Can we accept the report by Goldman Sachs, Brazil, Russia, India and China - A Road in India by 2050, with the forecast that India will surpass Japan as the third largest economy in the world by 2032?
As the matter stands now, India's economic growth is set to accelerate throughout FY 2017. The Asian Development Bank (ADB) expects the Indian economy to pick up in the coming quarters and grow by 7.0 per cent this fiscal and 7.4 per cent next year. India Ratings said that it estimates gross domestic product (GDP) growth to improve to 6.5 per cent in the July to September quarter and gross value addition to expand by 6.4 per cent. The Federation of Indian Chambers of Commerce and Industry (FICCI) said it expects second quarter GDP growth at 6.2 per cent and economic growth in 2017-18 at 6.7 per cent. Morgan Stanley expects real GDP growth to accelerate from 6.4 per cent this year to 7.5 per cent in 2018 and further to 7.7 per cent in 2019. The Economic Survey, India forecasts GDP growth to be at the lower end of the 6.75-7.5 per cent band. The World Bank revised India estimates from 7.2 to 7 per cent; the Reserve Bank of India (RBI) believes it will be 6.7 per cent and Morgan Stanley revised its forecast to 6.4 per cent from 7.6 per cent.
The economy grew by a mere 5.7 per cent in the April to June quarter in 2017-18. The slowdown in the economy due to demonetisation and the adjustment impact of the Goods and Services Tax (GST) implementation seems to be bottoming out and as the new indirect tax regime stabilises, the economy would see better days ahead.
Manufacturing has emerged as one of the high growth sectors in India. India is expected to become the fifth largest manufacturing country in the world by the end of year 2020.
The Gross Value Added (GVA) at basic constant (2011-12) prices from the manufacturing sector in India grew 7.9 per cent year-on-year in 2016-17, (as per the 2nd provisional estimate of annual national income published by the Government of India). Under the Make in India initiative, the government of India aims to increase the share of the manufacturing sector to GDP to 25 per cent by 2022, from 16 per cent, and create 100 million new jobs by 2022.
Business conditions in the Indian manufacturing sector continue to remain positive. India's industrial production increased by 3.8 per cent year-on-year in September 2017, following an upwardly revised 4.5 per cent gain in the previous month and missing market expectations of 4.2 per cent. Output rose at a softer pace for both mining (7.9 per cent from 9.2 per cent in August) and electricity (3.4 per cent from 8.3 per cent), while manufacturing production growth was unchanged at 3.4 per cent. Considering April to September, industrial production increased by 2.5 per cent, compared to a 5.8 per cent expansion during the same period of the previous fiscal year. Industrial production in India averaged 6.56 per cent from 1994 until 2017, reaching an all-time high of 20 per cent in November 2006 and a record low of -7.20 per cent in February 2009.
India has become one of the most attractive destinations for investments in the manufacturing sector. Cumulative Foreign Direct Investment (FDI) in India's manufacturing sector reached US$ 70.51 billion by June 2017.
With impetus on developing industrial corridors and smart cities, the government of India aims to ensure holistic development of the nation. The corridors would further assist in developing a congenial environment for industrial development and will promote advanced practices in manufacturing.
Farm sector has also been coming up, although at a slower rate compared to its potentials. It ranks third in farm and agriculture outputs.
India has been the world's largest producer of milk for the last two decades and contributes 19 per cent of the world's total milk production.
India is also emerging as the export hub of instant coffee and made an export of coffee worth 177,805 tonnes, valued at US$ 447 million, between April-August 2017, as against 162,641 tonnes, valued at US$ 363.1 million, during the same period last year. India topped the list of shrimp exporters globally, as the value-added shrimp exports rose by 130 per cent year-on-year to 23,400 tonnes in 2016.
The production of food grains in India reached a record 275.68 million tonnes (MT) during FY 2016-17. India is the second largest fruit producer in the world. Agriculture constitutes 10 per cent of the country's total exports and is the fourth-largest among exported principal commodities. India's groundnut exports rose to 653,240 million tonnes during April 2016-February 2017. India is the largest producer, consumer and exporter of spices and spice products. The Indian gourmet food market is currently valued at US$ 1.3 billion and is growing at a Compound Annual Growth Rate (CAGR) of 20 per cent. India's organic food market is expected to increase by three times by 2020.
The implementation of GST will make India a common market with a GDP of US$ 2.0 trillion along with a population of 1.2 billion, which will be a big draw for the investors.
'Make in India' drive has been well received as is clear from the ongoing trends. India is on the path of becoming the hub for hi-tech manufacturing as global giants are attracted by its market of more than a billion consumers and increasing purchasing power of the people.
The writer, a Management Economist, is Professor of Management at ICFAI University, Tripura, India.
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