Indian Economy — Outlook for 2024
A Nation with the potential of being amongst the world’s largest economic powerhouses — India. A country having the resources, if harnessed efficiently, would redeem the utmost value. Post-independence India was a broken nation, with no industries developed and uncertainty floating all over(a simple description of a devastated state). The Nation was in a slow growth phase, allowing its industries to develop indigenously. Hesitant of interference from foreign multinationals due to the threat of hindrance in growth and fear of the establishment of monopolies, the nation imposed strict trade policies. Such policies curtailed India’s growth potential but also worked as a helping hand, allowing indigenous businesses to flourish and prosper.
A question posed before the economy was how would infrastructure develop. As private companies were not in the state to invest in building infrastructure, the government took control of a few sectors — developing them under its control. Fast forward to a few years later, in 1991, there came an incremental change in the country’s trade policy as the nation induced foreign trade-friendly policies — opening gates for MNCs with welcoming arms. This resulted in fast-paced growth of the economy over the next two decades until 2008 when the housing bubble burst in the US had a contagious effect on the Indian economic sector. It caused a halt in economic development but came with a few lessons alongside. Over the next few years, India built its services sector (like any innovative economy), becoming a talent incubator for the IT Service Sector. Due to the comparatively cheap labour and golden talent, multiple MNCs set up their operations in the country, boosting the economy. While all of this was in the picture, a lot went on behind the scenes: at the macro level — changes in the political landscape of the country and focused shifting of government caused various sectors to develop, and on a micro stage, changes in lifestyles of consumers and expansion of the wealth gap in households.
This brings us to recent events such as COVID-19 and the Russo-Ukrainian war, which caused the world to step back; it highlighted various economic flaws, emphasising its dependence on other nations. Being run by an efficient government, the nation outlined multiple points where it could start to gain independence (Atma Nirbharta). Putting forth plans of Make in India and Atma Nirbhar Bharat in motion, the nation has created proof of its foresight towards India’s economic vision.
Entering today, a time when the nation is about to witness national elections, and there is some unrest in the public in regard to the current stance of political leaders towards issues of relevance. A few days back, Gujarat- (a state playing a pivotal role in India’s near future) hosted its annual summit (The Vibrant Gujarat Summit ‘24). The event showed positive signs of growth; a key observation from the various MOUs signed reflected the nation’s interest in the manufacturing and renewable energies sector.
On Feb 1st, the Modi Government released the interim budget for the year 2024, bringing in clarity towards the areas of focus under the government’s radar. The budget also received remarks such as “Good For Economy, Bad for Politics Budget’’ due to the upcoming elections. A Key area of focus was addressing the challenge of decreasing fiscal deficit (shortfall in government income compared to its spending or simply expressing a budget on lines of credit). The budget also highlights the government’s focus on railway and road infrastructural development and in-house arms production.
So, what will the year 2024 hold for us?
Our country is in the phase of rapid growth, which means that there is a risk of economic burnout, but the risk is a common ingredient in the growth story. Certain challenges arise in the face of the economy, namely, income inequality widening, striking a balance with the booming population and job prospects and distress in rural communities (problems better if dealt with at the earliest). Let’s not be disheartened as while there are a few challenges, there is only enough upside too, starting with development in infrastructure, which will ease conducting business, and promotion of entrepreneurial endeavours via favourable policies and, most notably a tech-friendly financial landscape reducing friction.
All in all, the year looks good for the nation, making it just another step forward towards the $5 Trillion GDP (considering the elections do not cause unrest in the economic system)
