Can MODI’s GOLDEN TEAM hit the 10 Trillion dollars GDP dream for India? : Economic Case Study

Think School・2 minutes read

India's economy has rapidly grown, aiming to become a superpower by attracting investments and focusing on domestic growth. Challenges such as low gross capital formation and debt availability hinder economic progress, with proposed solutions including improving business ease and digital loan systems to boost growth.

Insights

  • India's economic growth trajectory has seen a significant rise in its global ranking from the 10th to the 5th largest economy, with projections indicating further growth to 35-45 trillion by 2047, focusing on domestic investments to sustain this expansion.
  • Despite facing challenges in capital formation, debt availability, and cash flow issues, India aims to emulate China's economic success by attracting investments, implementing reforms, and fostering a conducive environment for businesses, particularly msmes, through initiatives like the Open Credit Enablement Network to enhance access to credit.

Get key ideas from YouTube videos. It’s free

Recent questions

  • How has India's economy evolved over time?

    India's economy has significantly grown from being the 10th largest to the fifth largest since the Prime Minister's first visit to the US. The IMF predicts further growth, aiming for a 35-45 trillion economy by 2047, with a focus on domestic investment. India's growth trajectory is expected to continue, attracting substantial investments and aiming to become a superpower and manufacturing powerhouse akin to China's economic rise.

  • What led to China's economic surge in 1978?

    China's economic growth surged in 1978 after liberalizing its economy, leading to significant GDP growth. This liberalization marked a turning point, boosting economic growth and job creation. India's similar move towards liberalization in 1991 has also positively impacted its economy, attracting foreign direct investment and aiming to become the second-largest economy in the next two decades.

  • What challenges does India face in achieving superpower status?

    The Indus Valley report highlights three economic challenges India must overcome to achieve superpower status. These challenges include low gross fixed capital formation, hindrances in debt availability to corporates and msmes, and insufficient disposable income leading to government debt. To address these challenges, solutions proposed include improving ease of doing business, implementing digital loan systems like the Open Credit Enablement Network, and granting banks more flexibility under RBI oversight to boost corporate borrowing.

  • How do Indian msmes struggle with securing loans?

    Indian msmes often struggle to secure loans from banks due to high interest rates ranging from 15-50%, lack of credit history, and costly processing fees. This difficulty in accessing credit hinders their growth and development. To address this issue, the Indian government is working on initiatives like the Open Credit Enablement Network to facilitate easier access to loans for msmes.

  • What financial challenges do small business owners in India face?

    Small business owners in India, like Ravi, face cash flow crises due to operating on credit with retailers. This practice leads to a monthly deficit of 1 lakh rupees despite a 50,000 rupee profit. Additionally, corporate and MSME debt, along with banking crises, hinder India's capital formation and economic growth. To alleviate these challenges, measures such as improving credit availability and addressing debt issues are crucial for the financial stability of small businesses in India.

Related videos

Summary

00:00

India's Economic Growth Trajectory Towards Superpower

  • India was the 10th largest economy when the Prime Minister first visited the US, now it is the fifth largest.
  • The IMF predicts India's economy to reach 35-45 trillion by 2047, with a focus on domestic investment.
  • India's growth is expected to continue, attracting significant investments.
  • India aims to become a superpower and a manufacturing powerhouse, similar to China's growth trajectory.
  • China's economic growth surged after liberalizing its economy in 1978, leading to significant GDP growth.
  • India's liberalization in 1991 marked a turning point, with reforms boosting economic growth and job creation.
  • India is attracting foreign direct investment, aiming to become the second-largest economy in the next 20 years.
  • The Indus Valley report highlights three economic challenges India must overcome to achieve superpower status.
  • Gross fixed capital formation is crucial for economic growth, with India lagging behind China in this aspect.
  • Corporate and MSME debt, along with banking crises, hinder India's capital formation and economic growth.

16:17

"Indian msmes struggle with credit access"

  • Ravi, a small business owner, faces a cash flow crisis due to operating on credit with retailers, leading to a monthly deficit of 1 lakh rupees despite a 50,000 rupee profit.
  • Indian msmes struggle to secure loans from banks, often facing high interest rates of 15-50% due to lack of credit history and costly processing fees.
  • The Indian government is addressing the credit gap issue through the Open Credit Enablement Network to facilitate easier access to loans for msmes.
  • India's economic growth is hindered by low gross fixed Capital formation, lack of debt availability to corporates and msmes, and insufficient disposable income leading to government debt.
  • Solutions proposed include improving ease of doing business, implementing digital loan systems like the Open Credit Enablement Network, and granting banks more flexibility under RBI oversight to boost corporate borrowing.
Channel avatarChannel avatarChannel avatarChannel avatarChannel avatar

Try it yourself — It’s free.