With a GDP growth rate of 6.1%, India will achieve steady development in the next two years, according to a poll conducted by Reuters. The poll conducted between July 13 and 21, representing the opinions of over 50 economists, also highlighted that the country’s employment situation.
Achieving the status of a developed nation, which is India’s long-yearning aspiration, will require an annual GDP growth rate of around 8% continuously in the next 25 years. However, this will be attainable only with key reforms in education, infrastructure, healthcare, technology and more.
Dhiraj Nim, an economist at ANZ Research commented, “If we want to realise that 8% growth potential this decade...the biggest challenge before policymakers is to reallocate the surplus labour from agriculture to more productive sectors with gainful jobs in them. If India's reform momentum is lacklustre, a less exciting picture is on the cards."
The poll also identified that major economies will slow down as compared to India’s projected growth, which will foster a favourable environment for job creation.
The projected growth rate is being maintained, as a similar poll conducted in June 2023 also hinted that India is set to achieve GDP growth of 6.5% by FY 2024-2025, wherein 6.2% growth in Q2, thereafter 6.0% growth rate in Q3, and 5.5% in the final quarter.
Nim further added, "I think 6.0% to 6.5% is a very achievable and a very conservative forecast for India's growth trajectory.”
A recent statement by Ajaypal Singh Banga, President of the World Bank signified job creation as a key factor for India's economic development. Also identifying the "China Plus One" strategy, as an opportunity for India as well.
About 68% of economists predict that India’s employment situation will slightly improve over the next few months in the current FY.
Radhika Piplani, chief economist at DAM Capital Advisors said, “The unemployment situation hasn't improved yet...and the skilling to some extent is also missing. So, there is a gap in terms of the demand versus the supply,"
More than 75% of economists acknowledged the modestly increasing impact of the Production-Linked Incentive (PLI), a scheme designed to attract foreign firms to set up manufacturing units in India.
The remaining economists expressed that allocating funds as 'incentives' for the PLI scheme from the Union budget 2023-24 will have no impact.
"All the sectors where PLI has started are seen booming, but the actual impact of it to on-the-ground employment - that is still something which is yet to be seen," Piplani added.
Despite India's need to make significant progress to replace China as the world's manufacturing hub, many economists concur that the PLI scheme is a positive step in the right direction. Moreover, incorporating economic reforms will boost the PLI scheme’s possibilities and multiply employment opportunities.
Suman Chowdhury, chief economist at Acuite Ratings and Research concluded, “Manufacturing needs to see strong growth and that is possible only when we...iron out the issues that are preventing fresh investments in the sector.”