In the recent World Economic Outlook update, the International Monetary Fund (IMF) has raised India’s FY25 Gross Domestic Product (GDP) growth projections to 7 per cent, from an earlier 6.8 per cent forecast in April, reaffirming India’s fastest-growing economy tag. India’s economic surge is propelled by its strong fundamentals of domestic consumption, manufacturing, controlled inflation, growing exports, and strategic measures for investments and fostering innovation. The outlook is also promising, from the current $4 trillion economy to $5 trillion in FY27, $7 trillion in 2030, and $35 trillion by 2047. From all accounts, we are all set to be the third-largest economy in the world by 2030, although, according to Reserve Bank of India (RBI) Deputy Governor Michael Patra, India can become the world’s second-largest economy by 2031 and the largest by 2060, given the country’s inherent strengths.
Independently, Financial Times’ top commentator Martin Wolf has asserted that India will become a superpower by 2047. He said that India could be what the IMF calls a ‘connector country’ in the world economy. He added that India can and should lead in the liberalisation of trade, domestically and globally. He argued that India also has the advantage of its diaspora, which is enormously influential, especially in the United States. He said that India’s human resources give it the capacity to diversify and upgrade the economy over time.
India has the world’s third-largest startup ecosystem, with over 100,000 startups and 100 unicorns, expected to become the second-largest ecosystem in the world by 2030. The micro, small, and medium enterprises (MSME) sector, which has demonstrated tremendous resilience and dynamism, plays a crucial role in GDP, exports, inclusive growth, and fostering entrepreneurship. With its thrust on innovation-driven growth, design, and research and development (R&D), India has emerged as a prominent hub for semiconductors, artificial intelligence (AI), and technology-driven solutions in various sectors, including agriculture, manufacturing, health, education, and defence. These are all drivers of our economy, where accelerators can be added.
Initiatives like Make in India, Industrial Corridor Development Programme, Production Linked Incentives (PLI), Semiconductor Mission, and National Logistics Policy will all help in building an efficient global supply chain. The emphasis on developing multimodal logistics infrastructure, including waterways and inland waterways, where India’s private sector is also playing a key role, will greatly help reduce transportation costs. In fact, a stage has come when India should have a shipping line of its own for facilitating exports. India has signed some Free Trade Agreements (FTAs), like the United Arab Emirates Comprehensive Economic Partnership Agreement (UAE CEPA), and several others are in the offing.
In this article, it has been suggested to install a few accelerators in various key sectors of the economy, based on competition policy and infusion of technology, competitive federalism, buoyed by various incentives. India is a federation of states, some of which are bigger than many European countries, with the potential to substantially propel growth in many sectors based on their innate strengths. By instituting a competitive spirit in key parameters like GDP, per capita income, employment, innovation, and exports, we can achieve substantial aggregate outcomes, enhanced productivity, and efficiency. To boost competition, there could be the infusion of modern technologies based on AI, etc., and homegrown innovations. The states may also conduct similar competitions among selected districts and choose them for their inherent strengths.
Some of the critical sectors where the introduction of competition and infusion of technologies may be considered are:
Agriculture and Allied Sectors
· Key Focus Areas: Modernisation, irrigation, high-yield seeds, sustainable practices, agro-processing.
· Potential Outcomes: Higher productivity, rural employment, and export of agricultural products.
Manufacturing
· Key Focus Areas: Textiles, automobiles, electronics, pharmaceuticals, renewable energy equipment.
· Potential Outcomes: Job creation, higher industrial output, and increased exports.
Information Technology (IT) and IT-enabled Services (ITES)
· Key Focus Areas: Software development, business process outsourcing (BPO), IT services.
· Potential Outcomes: High-value jobs, export revenues, innovation.
Healthcare and Pharmaceuticals
· Key Focus Areas: Generic drug production, medical devices, telemedicine, health tourism.
· Potential Outcomes: Employment, export of pharmaceuticals, improved healthcare access.
Tourism and Hospitality
· Key Focus Areas: Cultural tourism, eco-tourism, medical tourism, infrastructure development.
· Potential Outcomes: Employment, foreign exchange earnings, regional development.
Renewable Energy
· Key Focus Areas: Solar, wind, biomass, energy storage solutions.
· Potential Outcomes: Sustainable growth, energy security, export of green technologies.
Textiles and Apparel
· Key Focus Areas: Modernisation, skill development, brand building.
· Potential Outcomes: Job creation, export earnings, rural development.
Construction and Real Estate
· Key Focus Areas: Affordable housing, smart cities, infrastructure projects.
· Potential Outcomes: Employment, urbanisation, economic growth.
Financial Services
· Key Focus Areas: Banking, insurance, fintech, financial inclusion.
· Potential Outcomes: Financial stability, access to credit, economic resilience.
Logistics and Supply Chain Management
· Key Focus Areas: Infrastructure development, cold storage chains, digitisation.
· Potential Outcomes: Efficiency gains, reduced costs, enhanced trade.
Education and Skill Development
· Key Focus Areas: Vocational training, higher education, digital literacy.
· Potential Outcomes: Human capital development, employability, innovation.
Defence and Aerospace
· Key Focus Areas: Domestic production, R&D, exports.
· Potential Outcomes: Technological advancement, strategic autonomy, export revenues.
Retail and E-commerce
· Key Focus Areas: Digital platforms, supply chain improvements, consumer reach.
· Potential Outcomes: Market expansion, consumer spending, employment.
By integrating these strategies, India can effectively foster inter-state competition and competitiveness, leading to higher productivity, efficiency, and overall development. To motivate and inspire states, there could be nationwide recognition, awards, financial incentives, knowledge sharing and collaboration, and capacity building. Niti Aayog, India’s policy think tank, can play a pivotal role in the process.
India is a nation of unlimited resources in manpower, talent, and innovation. Let us demonstrate it at this historic moment to reach our fuller potential.
(With inputs from Varun Singh)
dhanendra kumar has served as the First Chairman of the Competition Commission of India, Executive Director at the World Bank for India, Sri Lanka, Bangladesh, and Bhutan. He is currently Chairman of Competition Advisory Services India LLP.
Disclaimer: These are personal views of the writer. They do not necessarily reflect the opinion of www.business-standard.com or the Business Standard newspaper.