Modi 2.0 has cleared its agenda to drive India to a $5 trillion economy in the 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 double 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.
The world’s biggest economies in nominal GDP 2019-20India has shown great results on 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 on the economic front and GDP growth. Now, India is number one in the 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 the Lok Sabha election in 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 driving 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 the secretaries of all the government departments on June 10.
Importantly, four cabinet ministers in the 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 the 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 its agenda and action plan separately addressing local potentials, strengths, weaknesses, and requirements.
Major Focus Points in Micro Plan and Micro-Management
Narendra Modi mainly touched upon to focus on taking steps to improve the ease of living for the people of India. He also emphasized 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, 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 beating 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 economies 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 a fragile five, according to the BJP manifesto, the Narendra Modi government turned India into a bright economic spot within five years. The manifesto adds, that India is not only the fastest-growing major economy in the world but also enjoys macroeconomic stability.
Making India the world’s third-largest economy is a commitment of the BJP. The promise is not in the air. The manifesto shares a roadmap with several realistic commitments for reforms.
Easing 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 the 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 a $5 trillion economy in five years, whereas it has had about a 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 in China in the recent past that adorned it with 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 which has a similar population. Moreover, both China and India were at a similar level of GDP in the 1950s and 60s. Despite the following 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.
Reforms, world-class companies, and infrastructure for accelerating GDP growth
Also, India has changed its tax policy in the last few years. The 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. Moreover, India has to focus on creating large world-class companies that can boost the Indian economy to a higher level. BJP manifesto already of a view of developing world-class infrastructure.
More Reforms are 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 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 for 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 them into a modern and scientific model. Information technology 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 the use of social media in government and political scenarios 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 a $5 trillion economy by 2024 and a $10 trillion economy by 2032.
It is a good sign that the Income-tax department has started using blockchain applications. The government can encourage 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; a little more than China and a 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 in 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 to 60 percent of unirrigated land. Moreover, the government has to encourage the use of modern irrigation systems such as sprinklers and drip. Also, India can learn water-saving methods from Israel. Additionally, greenhouses can increase the yield of agricultural products.
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Digitization can help in educating the farmers in modern techniques. Also, it can connect them directly with the market to get better prices 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 the US or Chinese Agriculture Level?
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 pollinator 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.
Ajay Srivastav, argues in his article in Business Line, The Hindu to set up model farms running in PPP mode. This is a good suggestion and the authorities may consider this.
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 to 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.
Drive India to a $5 Trillion Economy: Modernization and Digitization in the Manufacturing and Construction Sector
Make in India is a flagship program of the Indian government, launched in the first year of Modi 1.0. However, there is something to rethink. In a global economy, manufacturing is distributed. Innovations happen in one part of the globe and manufacturing takes place in the other. Further, we see assembling and packaging in some other countries. When it comes to marketing and delivery, normally, an MNC with global reach deals in. Jai Singh Kothari, the Chief editor, Nafa Nuksan, told me long back. This is the modern ecosystem in the manufacturing sector and business in this digital era. Indian leadership has to keep this in mind while driving India to a $5 trillion economy.
The present Indian ecosystem does not support modern research and innovation. Moreover, India has failed to retain its talent. Simply, Indians yet, have not a mindset encouraging research and innovations. Also, India doesn’t have a global distribution system in place. Hence, it is advisable for India to go for production and assembling and modernize and digitize the machines and methods suitable for a world-class production setup.
Already, Skill India has produced a large number of skilled blue-collar workers. The country and thrust on the program to enhance its quality and produce a more skilled workforce. Moreover, there are enough white-collar workers to support the manufacturing sectors. This will, also, be a great step to solving the unemployment and underemployment problems of India absorbing a large population.
India, unlike China, is not an export-oriented economy. It has its own domestic consumer base consuming two-thirds of its production. Hence, India cannot be looser in case of a trade war or global slowdown.
Export in Defence Manufacturing from India to Raise its GDP
Modi 1.0 had aimed to boost the Indian defense sector to be self-independent. As a result, according to the latest news, export is increased by more than 100 percent on a YoY basis. It was a mere 4682 crore or Rs. 46.82 billion in 2017-18 has jumped to 107.45 billion in 2018-19. This could happen because of policy liberalization. Rajnath Singh, Defence Minister of India is targetting to grow the export exponentially with a new general export license plan.
Digitization in the Service Sector for a $5 Trillion Economy
The service sector contributes the most to the Indian economy, more than half. Hence, modernization and digitization are a must for this sector. In order to progress fast, India has to get rid of the legacy systems. The country has to replace manual systems with computerized systems, especially in government. The Modi 1.0 has done a lot but a lot more is to be done.
For example, SMS is the biggest multi-facility government hospital situated in Jaipur, the capital of Rajasthan. This is a State government entity and they don’t care for modernization or digitization of the legacy system. The doctors are excellent and capable of treating any disease. However, the administrative system is running on the old manual processes.
For instance, if you want to go for testing, first you have to get a prescription from a doctor there. In the next step, you have to go to the concerning department and seek a date for testing. The pain does not end here. You have to deposit the testing fee in another window. And this is not enough. Wait, you cannot deposit the money. You have to wait and deposit the money only on the testing day! Ridiculous? But true. You have to be in Q in every instance. There is no digitized system and you can’t get an online appointment or deposit the amount online!
Millions of man-hours are wasted every year causing a loss of production. A simple change can save these hours and increase the productivity of Rajasthan. Need not to say, this will increase GDP and the economy of Rajasthan and India. I, therefore, urge all the state governments to go for modernization and digitization for ease of life.
Fortunately, Narendra Modi himself has initiated a meeting and asked all the Chief Ministers of state governments to prepare an actionable plan for a $5 trillion economy by 2024.
Moreover, the governments and public sector units have to redesign their computerization. It is not enough to put computers in offices or create websites and mobile apps. India has to go beyond and adopt Artificial Intelligence, IoT, Big Data, and Blockchain technology to be a $5 trillion economy in 5 years.