INDIAN ECOMONY

1. • PRESENTED BY : RAJAT MANGAL
TOPIC:- ARE WE MARCHING TOWARDS US$ 5TRILLION ECONOMY

2. We are thankful to the ICAI BILASPUR to give us an opportunity to prepare this project.
We will be inharmonious to express our gratitude to our faculty C.A DEEPAK VINAYAK
UKIDAVE
It was such a great experience for us & will definitely helpful in improving our skills.
(THANK YOU)

3. • It was on January 23, 2018 that Prime Minister Narendra Modi, while
addressing the World Economic Forum in Davos (Switzerland), first expressed his
ambition to make India a US$ 5 trillion economy by 2024-25. He reiterated the
target at the Governing Council Meeting of NITI Aayog in New Delhi in June 2019.
• Drawing a blueprint for the target, Economic Survey, 2018-19 assumed an
average real annual growth rate in gross domestic product (GDP) of 8 percent
from 2020-21 to 2024-25. It also assumed an inflation rate of 4 percent. This
implied a nominal growth rate of 12 percent. Further, it assumed an exchange rate
of Rs 75 per dollar in March 2025.
• Presently, India is the fifth largest economy in the world with GDP of around
US$ 3 trillion in 2019-20. If the US$ 5 trillion target is translated into reality, the
country will leave behind Germany to become world’s fourth largest economy in
2024-25, only behind US, China and Japan.
• India is projected to be the world’s most populous country by 2025, with at
least 145 crore (1.45 billion) people. Given the large geographic and demographic
size of the country, the target is the minimum the people of India can aspire for.
• When all was going well at the beginning of this year, the outbreak of
coronavirus epidemic in China was reported. All countries of the world were
alerted. On March 11, 2020, the World Health Organization (WHO) declared the
coronavirus epidemic as a pandemic.
• To cope with the medical crisis, the Prime Minister, in a televised address to
the nation, announced on March 24, 2020 a stringent countrywide lockdown from
March 25 to April 14 which was extended in instalments until June 30 but with
gradual relaxations.
• In the months of April and May, all transportation (railways, airways, metros,
road transport) was halted. Business establishments were closed down. The
supply of only essential goods and services was permitted. The severity of the
lockdown can be gauged from the fact that not a single motor vehicle was sold in
the country during the month of April.

4. • Data released by the National Statistical Office (NSO) on August 31,
2020 showed that India’s GDP contracted by 23.9 percent in the first
quarter (April-June) of 2020 compared to the same period the
previous year. The contraction affected the entire non-farm sector,
construction being the worst hit. Agriculture was the only exception
with a growth rate of 3.4 percent. As expected, countrywide lockdown
in the wake of pandemic hit the economy hard. Both consumption and
investment demand collapsed during the lockdown.
• On October 9, 2020, the Monetary Policy Committee (MPC) of the
Reserve Bank of India (RBI) stated that the Indian economy had
bottomed out in April-June quarter and a process of sequential
recovery with gradual removal of lockdown restrictions was underway.
According to MPC, the economy—which contracted by 23.9 percent in
the first quarter—was expected to witness a deceleration of 9.8
percent in the second quarter (July-September), 5.6 percent in the
third quarter (October-December) and enter positive territory with a
growth of 0.5 percent in the fourth quarter (January-March). The next
financial year (2021-22) would begin with a 20.6 percent growth in the
first quarter.
• MPC forecasted that India could see its worst recession ever in
2020-21 with the economy contracting by 9.5 percent. Similarly, in its
half-yearly South Asia Focus update released on October 8, 2020, the
World Bank predicted that Indian economy would shrink by 9.6
percent in 2020-21 because of the pandemic. On the brighter side, the
update projected that growth would rebound to 5.4 percent in 2021-
22.

