India, A $20 Trillion Economy

AUTHOR-

HIMANSHI VERMA

HARSH MEHROTRA

KASHISH GARG

KSHITIZ SHARMA

Abstract
In the midst of all the myriad nodi and haywire going on around the globe, the country with 1.38
billion minds manages to make a room for itself in the list of the top 5 robust economies of the
world. India, the country known for its rich culture and diversity, achieved this milestone and
aims even bigger. In terms of trade, as well as social and cultural connection, India holds a
significant strategic position on the planet. This research paper examines the roadmap to a $20
trillion economy. With the current growth rate and obstacles lingering around, this target seems
farfetched but with the right strategy things can be turned upside down. This paper analysis the
factors (viz., Economic, Technological, Legal, Sectoral and Demographic) that affect the growth
of the economy both positively and negatively. It takes into consideration all the things that
would contribute to or hinder India's dream of becoming a $20 trillion economy.
Keywords- Buoyant culture, Domestic Economy, Economy Dream, Internal and External factors
etc.

Introduction
In recent years, the global market's warp and weft have fallen even further short of the ideal of
perfect competition. If India were to shift its growth and development trajectory to a Citius,
Altius, or Fortius level, both government policies and business responses to those policies are
critical. Despite global headwinds, the recovery
continues with substantial economies' obtuse growth paving the way to downfall, the colossal
country of 138 crore minds has been a conspicuous exception.
Withstanding a single-digit growth of 7%, double of what the global economy manifests on its
growth prospects, incidentally leapfrogging Great Britain as the world's 5th biggest economy,
quotes as paramount. On the optimistic outlook, the statistical growth is 13.5% in the April-June
quarter. On a digger dip, the capacity utilization (CU) of India hits an all-time high of 75%,
which can sustainably conceal the constraint of private investments.
Rationale
In these unprecedented times, everyone wants their investments to be safe and what's a safer
place than the emerging market of a developing country. Both India and China are potential
developing countries but the high geopolitical risks associated with China are a chink in its
armour. Thus, making India the most suitable market for investing and growth prospects.
Relevance of this study
The findings in this study describes a roadmap to a $20 trillion Indian economy and India being
the hub of safe and value investments, reaching this benchmark would be beneficial for all the
global economies and give India a strong comparative edge.
Method of research
The method of this research is Descriptive Statistics.

Economic outlook
India's economy will grow well below its potential over the next two years, with inflation staying
above the midpoint of the Reserve Bank of India's tolerance band despite recent interest rate
rises, according to a Reuters poll of economists. While growth was expected to be faster than
many other economies, it would be too slow for the job creation needed to pull tens of millions
of people out of poverty in a country typically ranked one of the worst in the world for hunger.
Growth likely slowed sharply to an annual 6.0% in the third quarter from 13.5% in the second
which was supported mainly by statistical comparisons with a year earlier rather than new
momentum. It was expected to decelerate further to 4.4% in the fourth quarter

Fig-1

•In recent years, the global market's warp and weft have fallen even further short of the ideal of
perfect competition.
•If India were to shift its growth and development trajectory to a Citius, Altius, or Fortius level,
both government policies and business responses to those policies are critical.
•The rise in national income is driven by consumption, investments, government spending, and
(net) exports. It is also true that the global market is much more competitive.
•India establishes the Azadi ka Mandir Mahotsav to establish the trajectory blueprint for 2047;
the working-class Indians' increasing productivity is reflected in the per capita income, which is
currently 7,220 PPP dollars.
•India's growth trajectory over the past seven decades hasn't just happened by chance.
•It is a result of carefully sown seeds of policy reforms and sector-specific action goals
embedded in the vision of equitable development and enhancing the lives of the 1.3 billion of
lives (more than 15% of the world population)

On figures of growth
•The Indian economy expanded 13.5% year-on-year in the second quarter of 2022, the most in a
year but less than market forecasts of 15.2%.
• Gross value added increased faster for agriculture, forestry & fishing (4.5% vs 2.2% in Q2
2021)
• electricity, gas, water supply & other utility services (14.7% vs 13.8%)
• financial, real estate & professional services (9.2% vs 2.3%)
• public administration, defense & other services (26.3% vs 6.2%).
• On the other hand, a slowdown was seen for mining & quarrying (6.5% vs 18%);
manufacturing (4.8% vs 49%); construction (16.8% vs 71.3%), and trade, hotels, transport,
communication & services related to broadcasting (25.7% vs 34.3%).
• On the expenditure side, household consumption accelerated (25.9% vs 14.4% in Q2 2021) and
government expenditure rebounded (1.3% vs -4.8%).
• Meanwhile, gross fixed capital formation slowed (20.1% vs 62.5%) and net foreign demand
contributed negatively to growth, as exports rose 14.7% while imports advanced at a faster
37.2%

