Director’s Remarks: Global Economic Order and the Indian Growth Story: Championing Fair Trade, Employment and Technology Equality; Session 5 (INSTEP Programme 03 October 2024)

Dear Friends,

It gives me a great pleasure to welcome you to this session on Global Economic Order and the Indian Growth Story.

The topic is extremely relevant for India. India is at the cusp of sustained economic growth for the next few decades. There are reasons for this optimism. India has maintained a consistent average rate of growth of about of close to 7 percent per annum in the last three decades. As a result, the Indian economy has grown from about USD 266 billion in 1991 to about USD 3.7 trillion today. The GDP increased by 14 times in about three decades. It’s purchasing power parity increased from $1 trillion in 1991 to $13 trillion in 2023. Poverty has declined steeply from 55.1% in 2005–06 to 16.4% in 2019–20. India is today the 5th largest economy in the world and likely to become the 3rd largest economy in the next five years or so.

India is a leading player globally in generic pharmaceutical, vaccine, two wheelers, compact car, ICT software. Several programmes have been launched in the last five years to promote domestic manufacturing (PLI), quantum computing, AI, cyber physical systems, bio technology etc. The government has made major investment in roads, highways, housing, ports and other infrastructures. The country has achieved notable success in making digital public infrastructure and Fin Tech which has brought about financial inclusion. This itself has acted as the driver for economic growth. 46 percent of global digital financial transaction are carried in India. The country has comfortable foreign exchange reserve of about USD 700 billion.

Yet there are several issues that need attention. These pertain to ensuring adequate jobs, inequality, productivity, rural economy, low share in global merchandise exports, climate change, geopolitical tensions etc.

This has been the result of sustained economic reforms undertaken by the different governments. There is political consensus in the country that the reform process needs to be further deepened to sustain this growth in the next 25 years. The Prime Minister has set the vision of making India a developed country by 2047.

We are conscious that mere economic growth is not sufficient. The quality of life also has to improve. Nearly 250 million people have been lifted out of poverty in the last ten years. We are conscious that the country has to make progress on the diverse parameters of human development. More jobs need to be created. There has to be even a greater emphasis on improving the quality of employment, skills for the knowledge economy and health and education of our people. We cannot ignore environment as we grow.

The government has undertaken deep reform in the last few years. The process did not stop even during the years of pandemic. India is a federal democracy. The states have their own priorities and concerns. The process of reforms cannot proceed unless everybody is on board. Building consensus is serious but an essential exercise. India has considerable experience in this regard. Everybody has to be onboard and no one can be left behind.

As we have heard in the previous sessions, the world is not in a good shape right now with ongoing wars, a dysfunctional international system, regular disruption in supply chains, weaponisation of economic instruments, rise of non state actors, climate change, extreme weather events.

Some external constraints which need to be identified clearly are:

• Geopolitics
• Uncertain economic environment,
• US-China’ competition for supremacy, US-China Trade and tech war
• Global supply chain disruptions
• China’s overcapacity
• Rising tide of protectionism, WTO’s paralysis
• Climate change
• Energy transition and decarbonisation of the economy
• Paucity of critical minerals and rare earths
• Food security
• Global health
• China Plus strategy
• India’s neighbourhood
• Resources for military modernisation
• Reducing dependencies- energy, fertilizer, semiconductors, machine tools etc
• Atmanirbhar Bharat