India’s Future

Economic Prospects
MADE BY:
MEGHA (FB22085)
STUTI JAIN (FB22111)
NITISH BHATIA (FB22088)
ANIRUDH MATHUR (FB22119)
PREETI TOMAR (FB22092)
 INTRODUCTION
❖ India is seen as one of the bright spot in a scenario of global economic
slowdown. As many countries in West are in a probable mode of going into
a recession, India is projected to have a positive growth even in this dismal
time.

❖ As the world continues to reel in the backdrop of Russia- Ukraine war

triggering price of grains especially wheat and severely impacting the gas
and oil prices across the world, there remains an uptick in form of India.
❖ A top International Monetary Fund (IMF) official said, “When
everyone is slowing down in terms of economic growth, India has
not remained unimpacted, but is doing better and is in a relatively
bright spot compared to other countries.”

❖ As we live a globalized world, India cannot remain absolutely

unaffected with changing dynamics of the world. The impact of war
has triggered an upward trend in prices of oil, fruits, vegetables and
many such commodities. This became a case of imported inflation.
❖ With many financial institutions projecting a slowing growth for the
current and the upcoming fiscal years, India is likely to remain
resilient. The International Monetary Fund (IMF) says, India’s
economy is forecast to grow by 7% this year, later revising it to 6.1%
and budget estimates of 6.3% the economy can be impacted in
short term but has opportunity to bounce back. The major reason
as highlighted by the World Bank is the comparative insulation of
India from global spillovers than other emerging countries.
India this year surpassed U.K to become the 5th largest
economy of the world. Owing to the recession like
conditions and probable impact of Brexit over the
country.
❖ Various economists that for India to continue to be resilient it need to
grow at 9% annually every year. For this to be possible there is need to
focus on sectors like infrastructure, considerable increase in public and
private investments to boost the industry, land acquisition reforms,
encouraging manufacturing specially of semi conductors, so on and so
forth.

❖ This aspects has been seriously taken by the government. With

ambitious schemes like PM Gatishakti giving impetus to
infrastructure development, Startup India for enabling growth of
startups, Production- linked incentive for boosting industries etc.
❖ The recent report by world bank reports highlighted the growth
of Indian remittances to mark of $100 billion by the end of this
year.

❖ Most importantly the signing of important FTAs with UAE

(Comprehensive Economic and Partnership Agreement) and
Australia (Economic Cooperation and Trade Agreement) will act
as big boosters in terms of increasing the exports and crucial
raw materials for the growth of the country.
❖ India is set to surpass Japan and Germany to become the world’s third-largest
economy by 2027 and will have the third-largest stock market by the end of
this decade,” says Morgan Stanley’s Chief Equity Strategist for India.

❖ India’s GDP could more than double from $3.5 trillion today to surpass $7.5
trillion by 2031. Its share of global exports could also double over that period,
while the Bombay Stock Exchange could deliver 11% annual growth, reaching
a market capitalization of $10 trillion in the coming decade.
❖ “India will be one of only three economies in the world that can generate
more than $400 billion annual economic output growth from 2023 onward,
and this will rise to more than $500 billion after 2028.”

❖ Morgan Stanley data shows that multinational corporations’ sentiment on the

investment outlook in India is at an all-time high. Manufacturing’s share of
GDP in India could increase from 15.6% currently to 21% by 2031—and, in the
process, double India’s export market share.

❖ India is also poised to become the factory to the world, as corporate tax cuts,
investment incentives and infrastructure spending help drive capital
investments in manufacturing.
❖ The report estimates that India's manufacturing share of GDP
will rise to 21 per cent by 2031, implying an incremental USD 1
trillion manufacturing opportunity.

India's global export market share is expected to more than

double at 4.5 per cent by 2031, providing an incremental USD
1.2 trillion export opportunity.

India's services exports will almost treble to USD 527 billion

(from USD 178 billion in 2021) over the next decade.
 Employment Level
❖ The current status of employment, affected by the slowdown in the
world economy, layoffs by multinational giants, war paints a not so
happy picture. But the prospects for growth remains bright.

❖ India's workforce in the technology services sector to more than double

from 5.1 million in 2021 to 12.2 million in 2031.

❖ Healthcare penetration in India can rise from 30-40 per cent now to
60-70 per cent; implying 400 million new entrants to the formal
healthcare system.
❖ The signing of agreements like ECTA with Australia and CEPA with UAE will
act as boosters for employment. ECTA alone able to create an estimated 10
lakh jobs to be created.

