Recent data suggests that India’seconomic performance is consistent and IMF predicts a robust growth rate of 7.4% for India’s economy in 2017. There are many long term changes such asurbanization, the ever increasing middle class and the spending capacity of thepeople powering it’s competitiveness and in turn the consistent economicsuccess. Citizens have better access to employment, education, health, and soon. Urbanization:Due to urbanization a hugeconsumer base is formed which is a good indication for both global and localcompanies.
The infrastructure also got aboost as a result of urbanization. Again this is an opportunity for bothprivate companies as well as government. There will be need of more housing,transportation, education & health institutions and utility services likepower, drinking water, sanitation and so on. State may compete with each otherprovide better infrastructure to attract companies and tap resources. But what makes it moresustainable is recent government initiatives and technological advancements. Ifthe most significant and powerful changes to be listed the recentimplementation of goods and service tax (GST) will be the numero uno. Now India’s29 states will be really a unified market.
Earlier all the states had differenttax structures for different goods. Tax Reforms:Why somestates are very developed in India and why can’t industries come up in economicallyunderdeveloped states? The problem is – lack of infrastructure. Governments in underdevelopedstates cannot provide basic facilities such as electricity and water.
This isbecause these states are not rich. Why are these states not rich? Taxcollections are highest in manufacturing states. GST being consumption basedtax, tax collection will go to the states in which the goods are consumed, andnot where they are manufactured. This will give all the state the opportunitiesto be competitive and opportunity to economically perform. Historically,manufacturing was scattered across the country based on where you gotadvantageous tax breaks. It was not economically the best place to manufactureand supply something. There were quite hilarious consequences where,essentially, shipment of goods—let’s say 400 kilometers hinterland into Indiato the port—was more expensive than taking a container from that port toBrazil.
That is the kind of complexity that India’s logistics networks, enabledby local state taxes, was creating. With the GST also india seesmajor changes in direct taxes. In the recent years Income Tax rates and reviewmechanisms reformed.
The government is trying to include larger population, keeprate low, simple and transparent. Besides raising revenues, it is required toincentivise savings, promote exports, achieve balanced regional development,promote investments in infrastructure, expand employment, promote scientificresearch and development. Financial inclusion:Government’s push for financialinclusion now showing the effective difference.A large-scale independent nationalsurvey shows 99 percent of households have at least one member with a bankaccount (Bhattacharya 2016). Financial inclusion is linked to a country’seconomic and social development, and plays a role in growth and employment. Dueto financial inclusion bot the government and people truly involved in economy. A push for gentle prominence: Recently India came in lime lightwhen it successfully launched 104 satellites in the space and successful marsmission in its very first trial.
India’s greatest asset has been its ability tomanage lower-cost launch vehicles and success rate. The demand for small andinexpensive satellites is thought to dramatically increase, putting India in anextremely advantageous position compared to its foreign counterparts, who focusmainly on larger satellites. India’s space agency is planning a second missionto Mars. Now Indian economy is not onlyaccounted for FDI in India but also outbound investments from India to othercountries. In 2015 UK announced that India is the third largest source of FDIfor them as investments increased by 65 % and 9,000 jobs secured.
Now India is making its presenceglobally and taking necessary steps. Major Outbound investment is the clearindication that India has entered in the global marketplace and proves itscompetitiveness. As per McKinsey & Co.
, the Indian economy is expected toincrease its revenue from information-technology, agriculture, pharmaceuticals,infrastructure and FMCG to US$ 160 billion by 2025. The Indian media sector is expected to grow at a Compound Annual Growth Rate(CAGR) of 13.9 per cent, to reach US$ 37.
55 billion by 2021 from US$ 19.59billion in 2016, outshining the global average of 4.2 per cent. The international outreach anddemand of films is expanding.
A recent Bollywood film “Dangal” broke box officerecords in China for a non-Hollywood movie. India has shown its regionaleconomic leadership to neighbouring countries with substantial investment,infrastructure improvement and strategic trade alliance. The development of ChabaharPort in Iran which could give opportunity to Indian companies to potentiallyinvest over US $16 billion in Chabahar Special Economic zone. It’ll also extendIndia’s commercial outreach to Central Asia.