- In the last 9 years, India’s focus to build physical, financial, technological, digital and administrative capacity through a “reform, perform and transform” mantra is paying off
- GST collection made a high of ₹1.87L crores in April 23
- On ease of doing business ranking, India has moved up impressively from 147 to 63
- A number of long overdue fundamental reforms like bankruptcy act (IBC), real estate regulation (RERA), PLI (Production Linked Incentives) and one nation one tax (GST), have been game changers
NE ECONOMIC BUREAU
AHMEDABAD, JULY 4
When BJP came into power in 2014, expectations were high, in the backdrop of low business confidence owing to policy paralysis, delayed projects and bad loans threatening banking sector. Understandably, world then perceived Indian economy as ‘fragile’. It is heartening to see that on the economy front, even optimistic expectations have been exceeded. In fact, last 9 years were not really the easy ones for the growth to sustain. We saw formidable challenges and headwinds such as Covid, Russia Ukraine war, China- US standoff, inflation spike, interest rate and currency volatility, slowdown in developed economies and so on. India has sailed through these headwinds and emerged as a ‘power’ to reckon with.
भारत ने SCO में सहयोग के पाँच नए स्तंभ बनाए हैं। pic.twitter.com/Av9xsd1ooF
— PMO India (@PMOIndia) July 4, 2023
The daily news headlines clutter with political, social, international issues and obscure the assessment of how the underlying economy is chugging along. In the last 9 years, India’s focus to build physical, financial, technological, digital and administrative capacity through a “reform, perform and transform” mantra is paying off.
As regards to physical & digital infrastructure, in the last 9 years, national highway length has nearly doubled to about 1,45,000 kms, broadband internet subscriber grew more than 15 times to over 85 crores and digital transactions were staggering ₹149.5L crores in 2022! Power generation capacity has more than doubled and, port and airport infrastructure has gotten significantly better.
Commenting on this growth, Nirmal Jain, Founder, IIFL Group said, “For nation’s ability to finance its growth, banks have best ever capital adequacy and profitability due to faster resolution of bad loans and consolidation of PSU banks, creating a few large banks. The buoyant capital markets have helped channelize domestic savings to productive use. Corporates have been able to reduce debt and fortify their balance sheets. Current account deficit has moderated and currency has shown tremendous resilience to external tremors. GST collection made a high of ₹1.87L crores in April 23. Tax to GDP ratio continues to improve. FDI flows over the past decade at USD 600bn was twice the same in the previous decade. The government spend has much higher share of capex and inflation is range bound (4-6%).”
On ease of doing business ranking, India has moved up impressively from 147 to 63. A number of long overdue fundamental reforms like bankruptcy act (IBC), real estate regulation (RERA), PLI (Production Linked Incentives) and one nation one tax (GST), have been game changers.
Many external developments, economic and geo-political, seem fortunate for India. For instance, for the first time, global MNCs and investors are looking seriously for alternative to China and many energy intensive industries in Europe, battered by Russian gas disruption, are looking to geographically diversify and relocate. Favorable demographics coupled with better financial inclusion, a potential rise in share of manufacturing and the rapid growth in digital infrastructure are other big tailwinds. If government does not support with bold reforms, many a times, such fortunate opportunities are frittered away.
Over the next 5-10 years, India will still need to invest a lot more in social and urban infrastructure, further simplify tax laws, get consensus on farm laws to improve agricultural productivity, address the issue of state electricity boards losses etc. to fully capitalize on its growth potential.
While last 9 years have witnessed remarkable growth, the cumulative impact of a number of policy initiatives taken by the current government, is significantly enhanced capacity of the Indian economic juggernaut to sustainably grow at 7-8% pa in the coming decade and be the third largest economy in the world by 2030.
