Indian Economy To Scale New Heights
India is forecast to overtake the UK to become the world’s fifth largest economy this year and is projected to surpass Japan to feature at the second position in the Asia-Pacific region by 2025, a recent report has said. The London based agency ‘IHS Markit’s’ report on Prime Minister Narendra Modi and his party’s victory in the national elections, observed the economic outlook “looks positive” for the second term of the Modi government, with GDP growth forecast to average around 7 per cent per year during the 2019-2023 period.
“India is forecast to become the world’s fifth largest economy in 2019, reaching a total GDP size exceeding US$ 3 trillion, and overtaking the United Kingdom. By 2025, Indian GDP is also forecast to surpass Japan, which will make India the second-largest economy in the Asia-Pacific region,” it said.
As India continues to climb the rankings of the worlds’ largest economies, its contribution to global GDP growth momentum will also increase. India will also play an increasingly important role as one of the Asia-Pacific region’s major economic growth engines, helping to drive Asian regional trade and investment flows.
During Mr. Modi’s second term, India is expected to continue to confront significant economic challenges. “A key policy priority for the Indian government will be to continue to drive reforms in the public sector banks and reduce the burden of non-performing (or bad) loans on their balance sheets,” the IHS Markit report has underscored.
While manufacturing sector’s share in the GDP is still at 18 per cent against the target of 25 per cent, around 7.5 million persons are projected to join the Indian workforce per year on average over the next two decades.
The increase in India’s total population between 2015 and 2050 is projected at around 350 million persons, creating significant fiscal challenges for the government in order to deliver adequate physical infrastructure such as electricity, sanitation, affordable housing, and public transport, it said.
Continuing to drive the transformation of India’s industrial sector through ‘Make in India’ strategy will also be a strategic priority, in order to improve manufacturing sector output growth and generate stronger employment growth. When ‘Make in India’ strategy was launched in 2014, it had a set target of increasing the contribution of manufacturing to GDP to 25 per cent. However, by 2018, the manufacturing sector share of GDP is still at 18 per cent.
Despite significant achievements in infrastructure development during Prime Minister Modi’s first term, rapid infrastructure development in key sectors such as transport and power infrastructure remain important priorities, as well as reducing the regulatory burden of government red tape. India was ranked 77 out of 190 countries that are included on the World Bank’s Ease of Doing Business Index for 2019.
The resounding victory in the Indian national elections will provide continuity of economic policy for India over the next five years. The government does not face any risk of a weak and fragmented coalition governing the nation, which could have undermined momentum for further economic reforms.
Stating that India under Prime Minister Modi has achieved steady and robust macro-economic growth over the past five years, the IHS Markit report said the election results signal a strong vote of confidence from the electorate to the government’s economic track record in governing the nation.
Since Prime Minister Modi took office in 2014, Indian GDP has increased by 50 per cent, from US$ 2 trillion in 2014 to an estimated US$ 3 trillion in 2019, a total net increase of US$ 1 trillion in GDP in just five years.
A major economic policy reform achieved under Mr. Modi was the implementation of the Goods and Services Tax (GST) in 2017 to create a unified single indirect taxation system in India, removing the complex previous system of different state-based indirect taxes which had created significant inefficiencies, such as higher logistics costs, for firms distributing products across state boundaries. The GST will help in reducing logistics costs as well as improving industrial competitiveness.
Script: Padam Singh, AIR: News Analyst
“India is forecast to become the world’s fifth largest economy in 2019, reaching a total GDP size exceeding US$ 3 trillion, and overtaking the United Kingdom. By 2025, Indian GDP is also forecast to surpass Japan, which will make India the second-largest economy in the Asia-Pacific region,” it said.
As India continues to climb the rankings of the worlds’ largest economies, its contribution to global GDP growth momentum will also increase. India will also play an increasingly important role as one of the Asia-Pacific region’s major economic growth engines, helping to drive Asian regional trade and investment flows.
During Mr. Modi’s second term, India is expected to continue to confront significant economic challenges. “A key policy priority for the Indian government will be to continue to drive reforms in the public sector banks and reduce the burden of non-performing (or bad) loans on their balance sheets,” the IHS Markit report has underscored.
While manufacturing sector’s share in the GDP is still at 18 per cent against the target of 25 per cent, around 7.5 million persons are projected to join the Indian workforce per year on average over the next two decades.
The increase in India’s total population between 2015 and 2050 is projected at around 350 million persons, creating significant fiscal challenges for the government in order to deliver adequate physical infrastructure such as electricity, sanitation, affordable housing, and public transport, it said.
Continuing to drive the transformation of India’s industrial sector through ‘Make in India’ strategy will also be a strategic priority, in order to improve manufacturing sector output growth and generate stronger employment growth. When ‘Make in India’ strategy was launched in 2014, it had a set target of increasing the contribution of manufacturing to GDP to 25 per cent. However, by 2018, the manufacturing sector share of GDP is still at 18 per cent.
Despite significant achievements in infrastructure development during Prime Minister Modi’s first term, rapid infrastructure development in key sectors such as transport and power infrastructure remain important priorities, as well as reducing the regulatory burden of government red tape. India was ranked 77 out of 190 countries that are included on the World Bank’s Ease of Doing Business Index for 2019.
The resounding victory in the Indian national elections will provide continuity of economic policy for India over the next five years. The government does not face any risk of a weak and fragmented coalition governing the nation, which could have undermined momentum for further economic reforms.
Stating that India under Prime Minister Modi has achieved steady and robust macro-economic growth over the past five years, the IHS Markit report said the election results signal a strong vote of confidence from the electorate to the government’s economic track record in governing the nation.
Since Prime Minister Modi took office in 2014, Indian GDP has increased by 50 per cent, from US$ 2 trillion in 2014 to an estimated US$ 3 trillion in 2019, a total net increase of US$ 1 trillion in GDP in just five years.
A major economic policy reform achieved under Mr. Modi was the implementation of the Goods and Services Tax (GST) in 2017 to create a unified single indirect taxation system in India, removing the complex previous system of different state-based indirect taxes which had created significant inefficiencies, such as higher logistics costs, for firms distributing products across state boundaries. The GST will help in reducing logistics costs as well as improving industrial competitiveness.
Script: Padam Singh, AIR: News Analyst
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