Vibrant Indian economy key to a sustainable global future

Call it a journey into Narendra Modi-christened 'Amrit Kaal' (a uniquely auspicious period) or anything else, the fact is that India seems poised to emerge as the fastest growing large economy riding on a six-fold increase in its per capita GDP that is projected to cross $15,000 by 2047. Overall, the country's economy will attain a GDP size of $26 trillion (in market exchange terms) by 2047, marking the 100th year of Indian independence. This is precisely what EY's latest study projects. Under the most preferred scenario, India is likely to cross the critical thresholds of $5 trillion, $10 trillion and $20 trillion in market exchange rate terms in FY2028, FY2036 and FY2045, respectively. Over the next decade, India will not only be the fastest growing economy but will also play an integral role in leading the world into a sustainable future. The Modi 2.0 government has targeted net zero by 2070 and reducing carbon intensity by 45 per cent by 2030 vis-à-vis 2005 levels. Renewable energy and development of green hydrogen can help the country achieve its energy independence quest by reduced hydrocarbons import. The GoI announced several progressive policies towards adoption of green hydrogen, hoping to meet 10 per cent of global hydrogen demand by 2030

Quite significantly, India already offers a unique investment opportunity as the world struggles with heightened consumer demands and increased geo-political pressures. Boasting of the biggest talent pool, accelerated pace of economic reforms, breakthroughs in energy transition and rapid digital transformation, the long-term growth trajectory is clearly positive. India demonstrates immense potential and is positioned to make a truly transformative impact on the world stage.

Mind you that with strong services exports at $254.5 billion in 2021-22, India enjoys a strong foothold especially in IT and BPO services exports. There is now an opportunity for the country to seize a higher share of transformational, more complex and expertise-based services to grow faster in the IT services sector. Similarly, following the spate of digitalization in the government and private sectors, the digital economy has grown by 15.6 per cent from 2014 to 2019, which is 2.4 times faster than the growth of the Indian economy. Platforms like Open Credit Enablement Network (OCEN) and Open Network for Digital Commerce (ONDC) will democratize credit at scale and e-commerce market, respectively.

One will have to keep in mind that the country's private debt to GDP ratio remains one of the lowest among large economies, providing a headroom to drive 200 – 300 bps incremental annual GDP growth. This will fuel growth over the next 20-30 years to reach the current global average private debt to GDP levels. With accelerated credit growth, development of the corporate bond market and digital lending, an optimal financial architecture can help address the critical demand and supply gap in credit to individuals and Micro Small and Medium Enterprises (MSMEs). This will, in turn, reduce the cost of capital, and increase share of private debt to sustain high growth.

By then, around 25 per cent of the incremental global workforce over the next decade will come from India. It also has the largest pool of English-speaking STEM graduates with an annual addition of 2.14 million (47 per cent women) and 6.2 million healthcare professionals, including doctors and nursing staff. This significant young working population will not only reinforce India's competitive advantage in the services and manufacturing sectors but also usher in unprecedented boom in domestic consumption patterns.

Therefore there are more reasons than one to hope that India is already among the fastest growing economies globally and is now on the threshold from where a new era of growth drivers will emerge.