2021 2022 UNIT TIME FRAME

GDP -1.4 -1.4 percent Jun/22

GROWT
H RATE

GDP 13.5 4.1 percent Jun/22

ANNUAL
GROWT
H RATE

GDP 3173 2,668 USD Dec/21

Billion

GDP 36851 40,780 INR Jun/22

Constant Billion
Price

Gross 145367 13,280,2 INR Dec/21

National 32 23 Tens
Product

Gross 12,778 13,711 INR Jun/22

Fixed Billion
Capital
Formatio
n

GDP per 1,961 1,818 USD Dec/21

Capita

GDP per 6,675 6,187 USD Dec/21

Capita
PPP

Full Year 8.7 -6.6 percent Mar/22

GDP
Growth

GDP 4,933 5,689 INR Jun/22

from Billion
Agricultu
re

GDP 2,629 3,383 INR Jun/22

from Billion
Construct
ion

GDP 6,051 6,764 INR Jun/22

from Billion
Manufact
 uring

GDP 854 990 INR Jun/22

from Billion
Mining

GDP 4,664 4,939 INR Jun

from Billion
Public
Administr
ation

Fig-2

Growth indicator

An economic strategy moves beyond improving individual policies. It outlines the value
proposition of a location in the global economy, indicating where and how the location aims to
compete. The location-specific patterns of current competitiveness determine how specific policy
actions will impact productivity. A deeper inspection reveals a complicated mixture of
achievements and unmet obstacles. Inequality has grown over time, with particularly significant
gains at the top of the income distribution, while poverty has decreased.

With stark deficits in environmental quality and the standard of basic education, social growth
lags behind average affluence. Less distorted, more focused, and more geared toward organizing
bottom-up upgrading, social policies are now.Productivity and labor force participation are key
drivers of prosperity.Strong product development has occurred in India, as seen by changes in
GDP per employee. However, it is exceedingly low, especially for women, and has been steadily
dropping over time.
LEADING TO:

1) STRUCTURAL TRANSFORMATION
2) BETTER INPUT CONDITION ( factors of production)

The distinctive feature of economic growth occurs when a sustained period of rising income and
living standards coincides with changes in the distribution of economic activity across three
broad sectors of an economy—agriculture, industry, and services.
A) by factors of production: a literate and mobile labor force who are mostly in employment,
substantial quantities of skilled labor, most available land cultivated, all sectors heavily
capitalized, with spare capacity, comprehensive transport, and power systems.
B) by sectors of the economy: agriculture wholly commercial, mining of limited size,
manufacturing diversified and much larger than either agriculture or mining.
C) by public finance: reliance on direct taxes, tax laws enforceable; big outlays on social
security, and agricultural subsidies.
D) by foreign trade: exports that are sold to many countries with high price and income
elasticities, imports largely of primary products, and income elasticity of demand not high.

Roadmap India@2047

Over the next 25 years, India will become a developed nation because of its solid economic
foundation. According to our forecasts, India@2047 can earn more than USD 26,000 per person,
which is over 13 times the current level. Instead of using purchasing power parity (PPP) terms,
this is both conceivable and realistic in USD terms. These factors may be used to attain this
increase in per capita income: A realistic assumption of 12% growth in GDP
● The growth rate of the population decelerates by 0.01% every five years
● INR/USD depreciation of 2% per annum until 2025 and 0.5% per annum thereafter.
Consequently, India offers investors of all types an attractive destination - those looking for
resources, those looking for efficiency, and those looking for markets, in particular.

Fig-3
Buoyant position

In the next quarter of the century, India could provide massive scale and a variety of emerging
consumption patterns to market seekers. There are potential opportunities for market seekers in
the country as it has a large domestic consumption base, the seventh-highest final consumption
expenditure in the world,

1)Private and government consumption contributing more than 70% of the GDP,
2)A rapid rise in per capita income

In 2030, India is projected to have 140 million middle-income households and 21 million high-
income households, according to the World Economic Forum's Future of Consumption report
(2019). As compared to 2018, upper middle- and high-income households will drive 61% of
consumption in 2030. Due to disruptions caused by the pandemic, these numbers may
undershoot a little bit, but the trajectory will probably remain the same. As of 2030, India will
have the largest working-age population in the world, with a median age of 31, as compared to
China and the US, with 42 and 40, respectively.
Additionally, it is estimated that 90 million new households will be headed by millennials by
2030. Unlike their former generation, these digital natives will have a radically different way of
consuming and expecting service from both the public and private sectors. Considering the
growing per capita income of India@2047, it will be comparable to modern economies such as
Spain and Portugal, where the average per capita income is around USD 25,500. Indian youth
and the upwardly mobile still have a long way to go before their aspirations are realized.

