Last updated: April, 2021
Introduction
Over the years, India has emerged as one of the fastest growing economies in the world and an attractive investment destination driven by economic reforms and a large consumption base. India’s real gross domestic product (GDP) at current prices stood at Rs. 195.86 lakh crore (US$ 2.71 trillion) in FY21, as per the second advance estimates (SAE) for 2020-21. Simultaneously, the per capita income at current prices was estimated at Rs. Rs. 127,768 (US$ 1,765.43) in FY21.
In a country like India, the seven major infrastructural factors that are most significant in accelerating the pace of economic development are: energy, transport, irrigation, finance, communication, education, and health. The first five refer to economic infrastructural facilities, while the latter two relate to social infrastructure.
India has the second largest road network in the world, spanning a total of 5.5 million kilometres (kms).
With a generation of 1,561 terawatt-hour (TWh), India is the third largest producer and the third largest consumer of electricity in the world. As of February 2021, India had a total installed power-generation capacity of 379,130.41 MW, of which 96,186.93 MW was contributed by central utilities, 103,628.39 MW (state utilities) and 179,315.10 MW (private utilities).
The Indian banking system consists of 20 public sector banks, 22 private sector banks, 44 foreign banks, 44 regional rural banks, 1,542 urban cooperative banks and 94,384 rural cooperative banks in addition to cooperative credit institutions. As of September 2020, the ATM industry in India increased to ~2.5 lakh ATMs. Debit cards in India doubled to 86 crore in September 2020, of which ~30% (i.e., 30 crore) are RuPay cards issued to the PM Jan Dhan Yojana accounts.
A host of factors has enabled this growth, which includes a highly developed financial system, infrastructure requirement and proactive Government initiatives. Domestic and foreign investment has made an impact on the country’s growth.
Recent Developments/Investments
Road Ahead
India is presently known as one of the most important players in the global economic landscape. The country is on a fast pace growth and is expected to become a US$ 5 trillion economy by 2022. Going by the estimates of Government of India, the country will need investment of US$ 4.5 trillion to build sustainable infrastructure by 2040. The Union Budget 2021-22 highlights a 34.5% increase in capital expenditure—Rs. 142,151 crore (US$ 19.58 billion)—compared with BE 2020-21 to boost economic growth through infrastructure development. Increased government investment is expected to attract private investments, coupled with the government's key Production-linked Incentive Scheme providing significant support.
A positive agricultural outlook remains a significant lever for revitalising rural demand and accelerating consumption. The Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) has generated 350 crore individual days of jobs as of February 28, 2021, a substantial increase of 41.6% over FY20. The agricultural sector's growth will be supported even further by the Union Budget 2021-22, driven by increased investments in rural infrastructure, highways and agriculture infrastructure, as well as a strong drive for fisheries and seaweed production, and increased credit flow to allied industries.
India's real GDP growth for FY22 is projected at 11%, according to the Economic Survey 2020-21. The WEO January 2021 forecasts an 11.5% increase in FY22 and a 6.8% rise in FY23. According to the IMF, India is also expected to emerge as the fastest-growing economy in the next two years.
Note: Conversion rate used for March 2021 is Rs. 1 = US$ 0.014