Last updated: July, 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. 135.13 lakh crore (US$ 1.82 trillion) in FY21 as per provisional estimates of the annual national income for 2020-21. Simultaneously, the per capita income with GDP at current prices was estimated at Rs. 145,680 (US$ 1,960.96) 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 May 2021, India had a total installed power-generation capacity of 383,373.68 MW, of which 97,506.93 MW was contributed by central utilities, 103,869.64 MW (state utilities) and 181,997.12 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 Worldline India, the total cards in circulation stood at 94.7 crore in December; of this, debit cards accounted for 94% of the total market share, while credit cards accounted for 6%.
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.
According to provisional estimates published by the National Statistical Office (NSO), India witnessed a V-shaped recovery in the second half of FY21. As per the estimates, India recorded an increase of 1.1% in the second half of FY21, due to increased government expenditure, recovery in private consumption and investment in the fourth quarter of FY21. Sectors such as services also recorded growth in the fourth quarter of FY21 and this is expected to push further economic recovery in FY22. In addition, anticipated healthy monsoon presents a positive outlook for growth of the agricultural sector.
As per the Reserve Bank of India’s (RBI) estimates, India’s real GDP growth is projected at 9.5% in FY22, which includes growth of 18.5% in the first quarter of FY22; 7.9% growth in the second quarter of FY22; 7.2% growth in the third quarter of FY22 and 6.6% growth in the fourth quarter of FY22.
Note: Conversion rate used for June 2021 is Rs. 1 = US$ 0.013