For instance, in Spain and Portugal, the average lifespan is around 80 years, and the maternal
death rate is less than 0.10.

A step forward

India holds out of putting forward its best thinking to unlock these key areas. If all stakeholders
come together as a community of solvers to put their might behind it, INDIA@2047 will be
firmly gliding through the expressway of developed countries.
Rethinking the future of a committed India and de-stressing the economic and social fault lines
could achieve economic and social results for India in @2047 for both government and business.
India will need to open up the following main priority areas, which call for both investments and
policy changes, in order to reap the benefits of the economy.
Technological outlook

Technology can be seen as the main source of economic development, and the numerous
technological advancements have had a big impact on the growth of undeveloped nations.

Economic expansion and technological development are inextricably linked. The state of
technology also has a significant role in determining economic growth. High level technology
can be used to achieve the rapid pace of growth. Innovation and technological advancement are
the sole factors that determine economic growth. The process of expansion, however, comes to
an end if the level of technology stabilises. Therefore, the advancement of technology is what
keeps the economy growing.

Here are some Technological edges that India possess which can help it to turn itself into a
multi-trillion economy.

India is among the top three global economies in number of digital consumers.

India is one of the top three digital consumer nations in the world. India is the second-largest
internet subscriptions market in the world, with 560 million subscriptions in 2018, up from
238.71 million in 2013. India also boasts the most social media users and the second-largest
number of users of instant messaging services worldwide, after China. The largest system of its
kind in the world, Aadhaar, India's distinctive digital identity scheme, encompasses more than
1.2 billion people.

India has the second-fastest rate of growth of digital adoption in our

comparison set.

17 digital economies—including those in Brazil, China, Indonesia, Russia, South Korea,

Sweden, and the United States—both developed and developing were taken into account. On a
scale of 0 to 100, India's digital index score increased from 17 in 2014 to 32 in 2017, the second-
fastest increase after Indonesia. In terms of e-governance, digital identification, the increase of
mobile internet access, and the adoption of digital media by online users, India has done well.
For example, India's monthly mobile data consumption per user, which is 8.3 gigabytes (GB) per
month, is over 54 times higher than the figure in mid-2016, higher than nations like China, where
the figure is 5.5 GB per user, and comparable to digital leaders like South Korea, where it is 8–
8.5 GB per user.
India’s digital divide is narrowing fast as less- affluent states leapfrog to catch
up with more- affluent states.

Seven of the ten states with the lowest per capita GDP in India between 2014 and 2018 were
among the ten with the fastest rate of growth in internet subscriptions. Uttar Pradesh alone added
36 million internet memberships among the lower-income states, accounting for 12% of all
incremental internet subscription growth in India during this time. Similar to this, eight of the top
10 states in terms of the number of gram panchayats served by Common Services Centres
(CSCs) have lower GDP per capita than India as a whole.

India can create up to $1 trillion of economic value from the digital economy
in 2025, with half of the opportunity originating in new digital ecosystems that
can spring up in diverse sectors of the economy.

The existing digital ecosystem, which consists of information technology and business process
management (IT-BPM), digital communication services (including telecom), e-commerce,
domestic electronics manufacturing, digital payments, and direct subsidy transfers, currently
generates about $200 billion in economic value annually for India, accounting for 8% of India's
GVA in 2017–18. India might develop a digital economy of $800 billion to $1 trillion by 2025
(or around 18 to 23% of the nation's nominal GDP). The current digital ecosystem could
generate up to $500 billion in economic value, but if digital technologies are used to boost
productivity, savings, and efficiency in more varied industries like agriculture, education, energy,
financial services, government services, healthcare, logistics, manufacturing, trade, and
transportation, India's potential economic value could reach as much as $1 trillion. A wide range
of digital services, platforms, apps, content, and solutions would find a fast expanding market as
a result of India's anticipated five-fold increase in economic value from its digital transformation
by 2025. These investments in cutting-edge technology (including artificial intelligence,
blockchain, drones, and robots) tailored to India's demands constitute an alluring potential for
multinational corporations, small businesses, and platform-based innovators.

