According to report of IHS Markit, India is all set to overtake its colonial ruler United Kingdom to become the 5th largest economy of the world with gross GDP exceeding USD 3 trillion. It is projected that India may surpass even Japan by 2025 to become 2nd largest Asia Pacific Economy.
India with its emerging economy is set to boost Asian regional trade and investment flows. A key challenge for India to tackle will be the Non-Performing Assets (NPA) in banks and a framing a policy to reform public sector banks in order to reduce them from balance sheets. IHS reported that since 7.5 million additional workforce is about to join the India’s employed sector, Modi government will be under significant pressure to create good paying sustainable rapid employment growth so as to avoid the unemployment or more important the underemployment scenario. The increase in population growth as reported is set to reach 350 million persons by 2050 which will definitely create more fiscal challenges for government as demand for physical infrastructure like water, electricity, affordable housing etc. shoots up.
Make In India initiative launched in 2014 is yet to achieve its target to making share of manufacturing in GDP up to 25%. Hence, this should be a high priority of Indian government. Reducing the red tape in government office by use of e-governance also remains high on priority of Modi government. Although India lags behind the countries like China, Turkey and Mexico on Ease of Doing Business Index, the rank of 77 out of 190 countries is a remarkable progress when compared to its erstwhile rank of 142 out of 189 countries in 2015.
Chief Economist Rajiv Biswas quoted that BJP securing a clear strong mandate in 2019 parliamentary elections has avoided a weak coalition government which may have undermined the further push of economic reforms.
Before 2017, the state based different indirect tax based system had created a complex system of tax wherein the logistics cost across the state boundaries was very high. A major economic reform in this regard is the Goods and Services Act (GST) to create a unified tax system across the country. GST will also increase the industrial competitiveness in country.
Overall the last five years has been a tenure of stable growth and moderate inflation.