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Source: The post is based on an article “Becoming The Global Factory: How To Nail It This Time” published in The Times of India on 28th January 2023.
Syllabus: GS 3 – Indian Economy
Relevance: About the factors leading the improvement in the Indian economy
News: India has seen economic growth in recent years and received $84 billion in foreign direct investment despite declining global demands, pandemic and war.
This shows that India has huge potential to attract additional FDI in the real sectors.
How is India in a better economic position?
Implemented systematic changes: India is in a better position now because of numerous systematic changes made by India in telecommunications, power, infrastructure and talent. India also has a huge educated population with most of them being youth.
Increasing Per Capita Income: According to a report by Morgan Stanley, the number of households earning over $35,000/year will increase fivefold in the next decade, reaching over 25 million.
This will increase the GDP to more than $7. 5 trillion by 2031 and an 11% annual compounding of market capitalisation to $10 trillion over the next decade.
Increase in manufacturing: India is transitioning from being a global office to a global factory in the manufacturing sector. The combination of data and technology will help India in leading the world.
India is currently the fifth largest economy in the world and is on track to surpass Japan in the next five years and be on a par with Germany.
Growth of the banking sector: The improvement in the banking network in the country has improved the flow of funds and given a boost to the number of bank accounts. The bank account has increased from 43 per 1,000 people in 1972 to about 1,600 per 1,000 now.
Other Initiatives: Such as Production-Linked Incentives, the China Plus One strategy and plans like Gati Shakti have given a boost to the overall economy of the nation and have ensured ease of doing business in India.
Increase in FIIs: India has also been the destination for large Foreign Institutional Investors (FIIs) and it is witnessing a rise in sales of homes, automobiles and credit card spending across the country.
However, challenges such as geopolitical disruptions and rising energy and commodity costs exist in India, but these can be mitigated by bringing up policies and eliminating obsolete laws and regulations.
