India has been on an economic journey from fragility to stability and strength. The previous government attempted to maintain rapid development between 2009 and 2014 by running large fiscal deficits and maintaining an excessively loose monetary policy for an extended period. High inflation was the cause of the high nominal GDP growth. From 2009 to 2014, India saw yearly inflation rates in the double digits. The nation had to deal with substantial twin deficits, an overvalued rupee, and a fiscal and current account deficit (4.9% and 4.8% in FY13). The Indian rupee plunged against the US dollar in 2013. The value of the Indian rupee fell by 5.9% a year from 2009 to 2014. The economy became stagnant.
PM Quote
India has come out of the days of Fragile Five and Policy Paralysis to the days of being among the top 5 economies.
When PM Modi took over in 2014, the economy struggled with double-digit inflation, significant budget and current account deficits, and both. The current account deficit is slightly over 1% of GDP, the budget deficit is heading downward, the inflation is under control, and foreign exchange reserves are sufficient to finance almost eleven months' worth of imports. Indian economic indicators signal rapid urbanization, industrialization, increased household incomes, and higher energy consumption. With a GDP of US$3.75 trillion, India ranks fifth-largest in the world. As per government data, the per capita income stood at INR 98,374 in 2022-23 (approximately US$1,183). The Indian rupee has emerged as the best-performing Asian currency in January 2024. During the fiscal year 2022-23 (FY23), the proportion of direct taxes to gross domestic product (GDP) reached its highest point in 15 years, standing at 6.11 per cent.
After gaining independence, India constructed 74 airports in the first 67 years. In the past nine years, it has doubled that figure. In 2014, there were 723 universities; by 2023, there were 1,113In 2020, the Gross Enrolment Ratio (GER) for females was 27.9, compared to 12.7% in FY10. In 2014, 3.4 crore students were enrolled in higher education. By 2023, there will be 4.1 crore such students. The credit-to-GDP ratio of the private nonfinancial sector fell to 83.8% in December 2018 from 58.8% in March 2000 to 113.6% by December 2010.
Over the last decade, the Modi government implemented several changes to support the financial industry as the banking, non-banking, and nonfinancial sectors deleveraged their balance sheets. The Public Sector Banks (PSB) recapitalization and merger, the SARFAESI Act 2002 amendment, and the adoption of the Insolvency and Bankruptcy Code 2016 (IBC) are just a few of the measures that have helped improve the balance sheets of banks and corporations.
The government's Make in India initiative pushed the manufacturing sector's percentage of total Gross Value Added (GVA) up from 17.2% in FY14 to 18.4% in FY18. The government's Production Linked Incentive (PLI) programs have helped the share steady at 17.7% in FY24.
India has entered the prestigious $4 trillion stock market valuation league, a growth of over $600 billion since the year began, placing India alongside the US, China, and Japan.
India has developed a digital infrastructure that boosts competitiveness, fosters innovation, addresses financial inclusion, improves governance, and removes disparities. Digital Public Infrastructure (DPI) is a testament to our nation's digital revolution. Initiatives like CoWIN, e-RUPI, TReDS, Account Aggregators, ONDC, and the Open Credit Enablement Network (OCEN) are in different stages of implementation, crafting a compelling narrative of India's remarkable digital journey. Digital Public Infrastructure (DPIs) have empowered 97% of Indians with Digital IDs. With an advanced DPI, 400 billion USD have been transferred to 900 million beneficiaries through 313 Government schemes. An estimated 34 billion USD in savings was generated from DBTs due to the weeding away of fake/duplicate/non-existent beneficiaries. $100 billion in value was generated within India's consumer internet landscape through DPIs. DPIs also drive significant innovation in new fields such as Healthtech, Agritech, and Insuretech through novel business models and have evolved beyond Aadhar and UPI.
During crises like COVID-19, DPIs came to the rescue. It facilitated emergency payments to 300 million, including 200 million low-income women, within weeks of the pandemic. During the pandemic, India provided food or cash support to a remarkable 85% of rural and 69% of urban households through DPIs. CoWIN integration with Aadhar enabled India to complete 1 billion vaccinations in a mere 9-10 months, and global applause was received for this large-scale health campaign.
In 2014, Indian patent registrations declined at the rate of minus 0.4%. India made remarkable progress in patents in the last decade, with a CAGR of 60%, reaching 90,300 patents filed in 2023. India is in the 40th position in the Global Innovation Index among the top innovative economies globally, per Global Innovation Index (GII) 2023. As per the 2022 WIPO Report, India is ranked 7th in the world in terms of resident patent filing activity.
While the previous regimes turned every opportunity into a crisis. 2004-2014 became a lost decade for India. However, since 2014, the coin has flipped. It is now India's decade.
