India Poised to Become 4th Largest Economy: Road Ahead

India Poised to Become 4th Largest Economy: Road Ahead
  • India will become the 4th largest economy in 2025.
  • India's nominal GDP has more than doubled between 2014 and 2025.
  • India's per capita GDP remains low due to high population.

India is on the cusp of a significant economic milestone, projected to become the world's fourth-largest economy in 2025, surpassing Japan in nominal GDP terms. This remarkable ascent from the tenth position in 2014 underscores the nation's robust economic growth trajectory over the past decade. The article highlights key factors contributing to this achievement, including structural reforms, policy continuity, leveraging demographic advantages, and increased spending on infrastructure. However, it also acknowledges the challenges that remain, particularly the low per capita GDP due to a large population and the need for further reforms to sustain long-term growth and ensure that the benefits of economic progress are widely distributed. The journey from being the tenth-largest economy to the fourth within a span of just eleven years signifies a substantial shift in India's global economic standing. This progress is not merely a statistical achievement but a reflection of the dynamic changes occurring within the Indian economy. The article emphasizes the doubling of India's nominal GDP between 2014 and 2025 as a key indicator of this growth. This expansion has been fueled by a combination of factors, including government policies aimed at promoting industrialization, attracting foreign investment, and improving infrastructure. The Goods and Services Tax (GST), implemented in 2017, is highlighted as a major indirect tax reform that has streamlined the tax system and enhanced efficiency. The Insolvency and Bankruptcy Code (IBC) is also credited with improving the health of the banking sector by providing a framework for resolving stressed assets. The article also notes the role of digitalization in boosting productivity and efficiency across various sectors of the economy. Initiatives such as the Digital India campaign have promoted the adoption of digital technologies, leading to increased innovation and economic growth. The manufacturing sector has also received a significant boost through policies such as the Production-Linked Incentive (PLI) scheme, which aims to incentivize domestic manufacturing and attract foreign investment in key sectors. Despite these achievements, the article acknowledges that India's per capita GDP remains relatively low compared to other major economies. This is attributed to the country's large population and the prevalence of informal employment. The article emphasizes the need to address these challenges to ensure that the benefits of economic growth are more widely distributed and that all citizens have the opportunity to participate in the country's economic progress. The article also highlights the importance of continuous reforms to sustain long-term economic growth. These reforms include improving the ease of doing business, strengthening the legal and regulatory framework, and investing in education and skills development. The article emphasizes the need for reforms in agriculture, labor, and education to enhance productivity and competitiveness. The need for judicial, administrative, and police reforms is also highlighted as essential for creating a more efficient and transparent governance system. The article also stresses the importance of addressing the issue of unemployment, particularly among the youth. This requires creating new job opportunities in both the manufacturing and services sectors. The article also emphasizes the need to promote female workforce participation to enhance economic growth and reduce inequality. The article concludes by emphasizing the need for a stable political environment and continued reforms to maintain investor confidence and ensure sustained economic growth. It highlights the importance of ensuring that the benefits of economic progress are widely distributed and that all citizens have the opportunity to participate in the country's economic success. India's journey to becoming the world's fourth-largest economy is a testament to its economic potential. However, sustained growth requires a concerted effort to address the challenges that remain and to implement policies that promote inclusive and sustainable development. The article's analysis provides valuable insights into the key drivers of India's economic growth and the challenges that need to be addressed to ensure its continued success on the global stage. The consistent theme throughout the article is the critical role of sustained reforms in ensuring that India maintains its growth trajectory and achieves its ambition of becoming a $5 trillion economy and the world's third-largest by 2028. The article also highlights the importance of fostering a stable political climate and continued reforms to bolster global investors’ confidence, crucial for attracting foreign investment and fueling economic expansion. The piece also emphasizes the necessity of bridging the gap between overall GDP growth and individual prosperity, pointing out that while India's GDP has more than doubled, the per capita GDP remains low due to the large population and informal employment. The article thus underscores that sustainable economic growth must translate into tangible improvements in the lives of all citizens. Furthermore, the article points out the critical need for investing in education and skills development to ensure that the youth are employable. This is seen as essential for fostering social stability and prosperity. The article also highlights the importance of enabling exports, providing common facilities for quality outputs by MSMEs, and continued investment in infrastructure to bring down logistics costs and enhance evacuation capabilities. In summary, the article provides a comprehensive overview of India's economic progress, the factors driving its growth, the challenges it faces, and the policy measures that need to be implemented to ensure its continued success. It emphasizes the importance of sustained reforms, inclusive growth, and investment in human capital and infrastructure.

Source: Explained in charts: India to become 4th largest world economy soon. What's the road ahead to No.3 spot?

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