Thirty digital themes, if scaled up nationally, can accelerate India’s progress

in nine key areas and help create up to $1 trillion of economic value in 2025.

In areas where significant productivity gains, efficiencies, and citizen benefits can be realized,
and where initiatives already under way provide some foundation for future growth, the 30
themes collectively represent some of the largest system-level digital opportunities and
transformations that are possible. By offering better access, better quality, and greater
transparency to services, these themes have the potential to unlock enormous value and empower
millions of employees, entrepreneurs, small and large organisations, and consumers in rural and
urban areas of the nation. The nine objectives are listed below –

 21st-century IT infrastructure and software capabilities, which includes four

themes:

1. equipping the IT-BPM industry with digital technologies of the future, such as
artificial intelligence (AI), analytics, automation, cloud, cybersecurity, mobile,
and social, so that it could achieve between $205 billion and $250 billion of GVA
in 2025, or roughly twice the $117 billion of GVA achieved in 2017–18.
2. Creating state-of-the-art cybersecurity and data protection frameworks.
3. Building capabilities for real-time data visualisation and data analytics within
India.
4. realising the vision of broadband for everyone, comprising a new visual
broadband standard and the aspiration of providing affordable high- speed
internet to everyone by 2025.

 E-governance of the future, which includes six themes:

1. Scaling up the Government e-Marketplace.

2. Achieving comprehensive direct Benefit Transfers.
3. Launching digital Land 2.0 to dematerialise and digitise the transfer, leasing, and
tracking of land, aided by an interoperable land records platform.
4. Creating a National document and data exchange to facilitate paperless, instant
exchange of documents.
5. Introducing shareable APIs and digital tools for improved urban e-governance in
local bodies.
6. Achieving sustainable Common Services Centres in all gram panchayats as a
250,000-strong network of village-level entrepreneurs providing local communities
access to commission-based online services, such as farmer advisory and local job-
search and placement services.

 Healthcare for all, which includes three themes:

1. Assembling a universal electronic health record (EHr) for every Indian by 2025,
along with an Integrated Health Information Platform.
2. Introducing technology-enabled remote healthcare in public and private health centres
and hospitals.
3. offering a universal public health insurance platform to support the National Health
Protection Scheme (Ayushman Bharat).
 Quality education for all, which includes two themes:

1. Promoting digital content delivery and learning in schools and higher education centres
with HD video-based learning and online open courses.
2. Creating an integrated education content platform, with customisable local-language
content and anonymised student-level competency data to enable innovation that can
address educational competency gaps, facilitated by a fund of funds set up by the
government to shepherd promising ideas from conceptualisation to piloting.

 Energy for all, which includes two themes:

1. Expanding digitally enabled, affordable power access by installing prepaid meters,

completely digitising bill payments, and promoting advanced analytics in electricity
distribution companies (DISCOMs).
2. Building a smart grid that integrates distributed generation and renewables, and supports
distributed, bidirectional flows that enable entities on the grid to be both consumers and
producers of energy. This goal also requires the government to support research, proofs
of concepts, and scaling up of specific smart grid technologies.

 Next-generation financial services, which includes two themes:

1. Continuing to scale digital payment solutions and transition to a less-cash economy.

2. Introducing flow-based lending and advanced credit underwriting to provide more
finance to micro, small, and medium-size enterprises (MSMEs) through data-driven
credit evaluations, using information from the Goods and Services Tax Network and
other traditional and non-traditional sources of data generated by MSMEs. Flow-
based lending could fill 60 to 80 percent of the credit gap faced by MSMEs, which
could in turn generate $90 billion to $120 billion of additional economic value in
2025.

 Doubling farmers’ incomes, which includes three themes:

1. Enabling digital financing and insurance pay outs by facilitating consolidated

information, credit scoring models, and yield forecasting models using satellite and
weather data.
2. Introducing precision agriculture using data analytics, with an integrated agricultural
data platform across all existing and new data sources (such as the 158.7 million Soil
Health Cards dispatched). Based on pilots, this initiative could raise farm productivity
by 15 to 20 percent.
 3. Implementing online agricultural marketplaces linked to a unified, nationwide market
with
a set of institutional market facilitators and common assaying and grading standards.
Such e-marketplaces could cover 40 to 60 percent of agricultural produce sold in
India, leading to 15 percent farmers’ price gains, as demonstrated by pilots. Together,
these changes could add $50 billion to $70 billion of economic value in 2025.

