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Report released by government "Indian Economy - A review" - Summary of Indian growth trajectory and prospects

Tejasvi

@tejasvi

January 31, 2024

Public Policy

126

The government released the ‘Indian Economy – A Review’ (Report), which provides insights into the Indian economy’s trajectory and prospects over the past decade and its future outlook. The Report does not replace the official Economic Survey, The official Economic Survey is expected to be presented after the general elections and formation of the new government.

Some of the key highlights of the Report are listed below:

India’s projected growth to a $5 trillion economy in the next 3 years and a potential to reach $7 trillion by 2030.
India has moved from the 10th largest economy of the world to the 5th largest economy of the world.
In 2023-24, the Indian economy is estimated to have grown 7.3% on top of the 9.1% (FY22) and 7.2%
(FY23) in the previous two years.
India's real GDP is estimated to grow at an average of 7.9% between FY22 and FY24.
The share of services in total Gross Value Added, in volume terms, has risen from 51.1% in FY14 to 54.6% in FY24, as the pandemic and unlocking of the economy thereafter led to a surge in non-contact services.
Simplification of regulatory frameworks has been integral to all the reforms undertaken since 2014.
India’s digital infrastructure has enabled the creation of digital identities, improved access to finance, access to markets, reduced transaction costs, and improved tax collection and has provided the foundation for sustained and accelerated economic growth this decade.
India is among the fastest-growing fintech markets in the World, hailing as the third-largest growing fintech economy after the USA and the UK.
G20 Presidency, along with an increasing share of India’s GDP in global GDP, reflects the growing importance of the country in the global economic landscape.

Challenges confronting the Indian economy:

Increased geoeconomic fragmentation and the slowdown of hyper-globalisation
Trade-off between energy security and economic growth versus energy transition
The advent of Artificial Intelligence (AI) poses a big challenge since technology might remove the advantage of cost competitiveness that countries exporting digital services enjoy.
Ensuring availability of a talented and appropriately skilled workforce to the industry, age-appropriate learning outcomes in schools at all levels and a healthy and fit population

IT-BPM Industry:

Sharp increase in the share of services exports in GDP, with notable growth witnessed in business services exports between FY20 and FY23. Increased demand for digitisation and preference for online delivery of services post the outbreak of the pandemic has encouraged the export of business services.
Availability of a highly-skilled workforce capable of research and innovation, using high-end technology, and possessing managerial skills has led to the setting up of Global Capability Centres (GCC) in India to support the conglomerates in significant corporate functions.
The Department of Telecommunications issued guidelines for Other Service Providers (OSPs), which promoted the Work-From-Home culture in India and extended it to allow Work-From-Anywhere in India. The guidelines made it easier for BPOs and ITeS firms to cut down on the cost of location, rent for premises and other ancillary costs such as electricity and internet bills.

Micro, Small and Medium Enterprises (MSME):

The Udyam portal and Udyam Assist Platform (UAP) have helped consolidate the information on MSMEs, with 2.24 crore MSMEs registered on the Udyam portal and about 1.2 crore units registered on the UAP.
Progressive reforms for MSME include Emergency Credit Line Guarantee Scheme (ECLGS), revision in the definition of MSMEs under the ambit of Aatmanirbhar Bharat, the introduction of TReDS to address delayed payments for MSMEs, inclusion of retail and wholesale trades as MSMEs, and extension of non-tax benefits for three years in case of an upward change in the status of MSME.

Startups and Entrepreneurship

The number of recognised start-ups has increased from 452 in 2016 to more than 98,000 in 2023.
1,14,902 DPIIT-recognized startups across 763 districts of the country (as of October 31, 2023) have resulted in creation of more than 12 lakh jobs
44.5 crore loans worth ₹26.1 lakh crore were sanctioned under the MUDRA Yojana, with 68% of accounts belonging to women entrepreneurs.
Under DAY-NRLM, 9.5 crore women mobilised into 87.4 lakh self-help groups under DAY-NRLM (as of December 2023)
Under Stand-Up India, 2.1 lakh loans have been sanctioned, of which 84 per cent have been sanctioned to women entrepreneurs (as of November 24, 2023)

e-Commerce:

India’s e-commerce market is expected to reach USD 163 billion by 2026, with online sales accounting for over 25% of sales across major nongrocery retail categories.
The proliferation of internet connectivity and smartphones in India, coupled with rapid urbanisation and the rising influence of India’s middle class, have propelled the e-commerce market.
As per a report by UNICOMMERCE on ‘India E-Commerce Index 2023’36, the overall order volume witnessed a growth of 26.2% in FY23, indicating a flourishing ecommerce landscape in India, supported by a 23.5% rise in annual Gross Merchandise Value as compared to FY22.
The Open Network for Digital Commerce (ONDC) recorded more than 6.3 million transactions in November 2023.

Taxation:

Goods and Services Tax (GST) has enhanced the tax base, reduced compliances, ensured a free flow of goods across states, and led to the formalisation of the economy.
GST system has shown improved buoyancy over the pre-GST regime with consistently rising average monthly gross collections from ₹0.9 lakh crore in FY18 to ₹1.5 lakh crore in FY23.
The number of GST taxpayers increased from 66 lakhs at its introduction to 1.4 crore in 2022.

Digital Infrastructure:

Digital payment systems like Unified Payments Interface (UPI), which has one of the largest platforms in the world, have aided the growth of e-commerce.
The Global Payments Report 2023 projects e-commerce in India to register a CAGR of 16% between 2022 and 2026, mainly driven by ease provided by UPI.
The value of transactions conducted on the UPI platform has increased multifold from ₹0.07 lakh crore in FY17 to ₹143.4 lakh crore in FY24 (April-December 2023).
The Data Layer transformed the authentication ecosystem in India and facilitated the KYC process, reducing the cost of conducting e-KYC from ₹1000 to ₹534

Skilling

1.4 crore candidates trained under PM Kaushal Vikas Yojana since 2015 (as of December 13, 2023)
Skill India Digital platform launched in September 2023, bringing all skill initiatives together.
26.9 lakh apprentices engaged under the National Apprenticeship Promotion Scheme (as of September 30, 2023).
Entrepreneurship Training for 2 lakh beneficiaries between April 2018 and March 2023.
PM Vishwakarma scheme launched in September 2023 to provide end-to-end support to artisans and craftspeople, including skill upgradation, collateral-free concessional loans of up to ₹3 lakh

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