❖ Moreover, since the labor-intensive sectors will be benefitted, it is expected

to create an additional employment of at least 10 lakhs jobs in India, create
ample opportunities for investment, promotion of start-ups. Similarly, it
would provide enhanced job opportunities for Indians in Australia and
increased remittance flows to India.
Data released by National Statistics Office states
that India’s formal sector employment jumped by
0.4 million in the October-December quarter of 2021
with the total number of workers employed across
nine sectors at 31.4 million compared to 31 million in
July-September quarter and 30.8 million in the
April-June quarter of 2021.
 General Price Level
Currently the world is reeling under various problems like post
COVID recovery, Russia- Ukraine war and the global economic
slowdown. This has severely affected the general price level. With
inflation touching new heights not only in developing but developed
countries are heeding towards global recession.
• RBI expects inflation to come under control from January 2023
onwards.
• It also expect retail inflation to come under at 5.2% in FY24.
• For 2023-24 assuming a normal monsoon and no further
exogenous or policy shock, it indicates inflation will average at
5.2%.
• RBI project the retail inflation to average at 5.8% in Q4 FY23.
• RBI projected the India’s GDP growth for FY23 at 7%.
• RBI’s report also stated that inflation has
eased from its April peak 7.8%.
• The reasons stated for this inflation are –
• Adverse supply shop
• Russia – Ukraine war
•From May – December 2022 till the last meeting
of MPC, RBI has raised the Repo rate by 225
basis points or 2.25%
•On 6th December MPC committee decided to
increase the Repo Rate from 5.9 % to 6.25%.
 Expectations
❖ With global economic growth likely to moderate, global prices may ease. A
possible moderation in crude oil and industrial raw material prices may reduce
inflation by mid of 2023.
❖ The falling prices of oil and gas, copper, zinc, and other commodities are likely
to help sectors such as consumers, metals, cement, and automobiles in the
coming quarters.
❖ Falling cost of production will be of great help to local small-scale
manufacturers that have struggled to survive during the pandemic and
maintain their market share because of rising prices.
❖ The fall in prices may be short-lived if a sustained demand
improvement exceeds supply, leading to overheating of the
economy. Similarly, despite easing commodity prices, the current
account may remain a concern as India’s growth path will likely defy
the global slowdown, resulting in higher imports than exports.
Reserve Bank of India (RBI) has projected inflation at
6.7 per cent for FY2022-23. Consumer price-based
inflation (CPI) for Q1 2023-24, on the other hand, is
projected at 5 per cent, RBI Governor Shaktikanta Das
said. He further added inflation is projected at 7.1 per
cent (Q2), 6.4 per cent (Q3) and 5.8 per cent (Q4) in
FY23.  
 Impact on Industry
PHARMA INDUSTRY
❖ Around the world, rising inflation is having a significant impact on
the pharmaceutical industry. The majority of pharmaceutical
companies are seeing high costs for raw materials and are
expecting a decline in profit margins in the subsequent quarters of
2022.

❖ The pharmaceutical market is highly regulated when it comes to

the pricing of drugs, both generic as well as prescription. However,
pharma companies are facing increasing pressure on drug pricing.
The major reason for this increasing pricing pressure is the high
rate of inflation.
❖ Alkem Laboratories expects the Indian pharmaceutical industry
to rebound to 8-11 per cent growth rate with normalcy in
activities as the pandemic eases out but feels inflationary
pressures and evolving regulatory norms will be key risks to
watch out for.

❖ In its annual report for 2021-22, Alkem said the future of the
domestic pharmaceutical market continues to hold immense
potential led by favourable demographics, growing disposable
incomes, increased access to healthcare facilities, growing
consciousness towards healthcare, and increasing penetration
of medical insurance.
❖ The market is expected to increase at a CAGR of 37% from
2020 to 2025 to reach US$ 50 billion.

❖ The Contract Research and Manufacturing Services

industry (CRAMS) is expected to reach US$ 20 billion by
2024 and is expected to grow at a CAGR of 12%.
 FICCI REPORT
TEXTILE INDUSTRY
❖ The report highlights the key global trends, market scenario and opportunities
for India in the textile and apparel market. It further elaborates the key
initiatives that India will need to achieve the target of US$ 250 billion by 2025-26
and build a sustainable industry going forward.


❖ Global apparel consumption in 2021 is estimated to be around US$ 1.5 trillion
and it is estimated to reach US$ 2 trillion by 2025. Global textile and apparel
trade is around US$869 billion and expected to grow at 3.5% CAGR to reach
US$ 1000 billion by 2025-26.


❖ The report further states that the Indian textile & apparel market is estimated
at US$ 153 billion in 2021, with domestic market constituting US$ 110 billion
and exports contributing US$ 43 bn. The Indian textile and apparel market
has the potential to reach US$ 250 billion by 2025-26.

❖ The report highlighted key global trends impacting the textile and apparel
industry, which included High focus on sustainability and circular fashion,
the 'China+1' strategy of global brands providing opportunity for countries
like India to increase their export share, Increasing need for digitalization
across the fashion supply chain and Growing consumption of synthetic
based textile and apparel.


❖ The report suggested that, to achieve the target of US$ 250 billion
market and build a sustainable textile industry going forward, Indian
Industry needs to focus on leveraging government support schemes
like PLI, PM MITRA, Export incentives etc. to invest in new products,
build scale of operations, and improve competitiveness. The industry
should also align with global buyer needs of sustainability, value chain
traceability and providing end to end services.
 References
• https://www.businesstoday.in/latest/economy/story/rbi-projects-inflation-
at-67-for-fy23-gdp-growth-at-72-343799-2022-08-05
• https://timesofindia.indiatimes.com/business/india-business/explained-wh
y-world-bank-upgraded-indias-economic-forecast-for-fy23/articleshow/960
32053.cms
• https://ficci.in/pressrelease-page.asp?nid=4600
• https://www.forbes.com/advisor/in/personal-finance/self-employed-heres
-how-to-plan-your-finances/
• https://www.fortuneindia.com/macro/india-set-to-be-worlds-3rd-largest-e
conomy-by-2030-report/109567
• https://tradingeconomics.com/india/gdp-growth-annual