Last updated: October, 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 gross domestic product (GDP) at current prices stood at Rs. 51.23 lakh crore (US$ 694.93 billion) in the first quarter of FY22, as per the provisional estimates of gross domestic product for the first quarter of 2021-22.
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 August 2021, India had a total installed power-generation capacity of 388,133.75 MW, of which 97,636.93 MW was contributed by central utilities, 103,920.64 MW (state utilities) and 186,576.19 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 March 2021, the number of ATMs in India increased to 2.39 lakh compared with 2.35 lakh ATMs in March 2020. According to the Reserve Bank of India, in June 2021, the total debit cards in circulation stood at 906 million, while credit cards in circulation stood at 62 million.
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-paced 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.
Further, as per a Deloitte report published in September 2021, India remains an attractive market for international investors both in terms of short-term and long-term prospects.
As per the data published in a Department of Economic Affairs report, in the first quarter of FY22, India’s real gross value added (GVA) also recorded an 18.8% YoY increase in the first quarter of FY22, posting a recovery of >92% of its corresponding pre-pandemic level (in the first quarter of FY20). India’s output recorded a 20.1% YoY growth, recovering >90% of the pre-pandemic output in the first quarter of FY20. Also, in FY21, India recorded a current account surplus at 0.9% of the GDP. The growth in the economic recovery is backed by the government’s continued efforts to accelerate vaccination coverage among citizens. This also provided an optimistic outlook to further revive industrial activities.
Note: Conversion rate used for September 2021 is Rs. 1 = US$ 0.014