Build On The Robust Macroeconomic Fundamentals To Realise Viksit Bharat

India’s per capita income is currently $2,500, which needs to be enhanced to anything between $18,000 and $26,000. This is possible only when we are able to achieve a consistent growth rate of 9.4 per cent

The country’s real GDP growth was reported at 5.4 per cent for the second quarter of 2024-25, which is a very low growth compared to the recent past figures and way below the projected growth. It has come as a major surprise for the government, regulator and the market.

The factors contributing to this slump have been low manufacturing, mining and construction activities. Meanwhile, the first two quarters of this year were not encouraging as because of low spending by the state and central governments due to elections and other factors. There has not been enough demand support from urban areas even though rural demand for consumption has been improving. Agriculture and allied activities have shown improved performance in the last quarter, which is an encouraging sign.

In order to enhance manufacturing sector contribution to GDP, there is a need for more private investment to improve productivity. Similarly in order to enhance our market share in international exports, there is a need to deliver products that are of superiority quality, high-end products that cater to elite customers and also meet the requirements of developing and low developing countries.

India joining the global supply chain becomes necessary for the success of export markets. We must be able to capture the incremental market share for our products globally and Brand India has to be harnessed to the advantage of our exporters. We need to be fair in tariffs, which should be reciprocal. However, unnecessary dumping of imported goods has to be strictly discouraged, while at the same time support free trade.

Towards this certain areas need special attention like climate change and control of emissions.

It is not possible and advisable that private sector also depends upon government capex expenditure to enhance their business. There should be equal and greater initiatives coming from private sector and they need to invest in new and relative areas, upcoming business opportunities like alternative energy, import substitution efforts, utilisation of all facilities given under PLI manufacturing in more than 14 sectors to truly make India a global manufacturing hub.

This has been best illustrated by industrialist Kumar Mangalam Birla, Chairman of the Aditya Birla group, while exhorting India Inc to push up the pedal on investment. Pointing out that the Union Government has expanded their capex fivefold, he said, "it is now time for India Inc to join the capex party and this investment fervour needs to be far more widespread. We (businesses) have the capacity and also the responsibility to define the vision for development and shape the India of tomorrow."

While going about achieving a developed economy status by 2047, and make a successful transition from a middle income country to developed India, a lot of purposeful planning, execution by all stakeholders with a fresh mindset and huge spending on research and development are paramount.

The IMF has pointed out that quite a few countries could not transit to developed economies in the absence of the three-point formula of ‘Investment, Innovation and Technology’.

This implies that Viksit Bharat should not be wishful thinking but a goal-driven determination backed by conscious efforts and an on-the-ground execution of the action plan. There is also a need to upscale our capital, innovation, adopting new technologies, substantial new entrepreneurship and fostering inclusiveness with financial and economic inclusion and diversity. These have the potential to add to the GDP performance levels.

India’s per capita income is currently $2,500, which needs to be enhanced to anything between $18,000 and $26,000 depending upon the source and real GDP size that we achieve. This is possible only when we are able to achieve a consistent growth rate of 9.4 per cent.

There is also a need to activate all key drivers like savings, investment, capital formation (both private and public), domestic consumption in urban and rural areas, export promotion and global reach, new investment in alternative energies, new sunrise industries, providing skilled talents abroad, enhance the reach of manufacturing and greater services exports, create a global manufacturing hub in India and reduce import dependence by way of patronising Atma Nirbhar Bharat, tapping the potential of youth and women empowerment, machine learning and AI.

Efforts must be made to provide equal and enhanced opportunities to ensure rural, urban and metro growth, create new cities and aspirational districts getting new impetus, agro-based industries, food and fruits processing industries and global capacity centres, among other such achievable but critical factors.

Moreover, the growing young population needs to be assured by the current leaders of creating better and greater economic prosperity with thrust on integrating technology and building on the successes of startups and fintech to boost economic momentum.

The major advantages in India’s favour are strong macroeconomic fundamentals, best financial institutional strength, able regulators and most importantly a proactive and strong government, which all can collectively foster a new growth path.

(The author is former Chairman & Managing Director of Indian Overseas Bank)