 Make in digital India, make for India, make for the world, which includes five
themes:

1. Facilitating end-to-end supply chains, e-enabled trade, and e-commerce to reach

all Indian consumers and producers, link small retailers to digital value chains (such
as e-commerce logistics and smart point-of-sale machines in retail stores), and
improve inventory handling efficiency, which has shown gains upto 20 percent in
pilots in the private sector. Scaling this initiative to reach 60 to 80 percent of India's
supply chains could generate additional economic value of $5 billion to $10 billion in
2025.
2. Allowing efficient passenger transportation enabled by shared ride-hailing platforms
throughout the country.
3. Fostering an integrated digital logistics platform to optimise modal mix of freight
coupled with e-tolling, dynamic routing, and predictive maintenance of fleets. The
potential value is estimated at $20 billion to $25 billion in 2025.
4. encouraging manufacturing automation and internet of things (IoT)–based advanced
analytics to improve the competitiveness of the manufacturing sector by investing in
AI and IoT incubation centres, resource centres, and test beds for new IoT
applications.
5. Building vibrant electronic device manufacturing ecosystems encompassing
assembly, components, and design for smart phones, Led and LCD televisions and
set-top boxes, Led lights, sensors, medical electronic devices, among other goods.
Domestic electronics manufacturing could generate economic value of $100 billion
to $130 billion in 2025, based on this study’s estimates.

 Jobs and skills for all, which includes three themes:

1. Offering skill building for the future by creating large-scale national partnership for
workforce skill upgrades across industries.
2. Creating online talent marketplaces to connect employers with work seekers at all
levels, including a jobs data platform to capture labour demand and supply data at a
granular local level, leveraging channels such as CSCs and post offices.
3. Promoting digitally enabled jobs allowing people to work from home or remote
locations instead of needing to be co-located at the point of service delivery.
Fig-4
 Fig-5 Fig-6

The economic changes have sparked a significant internal skill migration to industries directly
involved in wealth generation, particularly in the export of services. (The Indian economy today
comprises more than 50% of the service sector.) But there haven't been as many significant new
initiatives in science and technology, either public or private. With a few notable exceptions,
India continues to be more of a consumer than a producer of technology. MNCs and international
businesses are increasingly using local personnel to create systems abroad that may be resold
home. The current economic structure does not yet place any pressure on the nation to produce
riches through the development of technology and intellectual property.

Other major technological drawbacks that India faces are-

Dependency on tech import

In the vast majority of circumstances, India still imports its most technologically advanced
products, such as all civilian and the majority of military aircraft, a range of defence tools, the
majority of cars, medications, computers, communication tools, etc. As a result, the
accomplishments only make up a small portion of the nation's overall technological market.
 Fig-7

Lack of human capital for efficient use of technology

Every day, new technologies are being created. However, using them in manufacturing is expensive
and requires workers with high levels of skill.

Any new technology needs resources, as well as individuals who are qualified and trained.
Therefore, a key barrier to the economic adoption of technology is a lack of skilled labour and
human capital.

India received a score of 0.44 on the Human Capital Index, placing it 115th out of 157 countries.
India is listed behind much poorer nations like Bangladesh and Nepal. A child born in India will
only be 44% as productive as a child born in a utopia with perfect health and education,
according to the score of 0.44.

In a world dominated by automation and artificial intelligence, human capital will become more
and more valuable. If one wants to survive in the brave new world, they must have the ability to
learn complex skills. Three things are estimated by the score. It begins by measuring infant
mortality up to age five. Second, it evaluates education in terms of anticipated school years and
learning retention. The score also examines the percentage of kids that are not stunted as a result
of poor nutrition. Even though the percentage of children who survive to age five is relatively
high, the adjusted years of education (which measure effective learning) are only between five
and six years, but the actual years of education are anticipated to be above ten years. The not-
stunted rate is a little less than two-thirds of the population with the proportion at 62 per cent.
However, The Government of India has been quick to challenge the report stating that it did
not reflect the key initiatives taken by the government to develop human capital “like the
Samagra Shiksha Abhiyan, which focuses on access and quality of education for the benefit of
197 million school children.” It has been alleged that the report has also ignored the
Ayushman Bharat Programme, “the world’s largest Health Insurance initiative”.

The government criticism has pointed to the Pradhan Mantri Ujjwala Yojana that has
benefited women by providing gas connections and replacing back-breaking firewood and
coke fuel. Financial inclusion was also mentioned wherein the Jandhan Yojana has provided
access to formal banking services to millions.
In conclusion, the response said, “The Government of India, therefore, has decided to ignore
the HCI and will continue to undertake its path-breaking programme for human capital
development…”
However, the previous year’s data on human capital released by the World Economic Forum
showed that there had been little change. In 2017, India ranked a low 103rd out of 130
countries surveyed.

