In a momentous achievement, India etched its name in history on August 23rd, 2023, by becoming the first country to reach the southern pole of the Moon with the successful Chandrayaan 3 mission. Joining an exclusive league, India stands as the fourth nation to land on the lunar surface.
Over the past decade, India has witnessed a remarkable transformation, particularly in the aftermath of the COVID pandemic. Notably, the nation has surged into the top five global economies from thirteenth in the year 2000.
With digital transactions accounting for a substantial 76% of its GDP, Foreign direct investments have doubled, soaring to an impressive $46 billion, while GST collections have surpassed expectations, reaching a staggering 18.1 lakh crores over the last five years.
The landscape of infrastructure has undergone a profound makeover, with electrification of railways surging more than sevenfold and national highways more than doubling in length within the span of a decade. These accomplishments are merely a glimpse of India’s ascent; its journey has only just begun.
Forecasts indicate that India is poised to emerge as the fastest-growing major economy over the next decade. However, with success comes the potential for unforeseen challenges.
On the ambitious path to attaining a $30 trillion GDP by 2047, under the visionary umbrella of “AMRITKAAL,” there exists an opportunity to draw lessons from successful nations while laying the foundation for the future based on impending megatrends.
Learning from global pioneers
China, the world’s second-largest economy, embarked on a journey of remarkable growth after embracing economic reforms in 1978. Averaging an impressive annual growth rate of 9.5% until 2019, China lifted over 800 million citizens out of poverty, emerging as a global leader in trade, technology, and manufacturing. Its success story is attributed to factors including a disciplined labor force, sustained investment, gradual market reforms, strong state capacity, integration with the global economy, and rapid technological innovation.
The United States, the world’s largest economy, has set the standard for innovation, productivity, and living standards since the late 19th century. It has also been a vanguard of global stability, advocating free trade, democracy, and human rights. The US’s triumph stems from a diverse market, entrepreneurial culture, robust private sector, transparent legal system, dynamic education system, and a thriving innovation ecosystem.
Japan, the third-largest economy globally, achieved unparalleled growth from the post-war era through the 1990s, marked by an average annual growth rate of 7.5%.
Renowned for its excellence in sectors like automobiles, electronics, and robotics, Japan’s success rests on a skilled labor force, strategic government-business cooperation, unwavering focus on quality, swift adaptation to global markets, and rapid adoption of technology.
Germany, the fourth-largest economy, experienced remarkable growth post-reunification in 1990. Renowned for its exports, manufacturing, and engineering prowess, Germany’s success factors include skilled labor, diversified exports, a stable social market economy, cooperative industrial relations, innovative SMEs, and sustainable infrastructure.
Megatrends: Shaping the world’s future
Megatrends are transformative shifts that have profound and enduring impacts on economies, societies, environments, and geopolitics. These trends create both opportunities and challenges, reshaping the world in unprecedented ways. Key megatrends that are shaping the world and are opportunities for India include:
- Demographic changes: Falling Birth rates, aging populations, and longer lifespans redefining labor forces, social welfare, and consumption patterns,
- Urbanization: Cities attract migration, driving innovation, technology, and resource management.
- Climate change : Eco-friendly policies and renewables combat climate challenges
- Digitalization and Innovation: Technology transforms work, education, healthcare, and communication.
- Globalization and Integration: Cross-border trade and culture shape the interconnected global stage.
Coupled with power shifts from west to east, gender equality, social justice, economic development, and increased awareness of well-being and morality.
India’s strategic advantages
India, with a population of 1.38 billion, comprising 17.7% of the world’s population, currently accounts for only 3% of global trade and GDP. With a median age of 28.4 years, India’s youthful demographic is a key strength.
Leveraging comparative advantages like a large and young population, a diverse economy, democratic governance with digital public infrastructure, vibrant startup and entrepreneurial ecosystem, rich cultural heritage, and strategic geographic positioning, India is poised to realize its potential.
As the nation grows to reach a $30 trillion GDP by 2047, in its AMRTIKAAL, themes that are likely to thrive include
- Defence and Manufacturing: Leveraging the ‘China+1’ strategy, production-linked incentives (PLI), leadership in space technologies and scalable growth can help India become a manufacturing hub, bolstering trade and contributing to global value chains.
- Clean/renewable Energy: Embracing renewable energy – Solar, Wind and Hydrogen coupled with the electric vehicle ecosystem positions India as a leader in clean technology, ensuring sustainable growth while combating environmental challenges.
- Formalization of the Economy: Transitioning from unorganized to organized sectors promoting transparency, efficiency, and accountability, which can enhance overall economic resilience.
- Consumerism: Rising per capita income and discretionary spending could propel consumerism, driving strong demand for various goods and services and fostering economic expansion.
- Financialization: Greater penetration of credit, increased financial inclusion, and privatization of banks can fuel economic expansion and bolster the financial sector’s role in driving growth.
- Technology: Riding on the wave of AI/ML, digital public infrastructure, and tech disruptors, India can leverage technological advancements to enhance productivity, create new industries, and stimulate economic progress.
In an evolving world, India’s journey exemplifies determination, adaptability, and foresight. As it navigates uncharted waters, it stands ready to harness its strengths, learn from global examples, and seize emerging opportunities to script a future that resonates with its rich heritage and bright potential.
Drawing inspiration from history, where India once commanded 30% of the global economy pre-1000 AD vs currently only 3% of global economy, there is potential for history to repeat itself, underpinning India’s drive towards economic prominence in “AMRIT KAAL”.
Note: The information provided in this article is for educational purposes only and should not be considered as investment advice. Investors should conduct thorough research and seek professional guidance before making investment decisions.
(The author is smallcase manager, Founder and CIO of Tikona Capital)
(Disclaimer: Recommendations, suggestions, views, and opinions given by experts are their own. These do not represent the views of the Economic Times)