5. Population
between
age group
15 - 64
767
Million
Urban
Population
377
Million
30 people move
every minute to
urban areas
Internet
Users
462
Million
2nd largest
in the world
ADVANTAGE INDIA
Growth Rate
7.6%
Fastest growing
Economy in the
World (2015-16)
Foreign
Reserves
$366.7
Billion
Railway network
2nd
Largest
23 Million
people travel
everyday
Road network
2nd
Largest
In the world
33 Lakh KM

6. ECONOMIC
by 2025
(BCG Study)
Huge Consumer Market
3.6
Trillion
$
Substantial GDP Growth
20
Trillion
$
SOCIAL
Average age
in 2025
Youngest Nation
29
Years
more added
to middle
class by 2025
Upward mobility
150
Million
Literacy rate
by 2025
Skilled work force
99%
POLITICAL
accounts
opened under
‘Banking for all’
Inclusion in Banking system
241
Million
Archaic laws
repealed to
reduce red-tape
Deregulation
1000+
UNPARALLELED OPPORTUNITY
by 2025
(PPP)

7. JAM TRINITY
Using technology to leapfrog – JAM trinity
Jan Dhan
Integrated approach to
bring financial inclusion
of all citizens
~219 million accounts
opened so far
Mobile
Indian market is the
second largest in the
world
More than 1 billion mobile
subscribers
Aadhaar
Unique identity to every
resident citizen
1 billion enrollments
under Aadhaar scheme
Inclusivity, banking for all, connectivity for all; 3 pillars to Create Huge Demand,
Motivate Investment, Manufacturing and Economic Growth to achieve the MII vision

8. Customs
24X7 custom
clearance at
19 PORTS
17 AIR CARGO
COMPLEXES
Environmental
Clearance
Not required
for
36 WHITE
INDUSTRIES
Single
Window
Clearance
Integrated
for
6
DEPARTMENTS
EASE OF DOING BUSINESS

9. ADVANTAGE INDIA
Projections of a strong economic growth amongst global slowdown
India remains an oasis of
growth amongst slowing
global outlook
India is projected to be the
fastest growing major
economy in 2017 surpassing
China
The trend is expected to continue
at least till 2021
• P = Projected
• Source: International Monetary Fund

10. THE CHALLENGES
The country will need to grow by 9 per cent every year for five years continuously and raise aggregate
investment rate to 38 per cent of GDP to achieve Prime Minister Narendra Modi's target of turning India
into a USD 5 trillion economy,
It will have to grow by 9 per cent in each of the five subsequent years to take the size of the economy to
USD 3.3 trillion in FY21, USD 3.6 trillion in FY22, USD 4.1 trillion in FY23, USD 4.5 trillion in FY24 and
USD 5 trillion in FY25.
Assuming an inflation rate of 4 per cent which is the target inflation rate as per the Monetary Policy
Framework, a real growth rate close to 9 per cent would be required to increase the size of the Indian
economy to USD 5 trillion by FY25. This implies a nominal growth rate of 13 per cent, assuming an
average annual depreciation of the rupee viz-a-vis the US$ at 2 per cent
In FY19 (2018-19), the gross investment rate, estimated at 31.3 per cent, was able to deliver a real
growth rate of 6.8 per cent. The implicit incremental capital-output ratio (ICOR) was 4.6, it said. "This is
relatively high because of deficient capacity utilisation."

11. • Realizing the gravity of the situation, the government announced on
May 12, 2020 the Aatmanirbhar Bharat Abhiyan (Self-reliant India
Initiative) which combined relief, policy reforms and fiscal and monetary
measures to help businesses and individuals to cope with the situation
created by the pandemic. A mega package of Rs 20 lakh crore (10
percent of GDP) was announced for the purpose. To supplement it, the
government, on June 20, 2020, launched a Rs 50,000 crore rural jobs
programme named Pradhan Mantri Garib Kalyan Rojgar Abhiyan. It
aimed at creating livelihoods for jobless migrant workers who moved
back from cities to their villages during the lockdown.
• On October 12, 2020, the government announced a new demand
stimulus package of Rs 73,000 crore. It mainly pertained to government
employees who were given, among others, the benefit of a leave travel
concession (LTC) cash voucher scheme, special festival salary advance.