Fig-8

Poor adaptation of technology in agricultural sector

The Indian agriculture sector contributes nearly 18 percent of the gross domestic product (GDP)
and 40 percent of the total rural Net Domestic Product (NDP). Due to a lack of sound
technology, Indian agriculture still confronts a number of difficulties despite making a
substantial contribution to promoting socioeconomic growth.
Technology in agriculture can be used in different aspects of agriculture such as the application
of herbicide, pesticide, fertilizer, and improved seed. But continued dependence on the
monsoon, inadequate access to irrigation, imbalanced use of soil nutrients resulting in loss of
fertility of soil reflects poor state of technology in Indian Agricultural system along with its
uneven access in different parts of the country.
Another aspect that adds to the economic issues in India is that poor farmers cannot even buy
essential things like improved seeds, fertilizers, and machines like tractors, investors, etc. Further,
most enterprises in India are micro or small. Hence, they cannot afford modern and more productive
technologies which further degrades the condition of Indian Agriculture.

Legal outlook
The law and order of any country plays a substantial role in the development of its economy.
Economics and law are the two disciplines that are extremely intertwined. The economic analysis
of law focuses on two major aspects- efficiency and incentives. To explain it further, when a
right is granted to the person who is ready to pay most for it, such a legal situation is said to be
efficient. Further law and economics shares with other branches of economics the assumption
that individuals are rational and respond to incentives. Hence, economic analysis of the legal
system is a colossal contributing factor in the growth and development of an economy.

The WJP Index

Since 2006, the World Justice Project (WJP) has been evaluating the jurisdictions of 140
countries round the globe. According to the 2022 WJP Rule of Law Index, India has to cover a
long and effective avenue in order to be at an equal footing with its global competitors, as it
resides at the 77th position. India has a mere score of 0.50 against the impeccable scores of the
global leaders like the US and China. This difference in the legal index is also reflectant in the
global GDP rankings.
 Fig-9

Legal factors that pull down the growth of India-

Hefty pendency of cases

Currently over 47 million cases are pending in the Indian courts. These pending cases are a huge
hindrance in India's trajectory to a multi million dollar economy.

The pendency of cases directly impacts the flow of money in the economy. Shedding more light
on it, the more time a corporate case is under dispute, the more adverse effect it has on its cash
flows, thus obstructing the flow of money in the economy.

Strict Trade Regulations

India stands at the 63rd position in the ease of doing business index. Despite the fact that many
markets have been opened up since the 1990s due to the LPG reforms, a considerable legacy of
rules and regulations that raise operational expenses still exists. These regulations partcularly
impact growing businesses attaining middle size: smaller businesses stay unorganised and larger
organisations can develop the capacity to handle the expenses of regulation.

India has improved on global rankings evaluating the cost of doing business since liberalisation
began in 2015. However businesses on the ground, continue to have a difficult time.
High expenses are produced by lengthy, unpredictable judicial processes and heterogeneity
among several branches of government.

India continues to experience poor regulatory enforcement, which refers to the pace and regularit
y with which laws are being implemented.

Improvements to the legal system

On a positive side, the legal system of India does not turn a blind eye towards the economic
development of the country. Several new laws and acts have been passed in order to minimize
the flaws in the legal system. Some of them are as follows-

1. Introducing a Vivad Se Vishwas Scheme to resolve pending tax litigation requiring taxpayers
to pay the amount of disputed tax only (and not interest and penalties) by 31 March 2021. In
cases of disputes relating to penalty or other interest or fee taxpayers would be permitted to settle
the dispute by payment of 25% of the amount in dispute by 31 March 2021.

2. Launching SEBI Complaints Redress System (SCORES), a mobile application enabling

investors to lodge their grievances with SEBI in relation to the securities market against listed
entities and SEBI registered intermediaries.

3. Several other measures like granting exemptions to non resident tax payers and permitting
100% FDI in contract manufacturing have been introduced but the proper implementation of
these laws is necessary.

