India to become next Asian hub
India is a significant economy today. It has grown at an annual rate exceeding 12 percent over the last seven years. Even going by the conservative assumption that the country will grow by 10 percent per year in real dollar terms over the next 15 years, it is expected to grow into a $ 5.5 trillion economy by 2024- 2025.
With some exceptions in the agriculture sector, India is now highly open to trade. Trade in nonagricultural goods and services and the flow of portfolio and direct foreign investment are now almost as free in India as in China. Restrictions on outward investment by Indian multinationals have also been considerably relaxed. The result has been India’s rapid integration into the world economy. Trade in goods and services as a proportion of GDP has risen from just 17 percent in 1990- 1991 to 53 percent in 2008- 2009, and foreign direct investment has risen even faster, from $ 0.1 billion in 1990- 1991 to $ 64.1 billion in 2009- 2010. Not just private Indian companies like Reliance Industries Ltd. and Tata Motors, but also public sector enterprises such as the Steel Authority of India and Bharat Heavy Electricals now compete against the world’s best, forcing them to be efficient and productive.
A country’s savings are counted as reliable along with investments, to remain a driver of fast growth. As such, there is also a steady climb in India’s savings rate, now touching almost 33 percent from 22.8 percent a decade earlier.
Importantly, it is claimed that labour shortages will not hold back India. Its dependency ratio, defined as the number of dependents per 100 working people, is continuing to fall.
As India allows people to save a large proportion of their income and raise the country’s rate of savings, experts point to the structural reforms in the country for boosting the number of people who work and contribute to growth. With reform pushing up productivity per worker, GDP has risen even faster.
This domestic empowerment has led India to continue expanding its technology sector and push into the key markets of US and Europe, along with Middle East and Africa.
According to estimates of the National Association of Software and Services Companies ( NASSCOM), revenues for India’s information technology and outsourcing industries are expected to reach $ 225 billion by 2020. Information technology spending rose 4.5 percent in the current fiscal year, as companies realized they needed to spend aggressively on adapting to new technologies. The rise in global technology spending is also a key factor behind the industry’s expansion.
India’s information technology and outsourcing industries continue to be one of the largest employers in the country. Over 230,000 jobs were added in the current fiscal year, bringing the total direct employment to about 2.8 million people.
As India is ambitious towards becoming an R& D hub, a greater number of smaller Indian cities are becoming industrial centres with an improved business environment to attract more foreign investment into the country.