New Delhi: Even while maintaining a stable yet modest growth rate averaging about 6 per cent per annum, India would become a USD 26 trillion economy by 2047-48, with a per capita income exceeding USD 15,000, which is nearly six times the current value, according to an Ernst and Young (EY) report.
The report highlights that there are a few key enablers of growth that uniquely strengthen India’s position in the global economy over the next decade and beyond, as it is most likely to overtake Germany and Japan and will become the third largest economy after China and the US by 2030.
India has attained critical mass as the fifth largest economy in the world, realised primarily on account of its policies of economic liberalisation, which made it more market-oriented, allowed for a greater role for private capital and in the process increased its global competitiveness. The growth projections for the Indian economy are the highest for any large economy over the coming decades.
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India’s strong services exports have grown by 14 per cent over the last two decades and stood at USD 254.5 billion in 2021-22. A large part of services exports is from the Information Technology (IT) Services and Business Process Outsourcing (BPO) services, with USD 157 billion in 2021-22.
This growth has been driven by both Indian headquartered and global IT companies.
Besides, other global corporations are leveraging Indian talent through their capability centres in India, which employ over 5 million people. What began as a cost arbitrage has now become a key source of high-quality talent and leading-edge innovation. The 1,500 Global Capability Centers (GCCs) in India representing 45 per cent of global GCCs are an acknowledgement that these centers are scalable with access to manpower skilled in new technologies, while adhering to business processes while adhering to business processes of the highest quality and efficiency.
All of these have converged to allow India to become the “office of the world” for corporations as they look to adopt technology at a global scale.
India is well-positioned to leverage this success and cater to more skill-intensive and increasingly digitised services. Indian and global IT services players will leverage India for higher value services such as consulting, experience design, full-stack digital engineering, product development for Industry 4.0 and incubate and industrialise new business process management use cases and processes often considered core to businesses today.
Most Indian and global IT services players will have their centres of excellence for Cloud, analytics and AI and other new-age technologies in India. Besides, great strides are being made in IP-based platform and product businesses, which are more scalable, sticky and differentiated, creating a potent ecosystem for India Hyperscalers to emerge over the next two decades.
Similarly, in non-IT services segments, India has a unique opportunity to fill in the talent gap as developed economies face a shortage of skilled talent due to demographic changes. This would be in areas such as education and healthcare, where services are increasingly being delivered over digital channels.
A large telecom subscriber base of 1.2 billion and 837 million internet users, combined with the government’s focus on building digital platforms, have laid the foundations for a digital economy, enabled the development of a robust digital payment ecosystem and strengthened governance.
A special focus and consistent backing of the GoI over the last decade in creating India’s uniquely scalable Digital Public Infrastructure has borne fruit, yielding economic benefits and growth of innovation and entrepreneurship.
The report highlights that over the period 2014-19, in absolute US dollar terms, the digital economy grew by 15.6 per cent, which was 2.4 times faster than the growth of the Indian economy.
India’s success is important for the world economy as it is home to approximately 1/6th of the global population. In 2023, India is slated to become the largest country in terms of population, enabling it to become the largest contributor to the global workforce for the next several decades, the report added.