The legal system of a country is its foundation. Proper implementation of rules and regulations,
preventing abuse of legislative and executive powers, reduction in corruption and bureaucracy
and quick decision making can also help in the reduction of crimes, improve the flow of money
in the economy and boom the GDP growth multifolds.
Sectoral changes in the economy

Sectoral or structural changes in the economy define the changes in the relative importance of the primary
sectors of an economy, including agriculture, industry, services, and more, during the economic growth
period. Here, relative relevance refers to shifting proportions of output and employment in various
economic sectors. The associated changes in the architecture of production organization and labor
utilization are crucial in the setting of big, low-income, and dualistic developing economies.

Sectoral changes have two broader approaches; One approach is to assume that changes in productivity
and employment are structural and then investigate how broader economic policies (macroeconomic,
industrial, export, and trade policies) have influenced the growth process in which structural change takes
place. This is less about specific structural change (capital accumulation and labour reallocation) and
growth components and more of an analysis of economic growth and what has contributed to the growth
process. The second strategy is more specialized and focused; in it, investment and capital accumulation
are seen as the primary drivers of improvements in productivity and employment, while labour input is
seen as the secondary driver.

Output Vs. Employment growth in India

India is a developing country with an employment rate of over 45% in agriculture and only 8% in what
would be considered "good work" in 2012. Although it qualifies as an emerging economy due to its recent
expansion, the dual economy paradigm is also pertinent. In these economies, structural transformation
depends on the mechanism of labor migration from traditional to modern sectors of the economy. Cross-
sectoral labor transfers continue to occur as countries get richer and lose their primary dualistic nature.
Still, they are exclusively tied to productivity development and have no associations with overcoming
dualism. Due to Kaldor, the framework is still applicable in this more advanced situation (Kaldor, 1967,
1968; Thirwall, 1986). Although it applies to both, this is more suited to the study of developed
economies because the aforementioned structural duality has been resolved or is less significant in these
economies. The employment side of structural change6 in these more developed economies solely
involves labor reallocation and transfer across otherwise homogenous economic sectors that differ
primarily in terms of productivity.

From 2000-2012, the Indian economy added value at a growth rate of 7.2% and productivity at a growth
rate of 5.6%. There is no doubt that this is an impressive rate of growth over the past 15 years. During
2000-12, employment growth and labor force growth remained the same (1.47%), as did unemployment
rates (2.7%).

GDP and GVA in India, 2000-16

2002 2005 2010 2012 2016 Growth Growth Growth
2000- 2000- 2000-
12 16 16*

GDP at factor cost 22 29714.7 45106.7 52475.3 - 7.40% - -

(2004–05 prices) 549.4
billion

- 54803.8 76510.8 87363.3 113861.5 - - 6.63%

GDP at constant
(2011–12 prices)
billion

- 50045.3 68824.8 78191.6 101197.9 - - 6.47%

NDP at constant
(2011–12 prices)
billion

35 45 69 81 105 7.23% 7.18% 6.46%

GVA (2011–12 498.2 724.1 223.6 069.7 033.5
prices) billion
[RSC-All sub-
sectors aggregate]

33 44 69 81 105 7.69% 7.52% 6.46%

GVA (2011–12 812.4 642.8 207.7 069.7 033.5
prices) billion
[RSC- Adjusted
Aggregate]
 99.1 112.2 163.4 189.9 240.7% 5.57% 5.71% 6.11%
Labour productivity
(2011– 12 prices)
Rs thousands [RSC
– All sub-sectors
aggregate

56.6 65.0 94.3 108.2 - 5.55% - -

Labour productivity
(2004– 05 prices)
Rs thousands [NAS
– factor incomes]

Fig-10

Note: Calculations of growth (log linear estimates). The RSC adjusted aggregate is the based on
adjustments that the RSC has itself done on the addition of subsectors.

Employment and labour force indicator, 2000-16

NSSO NSSO NSS NSSO LB Growth Growth 2000- Growth

2000, 2005, 2010, 2012, 2016, 2000-12 16 2000-16
USP, USP, USP, USP, UPS,
15+ 15+ 15+ 15+ 15+

Employment 358 407 423 436 436 1.47% 1.24% 0.54%

251 651 730 913 290
025 335 609 119 376

Unemployed 10 057 13 050 10 613 11 800 23 039 1.34% 5.32% 18.21%

389 305 577 729 090

Unemployement 2.73% 3.10% 2.44% 2.69% 5.02% - - -

rate

Labour Force 368 420 434 459 459 1.47% 1.39% 1.15%
15+ 308 701 344 329 329
414 679 186 467 467

Working 643 722 811 850 912 2.43% 2.20% 1.781%

population 15+ 889 828 362 130 243
936 124 406 448 702

LFPR All 57.2 58.2 53.53 51.6 50.35 - - -

LFPR Male 82.81 83.09 79.91 79.07 75.02 - - -

LFPR Female 30.69 32.65 26.17 23.34 23.71 - - -

 Fig-11

Consequently, India offers investors of all types an attractive destination - those looking for
resources, those looking for efficiency, and those looking for markets, in particular.

