Modi 2.0 has cleared its agenda to drive India to a $5 trillion economy in coming 5 years that is by 2024. Technology, digitization, and modernization shall have a great role in pulling up the economy to $5 trillion levels. Certainly, there will be a great role of IT in this economic pull-up. Additionally, BJP election manifesto 2019 focuses on a $ 10 trillion economy by 2032. At present, India is an economy of about $ 2.6 trillion. So, it needs to about doubling its economy within 5 years and quadruple by the next eight years. Presently, only the US and China are in $10 trillion club. In addition, Japan, the only country, has $5 trillion in GDP.
World’s biggest economies in nominal GDP 2019-20India has shown great results in the economic front in the last decades. However, it is far behind China in GDP growth. In fact, only China had been doing better than India in the economic front and GDP growth. Now, India is number one in growth rate beating China. Surely, India will be the 4th largest economy in the world beating both the UK and Germany by 2024. For this, Modi 2.0 has not only to maintain the growth rate but also to accelerate it at least 2 to 3 percent. Again information technology has to play a great role in this acceleration besides other measures.
$5 trillion economy: Top level meeting on June 10
Prime Minister Narendra Modi on June 10, 2019, had a meeting with the top 100 bureaucrats of all government departments. He instructed them to prepare a plan along with a roadmap to make India a $5 trillion economy. Also, he focused on ease of living for the people of India as his top priority.
Narendra Modi has taken oath as the Prime Minister of India for the second time on May 30 after a massive victory in Lok Sabha election 2019. Surprisingly, he has started working on his agenda of making India a $5 trillion economy within 10 days. This shows his keenness and commitment to drive the change. Also, the Prime Minister is not in a mood in delaying the matter.
Image credit: Narendramodi.in
$5 trillion economy: Narendra Modi Meeting with top bureaucrats
Action plan on $5 trillion economy of India
Narendra Modi is keen and focused on his mission to drive India to a $5 trillion economy. His goal is clear and he wants an action plan immediately to implement the economic agenda. He has clearly said that every department of the Union government has to play its role as this is a holistic agenda. He has also clarified that each district of every state shall contribute to making India a $5 trillion economy. Narendra Modi, Indian Prime Minister was addressing to the secretaries of all the government departments on June 10.
Importantly, four cabinet ministers in Modi government including Nirmala Sitaraman, finance minister, Amit Shah, home minister, Rajnath Singh, defense minister, and Jitendra Singh have attended the talk. Dr. Jitendra Singh is a Minister of State (Independent Charge) for PMO. He has extra charges for North-eastern region, Atomic Energy and Space in Narendra Modi’s new cabinet. P.K. Sinha, Cabinet Secretary, had initiated the meeting.
The dialogue between these political heavyweights with the top officials underlines the importance of the agenda to drive India to a $5 trillion economy by 2024.
Video: Narendra Modi meets bureaucrats to drive India to $5 trillion economy
Micro plan and micromanagement on $5 trillion economy
Amit Shah, the newly appointed Union Home minister is known for his Micro plan and micromanagement. He has shown his abilities election after election as BJP party president during the last five years. His presence demarks that the Modi government will not only work on a macro level but also enforce the agenda in micro levels.
We know that India is a highly diversified country and no plans can be successful without focusing on the local agenda. Hence, the Prime Minister has clarified that all of the districts in all states in India have to play their role in driving India to a $5 trillion economy. There are 725 districts in India and each of these districts has to prepare their agenda and action plan separately addressing local potentials, strengths, weaknesses, and requirements.
Major focus points in Micro plan and micromanagement
Narendra Modi mainly touched upon to focus on taking steps to improve ease of living for the people of India. He also emphasized on the importance of the Make in India initiative. He pointed out the need to make tangible progress towards Make in India.
Modi, mentioning India’s progress in ease of doing business, urged for greater facilitation for entrepreneurs and MSMEs. Also, Narendra Modi wanted the bureaucrats to use technology to improve outcomes and efficiency in every government department.
