Analysing India’s $5 trillion dream and sectoral challenges that it faces
Upstox
3 min read • Updated: February 24, 2024, 4:18 PM
Summary
The Indian government intends to achieve a $5 trillion economy by 2025. A working group established by the Department for Promotion of Industry and Internal Trade (DPIIT) within the Ministry of Commerce and Industry has taken the initiative to accomplish this monumental benchmark. The national aspiration has prompted the government and industry stakeholders to develop a comprehensive plan for realizing this goal.
India’s $5 trillion dream
India is now the world's sixth-largest economy. It has been identified as one of the world's fastest-growing economies. According to World Data Lab, India's consumer market is expected to increase at a rate of 46%.
The current economic structure provides a solid platform for reaching the objective of a $5 trillion GDP by 2025. The strategic plan acknowledges the prospect of generating $1 trillion from agriculture operations and other related industries. The government estimates the manufacturing sector to reach $1 trillion, while the services sector is estimated to reach $3 trillion.
Reviewing sectoral plans
The Indian government has placed great emphasis on encouraging growth in many businesses. It further has established a variety of initiatives and programs to accelerate this progress.
The agriculture sector has shifted from a production-focused approach to one that emphasizes income generation. This would allow the sector to expand further.
The Industrial Policy of 2018 proposes the strengthening of existing policies by developing a holistic agenda for Indian enterprises to become more globally competitive, contemporary, sustainable, and inclusive. Additionally, the Champion Services Sector project has been developed to aid in the expansion of service sectors.
Furthermore, this working group at DPIIT has a strategy that could result in the formation of various sectoral sub-groups.
Sectoral opportunities and challenges
To achieve a $5 trillion economy, India must focus on sectoral growth opportunities and address key challenges. In the manufacturing sector, the government can embrace advanced manufacturing technologies to improve output. It can invest in research and development to boost productivity and quality. So, it must address the lack of skilled labour issue.
For the agriculture sector, there can be government schemes to raise awareness for modern farming techniques. Many state governments have increased their investment in irrigation and storage infrastructure. This will lead to high-value crop yield in future.
For the services sector, plans on using digital technologies to expand healthcare and educational services are to be implemented. Furthermore, the central government is emphasising skill development. This can help India to compete with other developed countries.
With the development of smart cities, the infrastructure sector is set to modernise transportation networks to reduce logistical challenges.
In the BFSI industry, it is promoting inclusive banking and financial services. Additionally, it has engaged with NBFCs and other small financial institutions to provide access to credit for small businesses, to support the growing needs of SMEs.
To achieve a $5 trillion economy, India needs to capitalize on these opportunities while addressing the associated challenges through strategic policy interventions, investment, and technology adoption across sectors.
Conclusion
In short, the $5 trillion dream aims to propel India toward becoming a global economic powerhouse through concerted efforts in agriculture, manufacturing, and services, supported by strategic policy initiatives and stakeholder engagement aimed at realising this extraordinary economic vision.