Davos 2023: EY projects India to become $26-trn economy by 2047

Global consultancy firm EY on Wednesday announced its growth projection for India and estimated Indian economy will reach GDP size of $26 trillion by 2047, the 100th year of India’s independence. The per capita income is expected to increase to $15,000, putting the country among the ranks of developed economies, said EY. The report “India@100: Realising the potential of a $26 trillion economy”, was launched by Ashwini Vaishnaw, Railway and IT Minister, on the sidelines of the World Economic Forum at Davos, Switzerland.

The report underscores the growth trajectory of the Indian economy that is projected to be the highest for any large economy over the coming decades. It also cites key enablers that will underpin the country’s development over the next 25 years that will unleash business opportunities across sectors and will significantly enhance India’s global competitiveness. It recommends ensuring macro-economic stability and resilience and continued thrust on reforms, which will be especially relevant in the backdrop of on-going geo-political conflicts, inflationary pressures and slowing global growth.

Launching the report, Vaishnaw said, “In line with Prime Minister Narendra Modi’s vision, India has commenced its journey into ‘Amrit Kaal’, a uniquely auspicious period, representing India’s opportunity to herald a new world era. There is an unparalleled impetus on developing world-class infrastructure supported by growth and investment-oriented policies and reforms to establish India as a manufacturing and technology hub. Over the next decade, India will not only be the fastest growing economy but will also play an integral role in leading the world into a sustainable future.”

Carmine Di Sibio, Global Chairman and CEO, EY said: “As this study shows, India offers a unique investment opportunity as the world struggles with heightened consumer demands and increased geo-political pressures. With the biggest talent pool, an accelerated pace of economic reforms, breakthroughs in energy transition, and rapid digital transformation, the long-term growth trajectory is clearly positive. India demonstrates immense potential and is positioned to make a truly transformative impact on the world stage.”

Rajiv Memani, Chairman and Managing Partner, EY India said: “The entrepreneurial spirit of the private sector and policy measures of the last few years in the domains of fiscal, digital, physical infrastructure and social inclusion has uniquely positioned India for higher and sustainable growth. India is already among the fastest growing economy globally and is now at an inflection point where a new era of growth drivers will emerge. The next 25 years – the ‘Amrit Kaal’ – must bring an equal and strong focus on providing inclusive opportunities to all sections of the population, including women and those economically and socially disadvantaged.”

Under the most preferred scenario, India is likely to cross the critical thresholds of $5 trillion, $10 trillion and $20 trillion in market exchange rate terms in FY28, FY36 and FY45, respectively, show EY’s projections.

Growth enablers
EY has recognised eight key enablers of growth that will impact sectors across the economy and play a critical role in propelling the growth engine.

World’s Information Technology and Services Hub: With strong services exports at $254.5 billion in 2021-22, India enjoys a strong foothold especially in the IT and BPO services exports. There is now an opportunity for the country to seize a higher share of transformational and more complex, expertise-based services to grow faster in the IT services sector, said EY.

Digitalisation: A Force Multiplier: The furious pace of digitalisation in the country, including by the government, would result in multiple benefits of improving governance, financial inclusion and providing a framework for private players to reach new markets and create new products and services, said EY.

Reaping the demographic dividend: 25% of the incremental global workforce over the next decade will come from India. India also has the largest pool of English-speaking STEM graduates with an annual addition of 2.14 million (47% women) and 6.2 million healthcare professionals, which includes doctors and nursing staff.

Making domestic manufacturing competitive: As global supply chains continue to diversify post pandemic, the government’s ‘Aatmanirbhar Bharat’ (self-reliant India) initiative in manufacturing has found further impetus through path-breaking policies such as the Production-Linked Incentives (PLI).

Building the infrastructure of the future: In addition to massive upgrades in roadways, investments in physical infrastructure are being supplemented by IT-based ease-of-doing-business initiatives under the National Logistics Policy, with an aim to increase efficiency and lower the cost of movement.

Transition to sustainable energy: The government has set a target to be net zero by 2070 and reduce carbon intensity by 45% by 2030 vis-à-vis 2005 levels.

Policy recommendations: Enhancing ease of doing business, accelerating power sector reforms and energy independence, and enabling quality healthcare and education will not only increase business confidence but also ensure socio-economic development on a sustained basis. BusinessToday