In the current global economic scenario, India once again finds itself at a cross road where timely implementation of crucial reforms can see it become a global power in the years to come.
The economic growth has been driven by the expansion of services that have been growing consistently faster than other sectors. It is argued that the pattern of Indian development has been a specific one and that the country may be able to skip the intermediate industrialisation-led phase in the transformation of its economic structure. Serious concerns have been raised about the jobless nature of the economic growth.
Favourable macroeconomic performance has been a necessary but not sufficient condition for the significant reduction of poverty amongst the Indian population.
Growth slowed to 7.1% in FY2016 despite recovery in agriculture. While recent GDP (Gross domestic product) data may not fully capture the effects of demonetization, the slowdown did reflect a continued slump in investment.
Dragging on growth were excess production capacity, problems that past overinvestment left on corporate balance sheets, and new bank lending inhibited by too many stressed assets. Moderately higher growth is projected as consumption picks up and government initiatives boost private investment.
The construction sector, which contracted by 3.7 per cent, was one of the biggest drags on growth.
The financial services, real estate and professional services industries grew 2.2 per cent. However, the muted activity in the private sector was cushioned by a sharp increase in government activity, with public administration, defence and other services expanding by 17 per cent year on year during the quarter.
India is well poised to become the third-largest economy by 2030, surpassing four developed nations Japan, Germany, Britain and France, according to projections by a US government agency.
The estimate by the United States Department for Agriculture Economic Research Service (USDA), assumes the Indian economy will expand annually at an average 7.4% to $6.84 trillion by 2030. This will make it bigger than that of the economies of Japan ($6.37 trillion) and Germany ($4.38 trillion).