Factor contributed to India’s economic growth

Source: The post factor contributed to India’s economic growth has been created, based on the article “Making India a start-up nation” published in “Indian Express” on 12th August 2024

UPSC Syllabus Topic: GS Paper 3 – Economy- growth, development, and employment

Context: The article discusses India’s economic growth driven by digital payments, affordable data, and the startup boom. It highlights the need for integrating education, entrepreneurship, and employment to sustain growth and create jobs, with a focus on innovation and academia-industry collaboration.

For detailed information on India’s Economic Growth and challenges read this article here

What is India’s Current Economic Position?

1. India’s estimated nominal GDP in 2024 is $3.9 trillion.
2. India took 60 years to reach $1 trillion GDP, seven years to reach $2 trillion, and five years to reach $3 trillion in 2019.
3. In 2022, India became the fifth-largest economy, surpassing the UK.
4. In FY23, startups and corporates contributed $140 billion to the economy, 4% of GDP.

What are the factors contributed to India’s economic growth?

1. UPI and Digital Payments: The government’s introduction of UPI expanded digital payments to crores of people, boosting financial inclusion.
2. Telecom Revolution: Affordable data, driven by telecom companies, made the internet accessible to over 80 crore people, fueling digital businesses and startups.
3. Pandemic and E-commerce: The COVID-19 pandemic accelerated e-commerce and startups, contributing to economic growth.
4. Startup Ecosystem: India has over 1.4 lakh DPIIT-registered startups, creating 15.5 lakh direct jobs since 2017, with one unicorn added every 20 days.

What Should be Done?

1. Promote Entrepreneurship Among Graduates: If 5% of Indian students chose entrepreneurship, it could lead to 5 lakh new entrepreneurs annually, with 50,000 startups surviving, creating 5.5 lakh direct jobs each year.
2. Increase R&D Spending: India’s R&D investment is only 0.7% of GDP, compared to 3.4% in the US. Increased investment, especially in HEIs, can drive innovation and job creation.
3. Improve Academia-Industry Linkage: The US tech transfer model contributed $1 trillion to industry output in 20 years. India should replicate this model to enhance economic growth.
4. Measure HEI Success by Entrepreneurship: Instead of focusing solely on job placements, HEIs should also prioritize creating student-led entrepreneurial ventures. Institutions like IITs and IIMs support the startup ecosystem, with around 1 crore graduates entering the workforce annually.

Question for practice:

Discuss the factors that have contributed to India’s economic growth and the steps that can be taken to sustain it