Demographic outlook

The economy's underlying growth rate, structural productivity growth, living standards, savings
rates, consumption patterns, and investment are all impacted by demographic change. It also has
an impact on the long-term unemployment rate, equilibrium interest rate, housing market trends,
and the demand for financial assets.

Demographic Dividend
Demographic dividend is defined as "the economic growth potential that can result from shifts in
a population's age structure, particularly when the share of the working-age population (15 to 64)
is larger than the non-working-age share of the population (14 and younger, and 65 and older),"
by the United Nations Population Fund (UNFPA).

A nation's working-age population increases compared to the young dependant population as

fewer babies are born each year. If the appropriate social and economic investments and policies
are implemented in health, education, governance, and the economy, a country has a window of
opportunity for economic growth with more individuals in the labour force and fewer children to
support.

Demographic Dividend in India

In an ageing globe, India has one of the youngest populations. The median age in India is
merely 28 in 2020, compared to 37 in China, the US, and Western Europe, 45 in Japan, and 49
in Western Europe.
Since 2018, the working-age population in India (those between the ages of 15 and 64) has
increased faster than both the dependent population and the elderly population. The working-
age population will continue to swell until 2055, or 37 years after it started.
After the rise in life expectancy stabilises, a decline in the total fertility rate (TFR), or the
number of births per woman, causes this transition to occur.

o The window of demographic dividend opportunity in India is available for five

decades from 2005-06 to 2055-56, longer than any other country in the world.
o This demographic dividend window is available at different times in different
states because of differential behaviour of the population parameters.

Demographic Dividend – Opportunities for India

 With a median age far lower than that of China and other Developed nations, India will
have the youngest labour force in the world.

Fig-12

 The other countries will have a higher proportion of the population which is not in the
working-age group which will result in a shortage of manpower to the tune of 56 million.
 This gap may be filled by the Indian labour force both domestically and overseas, which
will boost economic growth.
 Personal savings will increase throughout the demographic dividend period, increasing
purchasing power that could fuel economic development.

Demographic Dividend – Challenges faced by India

 The development of skills among the working-age population so that they can become
economically productive citizens. In 11 of the 22 main States, the size of our sizable
 working-age population would have decreased by 2031. In contrast to Kerala, where the
population is already ageing, Bihar's working-age population is expected to grow until
2051.
 The employment rate for graduates from India is relatively low.

Fig-13

 As per UNDP report, India ranks very poorly in Human Development Index (HDI).

Fig-14

 The mean years of schooling and expected years of schooling are very low in India.

 Unemployment rates are high in rural and urban India.

 Fig-15

 A huge percentage of the population is still dependent on agriculture in India, this

segment is also known for underemployment and disguised unemployment.

 The unorganised sector of the economy, which is plagued by poor salaries and the
absence of social security, employs a vast proportion of the labour force.

 Reduced female labour force participation in India, according to reports from the World
Bank and International Labour Organization (ILO). Growing female literacy does not
translate into skills that are useful or marketable. Access to modern professions is limited
by the absence of flexible entry and exit policies for women in online learning
environments, open digital training modules, and vocational education.

This in turn give rise to issues like gender inequality and gender pay parity.

Fig-16
Conclusion

As per the research findings, with the projected growth rate caused by the economic,
technological, legal and demographic, sectoral factors, India can prevail the $20 trillion economy
mark by the year 2047. Though all the hurdles and complications that would arise in achieving
this target will have to be dealt with, the right strategies and their proper implementation as
discussed in this paper will surely turn things towards a brighter side which can set India on the
advent of glorious days.

References

1. Technological

 The Ministry of Electronics and Information Technology is an executive agency of the Union
Government of the Republic of India.
https://meity.gov.in/writereaddata/files/india_trillion-dollar_digital_opportunity.pdf

2. Economic

 www.rbi.org.in
 www.worldbank.org
 www.imf.org
 www.pwc.com

3. Legal

 www.articles.manupatra.com
 www.uk.practicallaw.thomosonreuters.com
 www.en.m.wikipedia.org
 www.worldjusticeproject.org

4. Demographic
 Censusindia.gov.in
 data.oecd.org

5. Sectoral

 www.pib.gov.in
 www.statista.com