Union Budget 2024, India Aims to be a $7 Trillion Economy
- Discussing India’s budget week, the government’s interim financial plan anticipates no major announcements, yet signals ambitious goals, aiming to make India the world’s third-largest economy with a $5 trillion GDP by 2030.
- Setting an ambitious economic goal, the leadership aims for a $7 trillion GDP in 7 years, expressing confidence in their economic management, supported by optimistic growth projections exceeding 7% for the current year.
- Looking ahead to 2025, the Finance Ministry projects a sustained 7% growth rate for India, yet highlights three pivotal trends posing challenges: de-globalization, artificial intelligence, and energy transition, shaping the future trajectory of the country’s economy.
- Examining the concept of de-globalization, characterized by reduced global interconnection, India anticipates a gradual shift in supply chain dynamics, emphasizing the need for diversified alternatives with a focus on low cost and high quality, expecting a more assertive pursuit of these options by governments and companies.
- While the challenge for India lies in attracting global businesses to shift supply chains away from China, it faces fierce competition from countries like Vietnam, Thailand, Indonesia, and Mexico, all striving for a significant share in the market, emphasizing the need for India to stay competitive and attractive by securing favorable deals.
- Addressing challenges, the Finance Ministry suggests that India must invest in reducing logistics costs and enhancing production to create high-quality products, while also acknowledging the impact of the growing trend of artificial intelligence on the service sector, a significant contributor to the Indian economy.
- Highlighting the significance of the service sector, particularly India’s renowned IT services, which constitute over half of the country’s GDP with a 10% global market share, the report underscores the potential threat posed by the rise of artificial intelligence, expressing concerns about its impact on job creation and the potential slowdown in the services sector, while also acknowledging the challenges of the ongoing energy transition towards green alternatives amid rising global temperatures.
- Addressing the pressing challenges of supply chain diversification, the impact of artificial intelligence on job creation, and the imperative shift towards green energy transition amid environmental obligations, India’s policymakers are tasked with finding a delicate balance between growth and sustainability, with the upcoming budget expected to reveal the strategies to tackle these multifaceted issues.
Sources : Internet