India’s target of USD5 trillion economy

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Yash Joshi

MBA- II Semester

Batch: 2023-25

yash.joshi2025@sibmnoida.siu.edu.in




Introduction

India is the fastest-growing and sixth-largest economy in the world. The Indian government aimed to achieve a $5 trillion economy by 2025 by adopting various policies and welfare schemes (pib.gov.in, 2023). This goal also includes sectoral growth, development of standard living, digitalization, and environmental policies. However, the COVID-19 pandemic slowed down the growth trend of India in 2020. Though in 2022, the GDP was Rs. 229 lakhs. However, the finance ministry set some objectives and solutions to achieve this target before the forecasted period of the International      Monetary Fund (IMF) is 2026-27. This assignment will also discuss the best possible solution to achieve this target (www.outlookindia.com, 2023).

The fundamental business problem the Finance Ministry faces is getting India’s GDP to $5 trillion, which calls for a comprehensive strategy that addresses inclusive growth, financial inclusion, job creation, and improved living standards.

The Objectives and Steps to Achieve the Goals

Objective 1: Infrastructural Development

India includes several welfare and infrastructural policies to strengthen the networks. First, this country launched the $ 1.9 trillion “National Infrastructure Pipeline” (NIP) program in 2019. It leads the transition of India from an agricultural to a service sector economy. Then PM Gati Shakti plan of Rs. 100 lakh was also launched to strengthen the logistics. The national highway network will be expanded to 2,00,000 kms, more than 200 airports and heliports will be built, and the gas pipeline network will be doubled to 3,50,000 kms, according to the government’s ambitious ambitions for 2024–25. Additionally, their plans call for constructing 11 industrial and two defense corridors, 4G access in villages and a significant increase in renewable energy capacity to 225 GW (www.businesstoday.in, 2023).

Objective 2: Expanding Export facilities

Export drives GDP growth too. By 2028, India wants to export $1 trillion in commodities and $700 billion in services. By FY22, it wants to export 31 items to 200 countries for $ 400 million. Market share and export incentive removal remain issues. India seeks to boost its export competitiveness by transitioning from raw materials to high-value products and watching imports to find industrial opportunities (www.businesstoday.in, 2023).

Objective 3: Industrial Development

The “Make in India” campaign emphasizes the government’s industrial effort, supported by a Rs 1.97 lakh crores production linked incentives (PLI) scheme across 13 sectors. Since April 2021, pharma has invested Rs. 12,960 crores. The GDP contribution by MSMEs is expected to rise from 30% to 40% with new drone and semiconductor programmes. India’s dedication to manufacturing and economic prosperity is shown through the project (timesofindia.indiatimes.com, 2023).

Objective 4: Digitalization and Innovation

From 2018–19 to 2020–21, digital transactions in India increased by 88%, driven by nine-fold growth in “Aadhaar-Enabled Payment System” (AePS) inter-bank transactions and an increase in UPI transactions. This led to reduced tax evasion, thanks to digital transactions. It is a boon to government coffers. Untapped digital assets and blockchain technology have the potential to increase by a trillion dollars over the next decade, which could completely transform India’s financial sector (meity.gov.in, 2023).

Objective 5: Installation of Renewable Energy Sources

India exceeds the objective by 40% with 156.83 GW of renewable energy installed capacity. Solar, storage, and mobility must improve to reach 500 GW and 50% renewable energy objectives by 2030. Amitabh Kant of NITI Aayog emphasizes grid enhancement, boosted preservation, green hydrogen, and green and non-electric energy sources. This will led to India becoming a significant electrolyser and carbon-neutral steel producer to switch from fossil fuel imports to exports (www.niti.gov.in, 2023).

Objective 6: Capital Expenditures

According to the Union Budget 2023-24, the finance ministry increased capital expenditures by 33% in different welfare schemes like Gati Shakti, PM Awas Yojana, educational programs, etc. Direct capital investment is responsible for enhancing people’s living standards (www.outlookindia.com, 2023).

List of the Best Possible Solutions- An Analysis

●    Coordinate the NIP and PM Gati Shakti to improve infrastructure growth through seamless connection, rural development, and logistics.

