Last updated: January, 2021
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 GDP (at constant 2011-12 prices) was estimated at Rs. 33.14 trillion (US$ 452.74 billion) for the second quarter of FY2020-21 against Rs. 35.84 trillion (US$ 489.62 billion) in the second quarter of FY2019-20.
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 November 2020, India had a total installed power generation capacity of 374199.04 MW, of which 93,926.93 MW was contributed by central utilities, 103,617.40 MW (state utilities) and 176,654.72 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.
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. In November 2020, Prime Minister Narendra Modi invited investors to participate in the Indian smart cities project pipeline (US$ 30 billion), of which projects worth US$ 20 billion are already underway.
Government initiatives like Make in India and Ease of Doing Business in India is expected to boost PE/VC investments in the country. Investors expect an increase in M&A activities in FY 2020-21.
To realise full potential of the Atma Nirbhar Bharat project, India is encouraging global investors to finance the energy sector. By 2030, the oil & natural gas sector in India is projected to attract over ~US$ 300 billion investments. Also, the government is aiming to more than double the share of natural gas in its energy base to 15% by 2030.
Note: Conversion rate used for December 2020 is Rs. 1 = US$ 0.014