{"id":322959,"date":"2025-01-10T15:46:20","date_gmt":"2025-01-10T10:16:20","guid":{"rendered":"https:\/\/forumias.com\/blog\/?p=322959"},"modified":"2025-01-10T15:46:20","modified_gmt":"2025-01-10T10:16:20","slug":"indias-financial-needs-for-growth-by-2047","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/indias-financial-needs-for-growth-by-2047\/","title":{"rendered":"India’s Financial Needs for Growth by 2047"},"content":{"rendered":"

Source<\/strong>: The post India’s Financial Needs for Growth by 2047 has been created, based on the article \u201cFinancing India\u2019s future growth is a challenge that must be met<\/strong>\u201d published in \u201cLive mint<\/strong>\u201d on 10th January 2025<\/p>\n

UPSC Syllabus Topic:<\/strong> GS Paper3- Economy- mobilisation of resources<\/p>\n

Context<\/strong>: The article discusses India’s need for financial capital to sustain economic growth and achieve development by 2047. It highlights the importance of increasing private investments, foreign capital, and expanding the corporate bond market. It also emphasizes improving investment norms for insurance and pension funds.<\/p>\n

For detailed information on Boosting India\u2019s Economy through Innovation and Reform<\/strong> read this article here<\/a><\/p>\n

What Financial Goals Does India Have for 2047?<\/strong><\/h2>\n
    \n
  1. India aims to become a developed country by 2047, needing a growth rate of 7%-7.5% per year.
    \n2. The National Infrastructure Pipeline requires an investment of $1.3 trillion, and the energy sector needs $250 billion annually until 2047.<\/li>\n
  2. The MSME sector requires $1.5 trillion for scaling up and digital transformation.<\/li>\n
  3. The chief economic advisor estimates that India\u2019s gross fixed capital formation needs to go up from the cur- rent 28% of GDP to at least 35% on a sustained basis.<\/li>\n<\/ol>\n

    What is the current status of India’s financial capital?<\/strong><\/h2>\n
      \n
    1. Public Capital Expenditure:<\/strong> Increased from 3.6% of GDP in 2019-20 to 5.6% in 2023-24<\/strong>, mostly focused on infrastructure development.<\/li>\n
    2. Private Investments:<\/strong> Indian corporates have reduced their debt-equity ratio from 1.2% to 0.9%<\/strong>, showing financial readiness. Equity fundraising through IPOs, QIPs, and rights issues crossed \u20b93 trillion in 2024, a 64% rise from <\/strong>\u20b9<\/strong>1.88 trillion in 2021<\/strong>.<\/li>\n
    3. Domestic Savings:<\/strong> Declined from pre-pandemic levels of 20% of GDP to 18%<\/strong>, with more investments going into physical assets.<\/li>\n
    4. Foreign Investments:<\/strong> FDI remains stagnant at $70-85 billion annually<\/strong>, while private equity and venture capital contribute around $50-55 billion annually<\/strong>.<\/li>\n
    5. Corporate Bond Market:<\/strong> Underdeveloped, representing only 16% of GDP<\/strong>, compared to the global average of 40%<\/strong>.<\/li>\n<\/ol>\n

      How can India secure the financial capital needed for growth by 2047?<\/strong><\/h2>\n

      Increase Private Investments:<\/strong> Encourage public-private partnerships (PPPs), divestments, and manufacturing incentives. Indian companies are well-positioned, with strong balance sheets and a 64% rise in equity fundraising in 2024.<\/p>\n

      Attract Foreign Capital:<\/strong> Boost FDI (currently stagnant at $70-85 billion) by improving ease of doing business, contract enforcement, and tariff clarity. Strengthen private equity (PE) and venture capital (VC) inflows.<\/p>\n

      Expand the Corporate Bond Market:<\/strong> Deepen the market, which is currently 16% of GDP, compared to the global average of 40%. Provide quality bonds and attract diverse investors for infrastructure and manufacturing funding.<\/p>\n

      Reform Insurance and Pension Funds:<\/strong><\/p>\n