Time to Invest in India.

INDIAN ECONOMY

11 Jan, 2023

NEWS HIGHLIGHT

Theme : Indian Economy
Paper:GS-3

The pandemic has proven to be the breakout moment in India’s long overdue emergence as the world’s next engine of growth.

TABLE OF CONTENT

Context : The pandemic has proven to be the breakout moment in India’s long overdue emergence as the world’s next engine of growth.

Investment :

It is a process of putting money in productive activities to earn income
It can be done:
Directly (in different activities in the primary, secondary or tertiary sectors)
Indirectly (as in financial securities, such as shares, debentures, bonds, mutual funds, etc.)

Challenges in front of Global Economy :

According to the International Monetary Fund (IMF): Global growth will nearly halve to 2(three point two) percent in 2022 and fall further to 2.7(two point seven)percent in 2023.Reflecting stalling growth in the US, China and the Euro Zone.
Higher food and energy prices led to global inflation peaking at 8(eight point eight)percent in 2022.Expected to decline to 5(six point five)percent in 2023 and 4.1(four point one) percent in 2024.
Inflation: It has been aided by fiscal and monetary policy working in tandem with a little help from easing commodity prices.
Developed nations are struggling to tame inflation as they adopted excessive stimulus measures.
McKinsey Global Institute report-2020 and 2021:Debt and equity liabilities of households increased by about $50 trillion and $75 trillion, respectively, as governments and central banks stimulated economies.
Russia-Ukraine conflict is inflicting fiscal pain beyond the immediate region
China’s Covid policy has disrupted supply chains.

India’s stand :

Economic growth: Economy estimated to grow around 7 percent in FY23 and a growth forecast of around 5(six point five)percent in FY24.Tag of the fastest-growing large economy in the world.
Retail inflation eased to 88(five point eight eight)percent in November.Coming within the RBI’s tolerance band after 11 months.
Surpassing the UK to become the world’s fifth-largest economy
Likely to overtake Japan and Germany before the end of the decade to become the third-largest economy in the world

Steps taken by India :

Reforms aimed at enhancing ease of doing business and reducing the cost of doing business in a large Unified domestic market
Boosting the manufacturing sector through the Production Linked Incentive (PLI) schemes.Helping attract large investments including in critical areas like semiconductors.
Heavy lifting in terms of public infrastructure capex during the pandemic period and its immediate aftermath.

Road Ahead :

The mantle of the G20 presidency has come at the right time, allowing India to influence the global agenda based on its own priority of accelerated, inclusive and resilient growth.
Attention must now shift to the private sector investment cycle which has been steadily gaining momentum.
India’s priority as G20 president is to focus on areas, which have the potential to bring about structural transformation leading to accelerated, inclusive and resilient growth.
The concept of LiFE (Lifestyle for the Environment) draws upon ancient sustainable traditions to reinforce modern-day environmentally conscious practices.
Knowledge sharing in areas like digital public infrastructure and financial inclusion will enable the wider adoption of disruptive technologies.
Investors – both domestic and global: They must now come forward and participate in the India growth story which, in turn, will give a much-needed boost to global growth going ahead.

FAQs :

ANS.

It is a process of putting money in productive activities to earn income
It can be done:
Directly (in different activities in the primary, secondary or tertiary sectors)
Indirectly (as in financial securities, such as shares, debentures, bonds, mutual funds, etc.).

ANS.

Developed nations are struggling to tame inflation as they adopted excessive stimulus measures.
McKinsey Global Institute report-2020 and 2021:Debt and equity liabilities of households increased by about $50 trillion and $75 trillion, respectively, as governments and central banks stimulated economies.
Russia-Ukraine conflict is inflicting fiscal pain beyond the immediate region
China’s Covid policy has disrupted supply chains.