After a year of disruptions in the Indian economy
following the cash purge and the Goods and Services Tax, Asia’s third-largest economy is now well poised to achieve new heights
of growth, despite the obstacles like rising debt and the trade protectionism. According to Finance Ministry, Indian economy is on track of doubling its size to $5 trillion
by 2025, with greater focus on start-ups, MSMEs and infrastructure investment.
Finance Ministry, at the CII Global Industry Associations Summit, exuded
confidence that India is on course to recording a growth rate of 7-8 per cent
and it can achieve even higher rates of expansion by focussing on producing
goods and services and generating demands for next 7-8 years. India’s GDP in
value terms currently stands at $2.5 trillion—making it the sixth largest
economy in the world.
India is now home to one of the fastest growing
start-ups ecosystem in the
world, thanks in large part to government efforts to remove barriers to entrepreneurship
and extend support for tech start-ups. As the government’s economic reforms
continue to materialize, we can expect many more companies to make commitment
in India’s business community, supporting its growth story.
To ensure these start-ups continue to scale up, the country need to continue promoting a
favorable business environment where start-ups can afford to innovate and
access capital.
As far as MSMEs are concerned, India has seen a strengthening MSME segment in the past few
years. Significant progress has been made on few challenges that had been the
major obstacle to the growth of MSMEs. One can draw an inference that concerns
such as government regulations, bureaucracy, availability and cost of land, and
certain labour-related challenges have reduced to some extent. Though, the key
challenges such as access to finance; availability of infrastructure;
availability of skilled labour; power supply and technology-related issues
continue to plague the sector. While demonetisation and GST have had an impact,
they have also created a framework for majority of MSMEs to join the organised
segment.
Further, the rising
income levels and economic prosperity is likely to drive demand for
infrastructure investment in India. According to Economic Survey issued
earlier, around USD 4.5 trillion worth of investments are required by India
till 2040 to develop infrastructure to improve economic growth and community
well being.
With regard to inflation, the ministry said that its trajectory is well within the RBI’s target of
4 per cent, plus/minus 2 per cent. The wholesale price index based
inflation fell to a 7 month low of 2.48 per cent. The consumer price based
retail inflation was also at 4 month low of 4.44 per cent in February. The RBI
takes into account retail inflation while formulating its monetary policy.
Undoubtedly, the Indian economy is on higher growth trajectory. While there are some sectors which
are growing at a higher rate, there are others which are struggling
with various policy measures and challenges. Even so, the strong spirit and
commitment to develop is noticeable.
Latin Manharlal Group
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