Syllabus: GS3/Economy
In News
- India is projected to become a $26 trillion economy by 2047–48, with per capita income exceeding $15,000, maintaining an average growth rate of ~6% per annum according to a report by Ernst & Young (EY).
Current Status
- Growth Momentum : India’s real GDP grew 8.2% in Q2 FY 2025-26, up from 7.8% in the previous quarter and 7.4% in Q4 of 2024-25, led by resilient domestic demand amidst global trade and policy uncertainties.
- Real gross value added (GVA) expanded by 8.1%, catalysed by buoyant industrial and services sectors.
- India’s services exports have grown by 14 per cent over the past two decades and stood at $254.5 billion in 2021–22.
- A substantial portion of these exports came from Information Technology (IT) services and Business Process Outsourcing (BPO), which together accounted for $157 billion during the same period.
- Global Capability Centres (GCCs): India hosts 1,500 GCCs (45% of global total), highlighting scalable talent, emerging technology skills, and efficient business processes.
- India has become a global hub for technology adoption and digital services.
- Digital Infrastructure: India has 1.2 billion telecom subscribers, 837 million internet users, and strong government support in building Digital Public Infrastructure, driving digital payments, governance, and entrepreneurship.
Factors Driving Growth
- Structural Reforms: Liberalisation of the economy, enhanced market orientation, and expanded role of private capital have strengthened global competitiveness.
- Services & IT Leadership: Rapid growth in services exports, especially IT and BPO, and the presence of Global Capability Centres have positioned India as the “office of the world” for technology and innovation.
- Digital Economy: A strong digital ecosystem, backed by Digital Public Infrastructure and widespread mobile and internet penetration, has enabled innovations such as digital payments and governance improvements.
- Ongoing Reforms: Changes like GST 2.0 and monetary easing are bolstering domestic demand and positioning the economy for sustained growth.
- Demographics: Employment is a vital link between growth and prosperity in India.
- With around 26% of the population aged 10–24, the country has a unique demographic advantage.
- Urbanization & Infrastructure: India’s real estate sector, currently contributing 8% to GDP, should reach 18% by 2047.
- FDI & Global Integration: Cumulative FDI inflows crossed US$ 1.05 trillion, with record equity inflows in FY25.
- Non-IT Services Potential: Non-IT services have strong growth potential, with sectors such as education and healthcare expected to gain from digital service delivery, particularly as developed economies face acute skilled-labour shortages.
Challenges
- Trade & Global Uncertainties: Continued export headwinds, tariff barriers, and the need for trade diversification remain concerns.
- Infrastructure & Logistics: High logistics costs and infrastructure bottlenecks still limit competitiveness and efficiency.
- Climate & Sustainability: Balancing rapid growth with environmental commitments remain concerns.
- Global Risks: Geopolitical tensions, supply chain disruptions, and technological competition.
Reforms & Initiatives
- Aatmanirbhar Bharat strengthening domestic manufacturing and self-reliance.
- Ease of Doing Business 2.0: Deregulation and SME empowerment to create India’s “Mittelstand”.
- Green Growth: National Hydrogen Mission, renewable energy expansion, and electric mobility.
- Financial Inclusion: Jan Dhan Yojana, UPI, and digital banking penetration.
- Global Integration: Trade diversification and strategic positioning amid geo-economic fragmentation.
Conclusion and Way Forward
- India’s journey to a $26 trillion economy by 2047–48 is both aspirational and achievable. With strong fundamentals, reform momentum, and demographic advantage, India is poised to redefine global economic power.
- However, success will depend on inclusive growth, climate resilience, and sustained policy innovation.
Source :DD
Previous article
The US Push to Redefine the WTO
