India's Economic Ascension: A Path to the World’s Third-Largest Economy by 2030
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Written by Paola Roldan - IMBA Student - United States
- IMBA Student Blog
An Upwards Trajectory
Since its 1947 independence from Britain, India has seen practically nonstop exponential economic growth. Between its rise in the tech world and its initiatives to support sustainability by making collective behavioral changes in its population, the country’s economic trajectory is positioned for even more remarkable growth, as indicated by several recent economic indicators.
Gaining Momentum
Based on recent reports, S&P Global Ratings predict India to be the fastest-growing major economy for the next three years, setting the stage for it to claim the position of the world's third-largest economy by 2030, surpassing both Japan and Germany (which at the time of writing are the third- and fourth-largest economies, respectively). This optimism is echoed by the country’s latest economic review, in which the Chief Economic Advisor’s team predicted that India's growth will surpass the global economy in the upcoming fiscal year, fueled by robust domestic demand and private investment.
With a growth rate of 7.2% in the 2022-2023 fiscal year, India had the second highest among G20 countries and nearly twice the average for emerging market economies (World Economic Forum).
Tech Takeover
India's embrace of a blossoming tech industry positions the nation as a key player in shaping the future of the digital economy. One such initiative was India’s Aadhaar program, which is today the world’s largest biometric identification system and what Paul Romer, Chief Economist of the World Bank, described as "the most sophisticated ID program in the world.”
Prime Minister Narendra Modi's government's emphasis on infrastructure spending and the influx of foreign investment, particularly in tech manufacturing, further support India's economic prospects.
In terms of tech manufacturing and construction, which contribute significantly to GDP growth, industries like mobile phone and electronics manufacturing have seen an expansion and are supported by government incentives (Forbes).
On the foreign investment side, foreign businesses are increasingly turning to India as an alternative to China for investment, particularly in tech manufacturing (Bloomberg).
This is a reflection of its lower commodity prices, including a decrease in crude oil prices, which provides an additional boost to India's economic outlook, enhancing its competitiveness.
Climate Crusaders
In addition to economic strength, India proves to exhibit leadership in addressing climate change, with initiatives like the Mission LiFE and a push for Green Hydrogen, balancing economic growth with environmental responsibility.
Rather than being reactive and focusing on policy and regulatory measures to address the environmental crisis as other countries are doing, India is implementing a preemptive approach with its Mission LiFE program by focusing on behavioral changes of individuals in their daily lives. India has so far been successful in offering a different approach and harnessing the power of collective action to solve complex environmental issues.
A Future of Opportunity
In conclusion, India's economic ascension is marked by robust growth, driven by technological innovation and proactive policy measures. With sustained momentum and strategic initiatives, India is on track to claim its position as the world's third-largest economy by 2030, embodying a narrative of progress, resilience, and opportunity on the global stage.
Resources:
- https://www.weforum.org/agenda/2024/01/how-india-can-seize-its-moment-to-become-the-world-s-third-largest-economy/
- https://www.bloomberg.com/news/articles/2024-01-05/india-likely-to-set-gdp-estimate-closer-to-7-on-spending-boom
- https://www.spglobal.com/marketintelligence/en/mi/research-analysis/indias-gdp-growth-remains-buoyant-in-2023-sep23.html
- https://www.forbesindia.com/article/explainers/gdp-india/85337/1
- https://www.reuters.com/world/india/india-be-worlds-third-largest-economy-by-2030-sp-global-ratings-2023-12-05/
- https://www.niti.gov.in/sites/default/files/2022-10/Brochure-10-pages-op-2-print-file-20102022.pdf
