In a recent report titled “The Indian Economy – A Review,” the government anticipates India’s economy to soar at a remarkable rate of over 7 per cent in the upcoming years, positioning the nation as the third-largest economy globally. This insightful overview replaces the conventional Economic Survey and precedes the interim Budget following the national elections.
The report sheds light on three pivotal trends expected to shape the economic landscape in the coming years:
- Transformations in Global Manufacturing: The era of hyper-globalization in global manufacturing is declared over in the report. While de-globalization may not be an immediate consequence, countries are awakening to the extensive integration of global supply chains. Governments are inclined towards on-shoring and friend-shoring of production, impacting transportation, logistics costs, and ultimately, product prices. Recent events in the Red Sea have amplified concerns, emphasizing the need for India to focus on reducing logistics costs and enhancing product quality to maintain and expand market share.
- The Rise of Artificial Intelligence: The report highlights Artificial Intelligence (AI) as a significant trend with far-reaching implications for services trade and employment. The challenges posed by AI may undermine the cost competitiveness enjoyed by countries exporting digital services. This underscores the importance of adapting to technological advancements and finding innovative solutions to sustain growth in the services sector.
- The Energy Transition Challenge: The report identifies the energy transition challenge as the most crucial trend. With global concerns over rising temperatures, the focus on reducing carbon emissions is paramount. While there is pressure on developing nations to shift to greener energy sources, the report acknowledges the trade-off between economic growth and energy transition in the short run. India, however, is strategically positioned, surpassing targets in non-fossil fuel-based power generation capacity. The nation’s commitment to steady economic growth is yielding resources for climate change adaptation, building resilience, and mitigating emissions.
The report asserts that India, with its prudent policies of the last decade, is better equipped than ever to confront these key challenges.
The nation’s ability to balance economic growth with global shifts in manufacturing, technological advancements like AI, and the imperative energy transition places it at the forefront of navigating the evolving economic landscape.