P.K. Sinha, Cabinet Secretary, handed over two important tasks to the group of secretaries. First, a five-year plan with well-defined targets and milestones for each ministry and second, significant impactful decisions in each department are the given assignments. He assured the high-level officials present of speedy approvals, within 100 days of submission.
The session was interactive. The senior bureaucrats not only listened but also presented their ideas and plans before their political bosses. Ideas shared on subjects like economic growth, administrative decision-making, education reform, skill development, health care, rural development and Panchayati Raj, agriculture, Information Technology, and industrial policy, etc.
Making India a $10 trillion, World’s third largest economy by 2032
India is aiming to a $10 trillion, World’s third largest economy by 2032. The country is, by and large, the world’s fifth largest economy with a GDP of more than 2.6 trillion. India has already surpassed France in 2017 to be the sixth largest economy in the world. Moreover, it is very close to beat the UK to be the fifth. Only the US, China, Japan, and Germany will be above India by the end of 2019. As we have mentioned in the paragraphs above, India has a target, a clear vision, and an action plan to reach $5 trillion economy by 2024. So, what’s next?
BJP, led by Narendra Modi and Amit Shah has committed to making it the world’s third largest economy with a $10 trillion GDP by 2032. BJP has clearly stated this in its election manifesto 2019.
In 2014, India was branded as fragile five, according to BJP manifesto, Narendra Modi government turned India into a bright economic spot within five years. The manifesto ads, India is not only the fastest growing major economy of the world but also enjoys macroeconomic stability.
Making India the world’s third-largest economy is a commitment of BJP. The promise is not in the air. The manifesto shares a roadmap with several realistic commitments for reforms.
Easing of tax policies and lowering GST rates will be the major tax reforms. The manifesto also promises a $1.4 trillion (100 lakh crore in Indian currency) investment in infrastructure in five years. Make in India is a flagship program of the Union government since 2014. Now, making India a global manufacturing hub is a new commitment of BJP in 2019.
Video: 10 trillion economy India- Suresh Prabhu, Union Minister
$5 trillion economy (GDP): How to achieve the target in five years
India needs a GDP growth rate of 10 percent to achieve the target of $5 trillion economy in five years, whereas it has about 7 to 7.5 percent growth rate in recent years. Hence, it has to accelerate its GDP growth rate by 2.5 to 3 percent to reach $5 trillion GDP by 2024.
This is a herculean task looking into the fact that India, already, is the fastest growing economy in the world. However, nothing is impossible. The world has witnessed a 12 percent GDP growth of China in the recent past that adorned it in the throne of the second largest economy in the world. If the US is the king of the world economy, China, presently, the Queen. India is insisting to be a Crown Prince of the world economy.
India can learn from China that has a similar population. Moreover, both China and India were at a similar level GDP in the 1950s and 60s. Despite the following of communism as a state policy, China made structural reforms and invested a huge amount in infrastructure growth to propel manufacturing growth. As a result, China has become the manufacturing hub of the world beating the US, several EU countries and its Asian rival Japan.
Also, India has changed its tax policy in the last few years. Introduction of GST is a vital step in tax reform. We have seen several amendments in GST during the last two years. Additionally, the government is ready to invest 100 lakh crore ($1.4 trillion) in 5 years in infrastructure. The massive investment in infrastructure, surely, will lead to accelerating GDP growth.
More reforms needed to accelerate GDP growth
No doubt, India has seen tax reforms like GST and Income tax in the last years. However, it is not enough. It not only needs more tax reforms but other policy reforms too. India has to revolutionize its legal and administrative systems for a structural change. The country is still running with the classical labor law pattern derived from the industrial era of the 19th century. Land acquisition is a major problem in India hindering industrial growth. Also, red-tapism is a cause of concern. India needs a total reform to accelerate its GDP growth. Double-Digit growth in GDP can only lead India to a $5 trillion economy by 2024 and a $10 trillion economy by 2032.
