India is emerging as a global power due to its unique focus on 5Ts– Tourism, Trade, Talent, Tradition and Technology. A combination of diverse opportunities in this culturally advanced, historically significant, a fast digitalizing nation having a relatively young / skilled population and a huge customer base is adding to its brand globally.
Indian Economy has been resilient amidst the most vulnerable times in the recent past, be it the pandemic syndrome or the advent of geo political issues posing challenges to the advanced and emerging economies which struggled to balance the twin objectives of maintaining price stability on one hand and growth momentum on the other.
If under an uncertain economic environment in the global economy, India exhibits the strength to bounce back to or continue to remain in the higher growth rate trajectory, it is only indicative of its the ability to stand out from others which is so very vital from the point of view of creating and maintaining a strong brand image.
India emerging as a global leader
India is reported to be the fastest-growing economy in the world already supported by three megatrends in the country, global offshoring, digitalization, and energy transition and this has put the country on the path to unprecedented economic growth. Further, it is projected that India will be one of only three economies in the world that can generate more than $400 billion annual economic output growth from 2023 onward which will rise to more than $500 billion after 2028.
According the official data released on June 12, 2023, India’s GDP has touched the $3.75 trillion mark in 2023 and it has been confirmed India has now become the fifth largest economy in the world. At $3,737 billion in current price terms, India’s GDP is only lower than the US ($26,854), China’s ($19,374 billion), and Germany’s ($4,309 billion)
Clearly, there are growth opportunities seen in the Indian economy and that is likely to attract global investment from the rest of the world to benefit from its rapid strides towards the critical threshold of crossing US$ 5 trillion by the financial year.
Positives in the Indian Economy
On the domestic front, the Indian economy is showing strong signs of growth.
- Increase in direct tax collections: Direct Tax collections are reported to have increased to Rs. 4.75 trillion so far in the current financial year 2023-24 recording a whooping 16 per cent increase in the revenue compared to the corresponding period last year. The revenue mop up has covered around 26.05 per cent of the budget estimates already.
- Robust GST collections: According to the official data released on July 1, 2023, India’s Goods & Services Tax (GST) collections increased to cross ₹1.61 lakh crore in June which is a record level since the roll out of GST as a mode of indirect taxation. This indicates that the economic activity is robust.
- Increase in the Industrial production: India’s Index of Industrial Production (IIP) rose by 5.2% year on year (YoY) basis in May 2023 inclusive of growth in manufacturing, power generation, and mining sectors. Manufacturing output increased by 5.7% YoY while power generation managed to grow by 0.9% YoY as against a decline in April. Mining output registered a growth of 6.4% which was higher than 5.1% in the previous month.
- Robust growth in the FY23 : Keeping in view the strong growth momentum in the economy, it is projected that the growth rate in the FY23 may actually work out to be better than the current estimate of 7.2 per cent.
Challenges posed to the Indian economy
Even as the Indian economy has shown good amount of resilience amidst the uncertainties surrounding the external sector, it shall have to tackle the challenges posed to it effectively.
- Keeping retail inflation within tolerable limits : The retail inflation has reached to a three month high of 4.8 per cent due to rising food prices, which were previously at 25-month low. This is a little higher than the expectations yet the good thing is that it is well below the tolerable limit of 6 per cent as set by the RBI. If the inflation in food items persists in the second quarter of this financial year, it may simply delay the chances of monetary easing. However, timely corrective measures on the supply side may ease out the inflationary pressures to some extent.
- Modest growth in exports : According to the official data released by the commerce ministry on July 14 the exports registered a significant decline of 22 percent in the month of June, 2023 and stood at USD 32.97 billion as compared to the previous year’s figure of USD 42.28 billion. The main reason of the decrease in the value of exports could be attributed to a slowdown in demand in global markets. However, the imports also have registered a decline of 17.48 per cent and stood at USD 53.1 billion.
- Coping with an El Nino drought : The World Meteorological Organization (WMO) has recently declared the year 2023 as an El Nino year with a probability of 90 per cent. It seems quite likely also as July 3rd and July 4th have been declared to be the hottest days on this planet. However, according to the Indian Meteorological Organization, India will have a normal rainfall despite El Nino. The government is also making efforts to keep vegetable prices under check through supply side measures including banning exports of some and raising the export duty on some and setting the limits for the maximum stocks that the traders can keep domestically.
To conclude, India is being viewed upon as an attractive investment destination largely due to the resilience it has manifested through macroeconomic stability, financial market stability and above all the flexibility with which the economy could move in tandem with the various corrective or remedial policy measures taken by the government and the regulatory authorities to deal with the uncertainties posed by the external shocks and the domestic disequilibria. Through the increased focus on increased capex and capacity building measures, the Indian economy is poised to leverage the growth momentum it has created and thus has offered opportunity to global players to consider India as an attractive destination for investment in financial and product markets.
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