India's Growth Trajectory

Why in News?

Recently Ministry of Information & Broadcasting has released a multi-sectoral overview of Indian Economy.

What was the performance of Financial Markets?

• India's financial markets are currently witnessing unprecedented expansion, capturing the attention of global investors.
• Growth potential of India is intricately linked to its liquidity and valuation dynamics.
• Stock Market Growth - With the world's 4^th largest stock market, daily average cash-trading levels of India has surged threefold from pre-Covid levels.
• Foreign Investments Performance – The retail sector's buying spree, fuelled by high liquidity, is expected to invite further foreign investments.
• Foreign Portfolio Investment (FPI) - Although FPI inflows have experienced a recent slowdown, India's high-yielding markets and robust growth potential continue to attract significant interest.
• In the fiscal year 2023-24, foreign portfolio investments amounted to Rs.3,39,066 crore.
  • Significance - This influx of capital underlines the resilience and attractiveness of India's financial landscape.
• Booming IPO Market - The number of initial public offerings (IPOs) rose by 66% in FY24, from 164 in FY23 to 272 in FY24, reinforcing India's growing significance within the global financial ecosystem.
• Market to Partner - MNCs are increasingly seeking partnerships with local firms, recognizing the strategic value of collaboration in India’s unique business environment.

What was the performance of Manufacturing and Services sector?

• India is not only the world's service economy but is increasingly becoming a major player in global manufacturing.
• Preferred Investment Destination - Government initiatives aimed at strengthening domestic production capabilities and attracting foreign direct investment (FDI). Have positioned India as a preferred destination for companies looking to diversify their global supply chains.

• Global Manufacturing Hub - Make in India initiative has transformed India into a global manufacturing hub by enhancing industrial capabilities, fostering innovation, and creating world-class infrastructure.
• PLI Schemes - PLI Schemes were introduced in 14 key sectors aimed at fostering investment in cutting-edge technology and promoting global competitiveness and to boost the country’s manufacturing capabilities, enhance exports.

Production Linked Incentive (PLI) is a form of performance-linked incentive to give companies incentives on incremental sales from products manufactured in domestic units.

• FDI Flow - In FY 2023-24, total FDI inflows reached $70.95 billion, with equity inflows at $44.42 billion.

• Improved Ease of Doing Business (EoDB) - India improved its business environment, climbing from 142nd in 2014 to 63rd in the World Bank’s Doing Business Report (DBR) 2020.
• It reflects the government’s sustained efforts to simplify regulations, reduce bureaucratic hurdles, and create a more business-friendly landscape.
• Service Sector Growth - India’s dominance in areas such as information technology (IT), cloud computing, and data science has solidified its reputation as a global hub for knowledge-based services.

How was the performance of Digital India and Technological Innovation?

• India's digital economy is one of the fastest-growing in the world, significantly reshaping the nation’s technological landscape.
• Effect of Digital India initiative – It has increased the internet penetration and boosted the digital infrastructure across the country.
• Internet subscribers has risen from 25.1 crore in March 2014 to 95.4 crore in March 2024.
• Growth in Digital Payments - Digital payments have surged exponentially, driven by the innovative Unified Payments Interface (UPI) platform.
• Currently 46% of global real-time payment transactions occur in India and UPI processed nearly Rs.81 lakh crore in transactions between April and July 2024 alone.

• The integration of digital technologies into various sectors, including agriculture, healthcare, and education, has enhanced efficiency and improved service delivery across the board.
• Digital Investment Drivers - India’s rapid advancements in artificial intelligence (AI), blockchain, and data science are driving economic growth and attracting global investments.
• IndiaAI Mission - It is aimed at building a robust AI ecosystem by democratizing computing access, enhancing data quality, and fostering indigenous AI capabilities.
• IndiaAI Compute Capacity, IndiaAI Innovation Centre, and AI Startup Financing set to propel AI innovation over the next five years.

What is potential of Demographic Dividend and Geopolitical Positioning?

• Demographic Dividend - 65% of India’s fast-growing population is under 35 and this workforce can be leveraged for next 3 decades.
• Government Initiatives to harness demographic dividend
  • Pradhan Mantri Kaushal Vikas Yojana
  • Craftsmen Training Scheme
  • Jan Shikshan Sansthan
  • National Apprenticeship Promotion Scheme
• Synergy between demographic dividend and ongoing economic initiatives will be critical in shaping a prosperous future.
• India’s geopolitical positioning has emerged as a key factor in its growth trajectory.
• South Asian Power - Its role as a stabilizing force in South Asia and increasing engagement with major global powers has enhanced its strategic importance.
• Influence in Multilateral Forums - India’s participation in multilateral forums such as the G20, Quad, and BRICS further strengthens its voice on global issues ranging from climate change to global security.
• This geopolitical stability, coupled with economic reforms, makes India an attractive destination for foreign investors.
• G20 Presidency - India’s approach as G20 president was characterized by inclusivity, ambition, action-orientation, and decisiveness.
• These principles were reflected in the New Delhi Leaders' Declaration, which was unanimously adopted by all G20 members.

Reference

PIB | India's Exceptional Growth Trajectory