Key policy reforms provided impetus to Indian economy in 2023

The Indian economy has had a good run on many fronts in 2023, riding on a number of key policy reforms, which turned out to be true game changers. Some of key policy reforms included: boosting manufacturing capabilities and exports with PLI provision to 14 select sectors; 1.14 lakh startups providing 12 lakh jobs across States and UTs; over 2.55 lakh approvals through the National Single Window System; focus of Make in India 2.0 on 27 sectors aimed at making India a manufacturing hub and creation of a unified logistics interface platform that integrates with 35 systems of eight ministries covering 1800+ fields. To take the step forward, the Central government last March sanctioned $72.41 million under FAME India Scheme Phase II that attracted FDI equity inflow for EVs and extending the FAME scheme up to March 31 of this year. When it comes to capital market, riding on these positive factors, the Indian equity market also witnessed a phenomenal performance in 2023, as benchmark indices soared to unprecedented highs, with the Nifty and Sensex scaling milestones of 21,000 and 70,000 mark, respectively. Indian equity emerged as one of the best-performing markets in last two years.

The Indian market fell relatively much lesser in CY 2022 compared to other global Markets. On the other hand, broader indices outperformed, the NSE Midcap 100 and NSE Small-cap 250 advanced 40.9 per cent and 42 per cent, respectively in CY 2023. The market cap is up 26 per cent in the current calendar year to $4.2 tn. The country added $900 bn in market cap, which is equivalent to the entire market cap of countries like Brazil, Sweden and the Netherlands, as per a joint study by Pantomath Financial Services Group and investmentz.com by Asit C Mehta Investment Intermediates Limited. The other important step was that it has intensified its decarbonization initiatives amid shifts towards renewable energy, with the aim to achieve 500GW renewables capacity by 2030. The green industry is expected to add 3.7 million jobs by FY 2024-25 to the current 18.5 million. The top sought skills are in renewable energy, environmental health safety, solar energy, corporate social responsibility and sustainability.

The emerging industries poised for investment-led growth in 2024 are battery energy storage solutions, green hydrogen, biotechnology, AVGC (animation, visual effects, gaming and comics) and semiconductor chip manufacturing, assembly and design. Meanwhile, India Inc. earnings started showing signs of improvement, with companies benefiting from a softening in commodity prices, leading to enhanced profitability and margins. Most companies are expected to continue strong performance in the upcoming quarters, driven by a robust domestic demand environment, positive macroeconomic factors and private capex revival. Visibility of revival in private capex along with sustained pick up in government capex bodes well. The momentum achieved during the CY 2023 with strategic measures by the Centre indicates a medium- to long-term GDP growth. As per S&P global Ratings, the country is set to become the third-largest economy by 2030, and the paramount test for the country would be to become the next global manufacturing hub. India’s robust economic trajectory is underpinned by resilient growth and favourable demographics.