12. • According to the World Investment Report, 2020 of the United Nations
Conference on Trade and Development (UNCTAD), India jumped from 12th spot in
2018 to 9th spot in 2019 on the list of global top 20 recipients of foreign direct
investment (FDI).
• Although India has been a preferred destination for foreign investors for long,
the recent upsurge in flow of funds into the country is quite remarkable and
encouraging.
• The Public Investment Fund of Saudi Arabia announced on June 18, 2020, an
investment of US$ 1.5 billion in Jio Platforms (digital arm of Reliance Industries
Limited) for a 2.32 percent stake. On July 15, Google announced an investment of
US$ 4.5 billion in Jio Platforms to claim a 7.73 percent stake. Jio Platforms has also
received investments from Facebook, Intel, General Atlantic and other private
equity firms.
• Similarly, Google announced on July 13, 2020 that it would invest nearly US$ 10
billion for developing digital infrastructure and funding innovations in India over
the next five to seven years. Google would help to expand the scope of digital
payments using Google Pay, and develop low-cost smart phones and other
products and services.
• Why has India suddenly become a hot-spot for foreign investments? There are
several good reasons for investing in India. In terms of size of the market, foreign
investors’ confidence lies in the large and expanding consumer market in India and
the future of its digital economy. Presently, the estimated population of India is
130 crore (1.3 billion). According to a study published in Lancet (July 2020), India’s
population will peak at 160 crore (1.6 billion) in 2048. The country will have the
world’s largest working-age population of 57.8 crore (578 million) by 2100.

13. ADVANTAGE INDIA
Promise of a strong consumer market combined with a large working population
1,311
1,528
1,705
860
1,033
1,145
27
31
37
0
5
10
15
20
25
30
35
40
0
200
400
600
800
1000
1200
1400
1600
1800
2015 2030 2050
Age
(years)
Population
(million)
Total Population Working age population Median age of population
*Source: UNDP Asia Pacific Human Development Report 2016
Income levels is expected to triple
by 2025
Urban market shall account for
2/3rd of consumption growth
over the coming decade
Working population to increase by
33% to reach 1.14 billion by 2025
India as a “young nation”, with
average median age shall be:
37.3 years by 2050

14. • In the Global Startup Ecosystem Report (GSER), 2020,
released on June 25, 2020, by California-based Startup
Genome, two Indian cities made it to the top 40 of the
world’s most favourable ecosystems to build a globally
successful startup. Bengaluru was ranked 26th and
Delhi 36th in the report.
Mumbai topped the list of emerging ecosystems
• Similarly, India has improved remarkably in recent
years on world indices of ease of doing business,
innovations, digital payments, logistics, and travel and
tourism.

15. • Tech Startups are expected to be 11,500 in
2020 from 4,300 in 2015
• Number of incubators has grown by 40% to
140 during 2015-16
• 15-20% growth in the number of active Angel &
VC investors in 2016
STARTUP INDIA
• 3rd largest Start-Up Ecosystem globally
• 3-4 Start-Ups are born every day
MORE THAN 20,000 STARTUPS
Source: NASSCOM’s Indian Start-up Ecosystem Maturing Edition 2016, Grant Thornton Report on The Indian Startup Saga, Youth of the Nation Survey
“START-UP WAVE” HAS CAPTURED THE
IMAGINATION OF THE YOUTH
• Median age of a founder is 31 years
• 12 Indian Start-Ups in Billion Dollar Club
• 55% of Youth would prefer to work for a Start-
Up over corporates in 2016
530+ ACTIVE INVESTORS HAVE EMERGED
FOR THE STARTUP SPACE
TOTAL FUNDING AT USD 3.8 – 4.0 BILLION
NO. OF DEALS UP BY 6-10% IN 2016

16. Removal of 17 indirect tax levies, thus reducing
cascading effect of tax
EODB
Simplification of tax administration & compliance
Drop in costs of capital goods, lower inventory and
working capital requirements
Cost Advantages
Seamless transfer of goods in the country : efficient &
low cost logistics
GST – GOODS & SERVICES TAX
What GST holds for the future
More transparent Indirect Tax regime; increased tax
collection
Removal of Inter-State tax levies
Unorganized sector to come under the tax regime
Inclusivity

17. Whatever
you’re thinking,
think bigger.”​
– Tony Hsieh