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The second piece that provided cheer was a tweet by the Finance Minister which said: “India’s GDP has reached $3.75 trillion in 2023, from around $2 trillion in 2014; moving from 10th largest to 5th largest economy in the world. India is now being called a Bright Spot in the global economy.” The FM’s tweet was only a reaffirmation of what Morgan Stanley’s Chief Economist Chetan Ahya wrote in Financial Times some months back: “Incrementally, India will add more than $400 billion to its GDP every year, a scale that is only surpassed by the US and China.” He added: “India is entering a phase where incomes will be compounding at a fast rate on a high base. For context, India took 31 years since 1991 to raise its GDP by $3 trillion. According to our projections, it will take just another seven years for the GDP to grow by an additional $3 trillion.”
There is little doubt that manufacturing, services and exports have contributed formidably to this galloping GDP base. But that is not the be-all and end-all. What will provide fuel for the next phase of the growth trajectory will be the expanding base of manufacturing to segments other than automobiles and infra. For example, defence and aerospace manufacturing, multiple incentive-driven programmes for green energy, semiconductors and electronics, to just name a few. Electronics was one of the first off the mark.
In 2021, under the Production Linked Incentive (PLI) plan, the country launched a $1.02- billion programme to stimulate local manufacturing and exports of electronics such as laptops, tablets, personal computers, and servers. While the programme was slow to take off, 2022 saw a sea-change with India’s smartphone exports reaching over $11 billion – half of it coming from Apple. The general belief is that in the next decade, India will be a global leader in the mobile devices segment.
The first three PLI Schemes (electronics/pharma and telecom and networking products) have been notified and are moving ahead. The other schemes approved by the Government include food products/ white goods/high-efficiency solar PV modules/automobiles and auto components/ advance chemistry cell/textile products and speciality steel. Green energy, of course, is an ambitious standalone project that will see a total transformation of the energy landscape in the country.
It is this churn in the manufacturing sector that will provide the true fillip for our GDP growth. That India can keep a 6.5 per cent growth trajectory despite the Ukraine-Russia conflict, a hostile neighbourhood and an uncertain crude oil regime is a reflection of the roundness of the Indian economy.