Dr. Arvind Kumar*
India’s ambition to become a $10 trillion economy is both achievable and necessary to raise the standard of living for its massive population. The country has immense potential across sectors like IT, manufacturing, agriculture, and renewable energy. There is a need for massive investments in transport (roads, railways, ports, and airports), utilities (electricity and water supply), and digital infrastructure. With its large and diverse economy, India stands at the precipice of becoming a $5 trillion economy, a goal envisioned by the government to be achieved within this decade. Currently, India’s economy is valued at approximately $3.5 trillion, making it the fifth-largest in the world by nominal GDP. According to World Bank’s India Development
Update observes that India remained the fastest-growing major economy and grew at a rapid clip of 8.2 percent in FY23/24.Amid challenging external conditions, the World Bank expects India’s medium-term outlook to remain positive. For 2025, even Moody’s updated the projection to 6.6%, up from the earlier forecast of 6.4%. However, transitioning from a $5 trillion economy after 2030 to a $10 trillion one in the Amritkaal is an ambitious target that requires sustained economic growth, smart policy interventions, and the optimization of both emerging and traditional sectors. It faces various obstacles that need resolution for continued growth. A key challenge is population density, with India ranking among the highest globally, impacting essential resources like land and water.
According to World bank report- ‘The world development report 2024 – The middle-income trap’, India may take nearly 75 years just to reach one-quarter of US income per capita. The road ahead has even stiffer challenges than those seen in the past: rapidly ageing populations and burgeoning debt, fierce geopolitical and trade frictions, and the growing difficulty of speeding up economic progress without fouling the environment.
Although the Indian government is steadfast in its commitment to addressing different economic concerns and fostering nationwide sustainable growth, however does the focus lies on fostering inclusive development and implementing innovative solutions?
Will the government’s commitment to reforms, economic management and overhaul and expansion of the welfare net have unlocked energies which will lead to the Indian economy doing much better than what international agencies such as IMF expect it to do?
Harbingers of growth
India’s IT sector has long been a cornerstone of its economy, contributing significantly to GDP growth and employment. With the rise of digitalization, e-commerce, fintech, and artificial intelligence, this sector holds tremendous potential for further growth. According to a report by the National Association of Software and Service Companies (NASSCOM), India’s IT industry is expected to grow at 8-10% annually, contributing significantly to achieving the $5 trillion target. Expanding beyond software services, India is poised to become a global hub for digital innovations. The growth of the digital economy will not only lead to more jobs but will also foster innovation across sectors like healthcare, education, and logistics through digital platforms.
Manufacturing is expected to play a crucial role in India’s economic transformation. The government’s ‘Make in India’ initiative aims to position the country as a global manufacturing hub, leveraging its large labor force and entrepreneurial ecosystem. Growth in this sector is critical as it directly impacts employment, innovation, and exports.The agriculture sector accounts for a smaller percentage of GDP compared to services and manufacturing, still it remains a significant sector due to its employment potential. It needs modernized practices, focusing on technology-driven solutions, irrigation reforms, and value addition through food processing .Investment in the food processing industry can enhance farm incomes and reduce post-harvest losses, directly impacting rural development and economic inclusion.
The creation of a robust supply chain and the promotion of exports in agricultural products can further boost the sector’s contribution to the economy. As the world transitions to a green economy, India has the potential to become a global leader in renewable energy. With solar power already witnessing significant growth, further investments in wind, hydropower, and biofuels can aid India’s energy security and provide new avenues for economic growth. India’s commitment to renewable energy will not only help the country meet its global climate commitments but also reduce import dependency on fossil fuels, improving trade balances and energy sustainability.
The financial services industry has seen rapid expansion, especially in digital payments, mobile banking, and fintech. According to the United Nations’ projections, India is expected to lead the global fintech revolution due to its growing internet user base, supportive policies, and massive entrepreneurial talent. The rise of digital banking and financial inclusivity is expected to help formalize the economy further, allowing more citizens to participate in economic activities. Expanding financial services, especially in underserved rural areas, can stimulate growth and improve income distribution.
India’s pharmaceutical industry is one of the largest globally, particularly known for its role in generic drug manufacturing. By investing in biotech and healthcare infrastructure, India can not only enhance domestic healthcare services but also become a global supplier of affordable medicines. The healthcare sector, especially after the COVID-19 pandemic, is witnessing significant reforms and investments. Enhancing the healthcare infrastructure, expanding health insurance coverage, and boosting pharmaceutical exports can drive growth in this critical sector.
Demuring the gaps and reforms
Although real estate has been a significant driver of growth in the past, the sector has witnessed stagnation in recent years due to issues such as unsold inventory, regulatory challenges, and a liquidity crunch. The real estate sector needs reforms, including better land acquisition laws, the implementation of Real Estate Regulatory Authority (RERA) provisions, and affordable housing projects to revitalize growth. Infrastructure development closely linked with construction, also needs policy and investment boosts. While the financial services sector holds promise, the banking sector, particularly public sector banks, has been plagued by a high level of NPAs.
Despite the government’s attempts at reform through measures like recapitalization and consolidation of banks, the sector needs deeper structural reforms to prevent future bad loans and maintain credit flow to key sectors. The telecom sector, once a high-growth industry, has faced challenges in recent years due to intense competition, regulatory hurdles, and high levels of debt. A growing economy requires a skilled workforce, yet India faces a significant skill gap. The existing educational system does not adequately prepare students for the demands of a modern economy, particularly in fields like artificial intelligence, robotics, data analytics, and renewable energy. The National Education Policy (NEP) 2020 aims to address some of these concerns, but its implementation will be crucial in preparing a future-ready workforce.
India has made strides in improving its ease of doing business rankings, but several challenges remain, particularly related to complex regulatory frameworks, taxation, and bureaucratic hurdles. Streamlining regulatory processes, simplifying tax structures (especially the Goods and Services Tax), and enhancing transparency can attract more foreign direct investment (FDI) and stimulate domestic entrepreneurship. While India’s overall economy has grown, income inequality remains a significant challenge. According to the UN Sustainable Development Goals (SDGs), reducing poverty and inequality is critical to sustainable economic growth. As India grows, environmental sustainability cannot be ignored. UN data highlights that while India is a fast-growing economy, it also faces some of the world’s worst pollution levels. Sustainable growth strategies, particularly in urbanization, energy use, and waste management, need to be embedded in all economic policies to ensure long-term growth.
Way forward
Focusing on inclusive growth that benefits both urban and rural areas, as well as address regional disparities, will be essential. To fight disparity and inequality of income and growth directly investing in opportunities for poor people is essential and boosting people’s capacity to generate income, today and in the future. Education and training as well as access to health care, micro-credit, water, energy, and transportation are powerful instruments. Social assistance is critical to prevent people from falling into poverty traps when adverse shocks hit. For sustained growth challenges like infrastructure deficits, regulatory complexities, and income inequality need to be addressed. Sustainable and inclusive growth, backed by robust policy reforms and innovative solutions, will be key to unlocking India’s true economic potential. Through careful planning, strategic investment, and international collaboration, India can indeed reach its ambitious goal and emerge as a global economic powerhouse.
*Editor, Focus Global Reporter