●    Priorities, high-value items, and innovative market entrance tactics to diversify and grow exports. Improve trade and leverage bilateral agreements.

●    Promote “Make in India” and 13-sector PLI initiatives. Improve competitiveness through innovation, skill development, and business ease (www.businesstoday.in, 2023).

●    Promote digital literacy, infrastructure, and innovation. Promote blockchain usage and digital payments for economic prosperity.

●    Accelerate renewable energy to 500 GW. Support solar, energy storage, and green hydrogen research (www.niti.gov.in, 2023).

●    To maximize capital expenditure efficiency, prioritize initiatives that benefit citizens, such as housing, education, and healthcare.

●    Promote government-private sector partnership to boost capital, creativity, and expertise across all objectives for sustainable and inclusive development (www.niti.gov.in, 2023).

●    Create comprehensive training programmes to give workers advanced skills for developing sectors, increasing employability and India’s global competitiveness.

●    Provide long-term certainty for investors and stakeholders to boost confidence and growth.

●    Balance economic growth and sustainability with eco-friendly development practices for a greener, more sustainable future.

Result - Best Possible Solution

·     Encourage government-private sector partnerships to increase money, innovation, and expertise for sustainable and equitable development. This solution recognizes government-private sector cooperation’s strength. India can boost growth by strategically integrating their resources, expertise, and abilities. Coordinating the NIP and PM Gati Shakti would boost infrastructure development and rural development. Diversifying and strengthening exports requires prioritizing high-value products, inventive market entry, and bilateral relationships (www.niti.gov.in, 2023).

·     The “Make in India” initiative and 13-sector PLI projects will promote innovation, talent development, and business-friendly policies to boost competitiveness. Enhancing digital literacy, infrastructure, and blockchain usage would expedite economic development while advancing energy-efficient technologies and green technology research will move India towards sustainable goals. Investor confidence, economic expansion, and a greener, more equitable future will increase by strategically directing capital spending to citizens’ welfare, increasing government-private sector partnerships, and prioritizing environmental sustainability  (www.outlookindia.com, 2023).

Conclusion

Strategic collaboration between the government and the private sector is essential if India is to reach its $ 5 trillion economic target. Infrastructure, export diversification, innovation, and environmentally sustainable practices must be prioritized. Collaborative partnerships, directed capital expenditures, and environmental consciousness are vital to sustainable growth and equitable development.

References

· meity.gov.in, 2023, India's  target of  USD 5 trillion economy, Retrieved fromhttps://meity.gov.in/writereaddata/files/india_trillion-dollar_digital_opportunity.pdf [Retrieved on: 12.08.2023] 

·     pib.gov.in, 2023,    India's    target    of    USD    5    trillion                  economy,            Retrieved     from https://pib.gov.in/Pressreleaseshare.aspx?PRID=1549454 [Retrieved on: 11.08.2023]

·     timesofindia.indiatimes.com, 2023, India's target of USD 5 trillion economy, Retrieved from https://timesofindia.indiatimes.com/business/india-business/govt-taking-steps-to-make-india-5-trillion-economy-at-an-early-date-finance-ministry/articleshow/98633527.cms?from=mdr [Retrieved on: 13.08.2023]

·     www.businesstoday.in, 2023, India's target  of USD 5 trillion economy, Retrieved from https://www.businesstoday.in/magazine/30th-anniversary-special/story/the-path-to-a-5-trillion-economy-321694-2022-02-15 [Retrieved on: 11.08.2023]

·     www.niti.gov.in, 2023,   India's target of USD   5 trillion economy,   Retrieved   from https://www.niti.gov.in/sites/default/files/2019-01/Strategy_for_New_India_2.pdf [Retrieved on: 14.08.2023]

·     www.outlookindia.com, 2023, India's target of USD 5 trillion economy, Retrieved from https://www.outlookindia.com/business/india-will-be-able-to-become-5-trillion-economy-by-2027-sunil-mittal-news-290064 [Retrieved on: 12.08.2023]

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