Need of Modernization to drive India to a $5 trillion economy by 2024
Indian economy is running both on old and modern systems. Modernization took place in several areas whereas many other sectors are running in the old patterns. These inefficient old patterns are causing serious problems in GDP growth. India needs to modernize its agriculture, manufacturing industries, construction, and service sectors. It needs modern types of machinery as well as modern methods and management. Modernization is much awaited in storing and packaging facilities and distribution systems. Modern methods of agriculture can lead to a high yield. In turn, that can level up farmers income and solve several economic and political problems. Simply, technologies like CAD/CAM can revolutionalize manufacturing industries, especially in the MSMEs. The government can set up a task force to identify the areas where modernization is much required. This will help drive India to a $5 trillion economy by 2024.
Legacy data management systems are other black holes in economic development and GDP growth. India has to get rid of the legacy data management systems by transforming it into a modern and scientific model. Information technology and can play a great role in this transformation. Remodeling this, India can expect a $10 trillion economy by 2032.
Need of Digitization to drive India to a $10 trillion economy by 2032
The Narendra Modi led government has done a lot for digitizing India. Direct benefit transfer and digital payment are to name a few. People have seen several websites, mobile applications, eCommerce sites and use of social media in government and political scenario during the last five years. Certainly, these are helping India in its GDP growth, ease of living and ease of doing business. Several state governments and corporations, and businesses also adapt to the digitization processes in various ways.
India needs more digitization and adoption of modern digital techniques. It has to pave the path for new technologies to be a $10 trillion economy by 2032. Adoption of new and modern technologies such as blockchain, big data, artificial intelligence, etc will lead India to its destination of $5 trillion economy by 2024 and $10 trillion economy by 2032.
It is a good sign that the Income-tax department has started using blockchain applications. The government can encourage the blockchain business applications in many other fields such as banking and finance, healthcare, supply chain management, logistics, etc. Similarly, artificial intelligence can play a big role in several sectors. Governments and big corporations can use big data technology for data management and analytics. All these digitization processes will help in accelerating GDP growth to a double digit.
Modernization and Digitization in the Agriculture sector to drive India to a $5 Trillion economy
India is a country where about half of its population is dependent on agriculture. However, agriculture contributes 0nly about 15% or 400 billion dollars to its GDP. India’s arable land is almost equal to the US and China; little more than China and little less than America. Whereas US agriculture contributes about a trillion dollar and Chinese agriculture about 900 billion dollars to their GDP. Hence, there is a scope of 150 percent growth in this sector if we compare the sector with the US and China. Additionally, more population is involved in the agriculture sector in India than to America and China. We, therefore, need a far better contribution from the sector to boost the Indian economy.
Both Modernization and Digitization in the Agriculture sector can play a major role in boosting the sectoral economy. The US applies the most modernized method and China is not lagging far behind. India needs to improve the irrigation system to cater 60 percent unirrigated land. Moreover, the government has to encourage uses of modern irrigation systems such as sprinkler and drip. India can learn water saving methods from Israel. Additionally, greenhouses can increase the yield of agricultural products.
Digitization can help in educating the farmers in modern techniques. Also, it can connect them directly with the market to get better price improving the communication channels. Improving the infrastructure of Krishi Upaj Mandi can also play a key role in boosting the Agriculture GDP driving the Indian economy to $5 trillion.
Can India reach to the US or Chinese levels in Agriculture?
Belgium and the Netherlands, modernizing their farms, raised agricultural production to 8 tons per hectare as compared to India’s below 3 tons. Additionally, they take care of sustainable agriculture and biodiversity. They have shown that even a focus on pollinators health can increase yield. I urge, Mr. Narendra Tomar, Agriculture Minister of India to set up an SIT like task-force to study and implement their farming method, at least as a pilot project.
If India can reach to the US or Chinese level in agriculture economy within five years it will add 600 Billion dollars to its economy. India needs to add a little more than $2 trillion to its GDP to reach its target to be a $5 trillion economy. 600 billion is about 30 percent of the same. Then, the contribution of the agriculture sector in the GDP will be about 20 percent. And that will improve the economic condition of farmers in a dramatic way. Despite difficulties, this is not impossible.