) and revisions in the definition of MSMEs aim to nurture an ecosystem for startups, with the number of recognised startups increasing from 452 in 2016 to over 98,000 in 2023.

Infrastructure boost

Large-scale public spending since 2014 has addressed long-standing infrastructure bottlenecks. Programs like Bharatmala, Sagarmala, and UDAN have modernised road connectivity, port infrastructure, and air routes, respectively, while the National Logistics Policy 2022 supports the overall logistics ecosystem.

Digital transformation

A common thread through the reforms has been the use of technology and digital platforms, fostering efficiency gains, formalisation, financial inclusion, and economic opportunities. Digital infrastructure has played a crucial role in driving sustained and accelerated economic growth.

Inclusive growth initiatives

The government's commitment to inclusive growth is evident through initiatives targeting women empowerment, sanitation, financial inclusion, and healthcare under schemes like Ayushman Bharat. Over the last decade, these efforts aimed to integrate traditionally excluded sections into the mainstream, ensuring active participation in India's growth story.