India has come a long way since its independence, facing innumerable challenges head-on through the journey to reach where it’s today. A country of 1.38 billion people full of aspirations and opportunities, India today is prepared to embark on a new journey of economic prosperity and growth over the next 75 years.
What started as a journey of a poor nation with millions struggling to meet both ends after getting independence from the British, India has fought a long battle with poverty, joblessness and social inequality to emerge as the largest democracy and one of the fastest-growing economies in the world.
“India has transformed from a poor, agrarian economy to one of the powerhouses of the world with robust growth rates and a dynamic industry,” says Chandrajit Banerjee, Director General of the Confederation of Indian Industry (CII).
“To my mind, the early years were instrumental in building India’s confidence through infrastructure development,” he says, adding that landmark reforms initiated in 1991 opened up the economy to new entrepreneurs and overseas companies, and drove its growth.
To my mind, the early years were instrumental in building India’s confidence through infrastructure development.
India’s leading home-grown manufacturing companies such as Godrej & Boyce agree that the economic liberalisation undertaken in the early 1990s has lifted the nation’s economy and with it, the lives of its people.
“The growth has been inclusive and has helped to take huge sections of the population out of poverty,” says Anil G. Verma, Executive Director and President at Godrej & Boyce.
He points out that most businesses use their domestic market to build scale and capabilities to launch into the world markets. “India offers such a base. Moreover, our democracy gives the opportunities and freedom to market forces to flourish,” he adds.
The growth has been inclusive and has helped to take huge sections of the population out of poverty.
Tata’s Voltas, which has also been an integral part of India’s economic growth in the form of taking up engineering, water management, rural electrification and MEP projects, besides manufacturing air conditioners and refrigerators, says India has achieved substantial growth at many levels in sectors including manufacturing, employment, nation-building, infrastructure, education, and health.
In the tertiary sector, information technology and communication has transformed the landscape and built opportunities for start-ups.
“In the tertiary sector, information technology and communication has transformed the landscape and built opportunities for start-ups. Medical, education and tourism sectors have shown major progress and helped in the overall development of the country’s economy,” says Pradeep Bakshi, MD & CEO, Voltas Limited.
Some of the other landmark reforms in the past decade, according to economist Dr Rumki Majumdar, who is also the associate director with Deloitte India, include GST reforms, setting up of the monetary policy committee, banking and financial sector reforms including financial inclusion, and the insolvency and bankruptcy code.
Today, India is the sixth-largest economy in the world and is expected to be one of the fastest-growing countries in Asia and beyond over the next five to 10 years, according to Moody’s.
Not only does India have one of the largest consumer bases, which makes it an attractive market for global investors, but the country is well positioned to benefit from a demographic dividend over the next few decades.
Shahana Mukherjee, Economist at Moody’s Analytics, says some of the key factors that proved favourable for India is its demographic profile and its significance in the global trade of services.
“Not only does India have one of the largest consumer bases, which makes it an attractive market for global investors, but the country is well positioned to benefit from a demographic dividend over the next few decades as the nation’s working-age population continues to increase at a steady clip.”
Verma points out that over 60 per cent of India’s population are in the productive age group of 15-60 years. This is projected to grow for another 15 years and will continue to remain over 50 per cent until the mid-2050s.
“This constitutes the base on which we can grow. It will also contribute to the domestic consumption, which will fuel the growth.”
Looking at the future, I am thrilled to be a part of this software-as-a-service industry, which has the potential to reach $1 trillion in value and create nearly half-million new jobs by 2030.
Another important feature Mukherjee points out is that India has made visible inroads into the global services trade over the past decade, with a strong presence in key industries such as IT.
India’s IT industry is deemed as the real powerhouse for innovation as businesses around the world accelerate with digitisation and automation, says Ashish Aggarwal, Vice President and Head of Public Policy at Nasscom.
“Looking at the future, I am thrilled to be a part of this software-as-a-service industry, which has the potential to reach $1 trillion in value and create nearly half-million new jobs by 2030,” he says.
Towards a $5-trillon economy
India embarked on its reforms journey exactly 30 years ago and since then, its GDP has multiplied almost ten-fold. To achieve the target of a $5-trillion (Dh18.3 trillion) economy, CII says the Indian government has been undertaking significant reforms through the years.
“It has rightly provided a fillip to infrastructure development with a targeted expenditure of close to $2 trillion and over 8,000 projects, which will ensure a rapid growth path,” says Banerjee.
With vaccination, continued reforms in land and labour, and a conducive global growth ecosystem, CII is confident that India is on target to achieve a $5-trillion economy by 2030.
Next 75 years
Backed by strong macroeconomic fundamentals and demographics, India would continue to remain a major player on the world map, adds Banerjee. “Our strengths lie in the large domestic market, our burgeoning middle class, a rich reservoir of skilled workforce and a diverse economy fuelled by a dynamic entrepreneurial system.”
India has emerged as a resilient economy during tough times in the past and this time will be no different.
Having achieved incredible feats in the past 74 years including surviving the global financial meltdown in 2008, India is today on a better footing to deal with the coronavirus pandemic, which has triggered the greatest economic catastrophe in history.
“India has emerged as a resilient economy during tough times in the past and this time will be no different,” says Dr Majumdar. But she says India will need to get a larger proportion of the population vaccinated as quickly as it can to boost business and consumer confidence.
Despite the pandemic, Banerjee points out that the World Investment Report 2021 indicates that FDI inflows into India rose by 25.4 per cent to reach $64 billion in 2020, up from $51 billion in 2019. “This is a testimony to the fact that the world continues to engage with India and the country continues to remain a major player in the world economy,” he adds.
Bakshi agrees that India will grow at a rapid pace in the years to come, once Covid-19 retreats, “which will bring plenty of opportunities in terms of employment, production and exports”.
In this Covid recovery phase, Nasscom is affirmative that the industry is moving on the right path towards digital transformation, global investments, and collaborating with the government to create a healthy ecosystem for start-up incubation. With one of the strongest deal pipelines and a robust business outlook, Aggarwal says the industry is on track to meet its vision of $300-$350 billion in revenues by 2025.
Beyond the Covid-19 crisis, Moody’s expects India’s growth will rest on various factors including its internal demand and the large and fast-growing domestic market “which will support the growth momentum over the next five to 10 years”.
With the China Plus One policy in terms of manufacturing, many international players are now seeing India as a manufacturing destination, and Bakshi says “this is bound to improve the economy of the country”.
Thanks to government initiatives like Atmanirbhar Bharat, or Self-reliant India, campaign, Verma says there is a strong fillip to domestic manufacturing. “Supported by industry-friendly policies on investment, infrastructure and labour reforms, the environment for fostering industrial growth has increased greatly,” he adds.
Understanding the synergies required to thrive in the new normal, Indian private companies such as Voltas is collaborating with the government to build manufacturing prowess and accelerate the economic development of the country.
“In line with the self-reliance movement, we are fully geared to increase our portfolio of Made in India products, completely developed in India with government encouragement, for domestic consumption as well as for exports,” reveals Bakshi.
As India moves to write a new history, Verma from Godrej & Boyce says the consensus view in the country encourages growth with equitable distribution of its benefits. “That and the unique nature of its people and systems make it a very positive story to uplift its people as well as its larger environment,” he adds. ■