The Indian government has introduced various measures for helping the economy be less reliant on imports, and ultimately, increase exports from the country. The approach of being self-reliant India has proved to be successful by looking at mass data of production-linked schemes, along with utilising the inherent strength of the individuals, which is exporting services to foreign countries.
Let’s understand three sources of the economy's strength according to the economic survey.
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Services: Source of strength
Undoubtedly, the government is supporting the promotion of digital infrastructure while focusing on physical infrastructure as well. According to the economic survey, India has been placed among the top 10 service exporting countries in the year 2021, comparing the commercial services export has increased from 3% in 2015 to 4% in 2021.
Services are broadly classified into two categories;
- Contact-intensive services like hotel, tourism, retail trade, entertainment, and recreation, which has registered a sequential growth of 16% at pre-pandemic levels.
- Non-contact intensive services like information, communication, financial, professional, and business services have contributed significantly to the economy.
Service sector growth at pre pandemic level is majorly driven by vaccination and loosening restrictions on covid formalities.
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Industry: Steady recovery
Apart from being a service-led economy, India cannot be always untouched by the growth of the manufacturing sector. Russia-Ukraine and the pandemic war make India realise the importance of being a manufacturing hub as the supply chain was the next biggest thing that was at risk in both of the scenarios.
There are 4 industrial performances in FY 2023
| Industry | Share in total GVA (%) |
| Mining and quarrying | 2.3 |
| Construction | 8.1 |
| Manufacturing | 17.3 |
| Electricity, gas, water, and other utilities | 2.3 |
Source: www.indiabudget.gov.in
Production-linked schemes are one of the primary drivers for growth in these sectors. The industry not only accounts for 31% of the GDP but also has a significant contribution in generating employment for up to 12.1 crore people in the financial year 2023, directly or indirectly. Directly poisoning the growth of the GDP of the country and indirectly becoming a growth driver of the banking, insurance, and logistics industry.
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Digital infrastructure: lifting potential growth
When we talk about digital infrastructure, the very first thing that comes to mind is the pandemic era, because this is where digital infrastructure has given robust growth. The physical model is already working, but the digital model brings various new opportunities for individuals and the economy as well.
In 2009, only 17% of adults had bank accounts, 15% of individuals were using digital payments, 1 in 25 people had unique ID documents, and 37% of India had mobile phones. In 2022, over a billion people have unique digital ID documents, more than 80% have bank accounts, and over 600 cr digital payment transactions have been completed on a monthly basis.
It could be possible only because of the easy accessibility of resources required, and low-cost transaction fees. It has become more convenient to use digital platforms than using physical infrastructure, which might be a time-consuming process.
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Conclusion
Whether it is manufacturing growth, digital infrastructure, or service sector export, it could become possible due to a slight push by the government and a dramatic change in the mindset of individuals. These sectors were already a source of strength for India's economy, which can become a defining feature of the country.
Anushka Trivedi is a freelance financial content writer. She can be reached at anushkatrivedi.com