Remarkable ability in a challenging world.

India's economic growth remains resilient, despite global challenges.

Despite significant global challenges, India remained one of the fastest-growing major economies in the 2022/2023 fiscal year. (Image source: Business Today)

The World Bank's India Development Update (IDU) report for the first half of 2023 assesses that, despite global challenges, India remains one of the fastest-growing major economies in the 2022/2023 fiscal year (April 2022 to March 2023) with a growth rate of 7.2%. India's growth rate is the second highest among G20 countries and nearly double the average for emerging market economies.

What are the drivers of India's growth?

India's remarkable resilience is bolstered by strong domestic demand, substantial investment in public infrastructure, and a robust financial sector. Indian bank credit growth increased to 15.8% in the first quarter of the 2023/2024 fiscal year, compared to 13.3% in the first quarter of the 2022/2023 fiscal year.

IDU predicts that global headwinds will persist and intensify due to high interest rates, geopolitical tensions, and sluggish global demand. As a result, global economic growth will slow in the medium term as a combination of these factors.

Against this backdrop, the World Bank forecasts India's GDP growth in fiscal year 2023/2024 at 6.3%, with adjustments in the economy primarily aimed at responding to challenging external conditions and weakening pent-up demand.

However, the services sector is expected to remain strong with a growth rate of 7.4%, and investment growth is projected to remain high at 8.9%.

World Bank Country Director for India, Auguste Tano Kouame, analyzed that the unfavorable global environment continues to pose challenges in the short term. “Focusing on public spending to attract more private investment is a favorable path for India to seize future global opportunities and thereby achieve higher growth.”

World Bank senior economist Dhruv Sharma, also the lead author of the report, added that general conditions will remain favorable for private investment. He predicted, “Foreign direct investment volumes are also likely to increase in India as the rebalancing of global value chains continues.”

One of India's growth drivers lies in its digital economy. This sector has experienced rapid growth thanks to the increasing supply and demand for digital solutions. Meanwhile, the foundation of this South Asian nation's digital economy is strongly bolstered by the government's well-planned digital infrastructure development.

The coordinated efforts of the Indian government and stakeholders have led to a significant increase in digital payment transactions, contributing to the growth of businesses and the economy as a whole. Over the past decade, the number of digital transactions in India has increased from 127 billion in 2013-2014 to 12,735 billion in 2022-2023 (as of March 23), a more than 100-fold increase.

The journey to becoming a digital leader

While the Covid-19 pandemic profoundly impacted global manufacturing, supply chains, and financial markets, India leveraged this very period to mitigate negative economic impacts and achieve a rapid recovery thanks to its digital economy strategy.

According to India's Railway Minister Ashwini Vaishnaw, digital payment transactions amount to $1.5 trillion per year (as of December 2022). Furthermore, with India's economy becoming increasingly integrated into the global system, cross-border payments are becoming even more important.

To achieve this goal, along with expanding access to affordable, convenient, and secure digital payment methods domestically, the Indian government is "striving to popularize" domestic payment products such as UPI and RuPay globally. Indian digital payment systems are now available in Singapore, the UAE, Oman, Saudi Arabia, Malaysia, France, Belgium, the Netherlands, Luxembourg, and Switzerland…

India is one of the fastest-growing fintech countries in the world, primarily driven by the growth of the digital trading segment. In the FinTech sector, India was the second-highest recipient of funding after the US in Q1 2023 and ranked among the top five countries and regions in terms of total funding activity.

In the first quarter of 2023, Fintech startups in India attracted $1.2 billion in investment. To further facilitate integration with the global digital economy, in December 2022, the Reserve Bank of India (RBI) announced the pilot launch of a digital rupee.

In an effort to promote the integration of India's digital economy at the local level, New Delhi introduced the JAM trio (Jan Dhan account - citizen identification card - mobile phone). During the Covid-19 pandemic, the JAM trio played a crucial role, enabling the government to quickly transfer financial support directly into people's accounts, even amidst limited travel and resources.

Amidst the growing global digital transaction landscape, India continues to dominate real-time payment (RTP) protocols, with an astonishing 89.5 billion transactions in 2022, achieving an annual growth rate of 76.8%, accounting for 46% of all global real-time transactions.

The value of digital payments as a percentage of GDP has increased from 660% in 2014-2015 to 862% in 2018-2019, making the shift to digital payments in India clearly visible. RTP is projected to contribute $45.9 billion to India's GDP by 2026, as the volume of RTP is expected to exceed $206 billion by that time.

India has witnessed a surge in successful startups across e-commerce, fintech, and healthcare sectors. Creating a favorable environment for innovation, creativity, and risk-taking has paved the way for the emergence of numerous digital leaders.

Importantly, India's journey toward digital leadership is not solely about individual achievements, but also encompasses the development of a conducive environment for innovation and technological advancement. Conversely, India's rise as a global digital leader presents a golden opportunity for individuals, businesses, and the nation as a whole.

With the right investment and collaboration strategies, India can continue this upward trajectory, consolidating its position as a global digital powerhouse.

Source: https://baoquocte.vn/kinh-te-an-do-kha-nang-dang-ne-trong-mot-the-gioi-day-thach-thuc-245822.html