Das highlighted some sectors for India's prospects. These are:
Firstly, information technology (IT) services and information technology-enabled services (ITES) backed by entrepreneurial capabilities and innovative solutions have emerged as a key strength of the Indian economy over the years. There is a growing league of Unicorns in India reflecting its potential for technology-led growth. The country has added several unicorns over the last year to become the third-largest startup ecosystem in the world. Underpenetrated Indian markets and a large IT talent pool provide an unprecedented growth opportunity for new-age firms. Further, the COVID pandemic has provided a new impetus to technology-driven companies such as fintech, edtech and health tech which are likely to see increased funding activity in the coming years.
Secondly, India’s digital momentum is expected to continue with strong demand in areas such as cloud computing, customer troubleshooting, data analytics, workplace transformation, supply chain automation, 5G modernisation and cyber security capabilities. India has the natural advantage to benefit from the emerging trends in these areas. The drive towards full fiberisation of the economy has to go hand in hand with the establishment of data centres across the nation for data storage and processing. Ensuring universal, affordable and fast broadband internet access all through the country can play a critical role in advancing productivity and employment opportunities. Further, the stronger push to digitalisation and automation can have spillover effects on ease of doing business. Medical advances and process accelerations can spark a renaissance in public health innovations and delivery. E-commerce is emerging as another promising sector for India. It has benefited from growing market, increased internet and smartphone penetration and COVID-induced shifts in consumer preferences. Various initiatives taken by the government, namely Digital India, Make in India, Start-up India, Skill India and Innovation Fund have created a conducive eco-system for faster growth in the digital sector.
Thirdly, the pandemic has brought to focus what India can achieve in the area of manufacturing. In the pharmaceutical sector for the first time in history, vaccines were developed and administered within a year with India remaining a forerunner and a global leader in vaccine manufacturing. Investors have shown confidence in the Production Linked Incentive (PLI) scheme introduced by the government. Following this initiative, India is now home to almost all the leading global mobile phone manufacturers and during the recent period, India has turned from being an importer to an exporter of mobile phones. This trend is likely to spill over to other sectors also. The presence of global players would help in enhancing India’s share in Global Value Chain (GVC) and building up a resilient supply chain network. Greater GVC participation would also enhance the competitiveness of India’s large and Micro, Small and Medium Enterprise (MSME) supplier base.
Fourthly, the global push towards green technology, though disruptive, can create new opportunities in several sectors. For example, the automobile sector is moving towards electric vehicles. With greater innovation, electric vehicles are slowly converging to internal combustion engines (ICE) in cost and performance. The biggest Electric Vehicle car maker is not from the traditional car maker companies. Similar creative disruption is also visible in the two-wheelers space. With supportive policies, greener technologies can yield economic and environmental benefits.
On the fifth, he said that India’s energy sector is also witnessing significant churning and technological transformation. As India grows rapidly, its energy demand is expected to pick up in the near future. Currently, a large part of the energy demand is met from fossil fuels, with significant import dependence. India aims to increase the share of non-fossil fuels to 40 per cent (450GW) of total electricity generation capacity by 2030, as part of the goals set under the Paris agreement within the United Nations Framework Convention on Climate Change (UNFCCC).1 With a view to give a boost to the agriculture sector and to reduce environmental pollution, the Government had launched the Ethanol Blended Petrol (EBP) Programme, which would help in cleaner air besides saving on fuel imports. The percentage of ethanol blending by Oil Marketing Companies has risen from 1.5 per cent in 2013-14 to 5.0 per cent in 2019-20 and is further expected to rise to 8.5 per cent in 2021-22, on course to achieve 20 per cent target by 2025. The drive towards renewable energy is a step in the right direction both for energy security as well as environmental sustainability, which are critical for our long-term economic growth.
Sixth, in the post-pandemic period, global trade will remain vital for faster recovery. Reflecting congenial policy environment and supportive external demand, India’s exports have rebounded, with a broad-based double-digit growth during the first half of 2021-22. India’s exports of agricultural commodities, including Geographical Indications (GI) certified products to newer destinations, offer favourable prospects for overall export. Furthermore, exports of engineering goods – which account for around one-fourth of India’s total exports – experienced robust growth across product categories and newer markets. To further strengthen the export potential, there is a need to enhance the share of high-tech engineering exports to achieve an ambitious engineering export target of US$ 200 billion by 2030.
Seventh, a dynamic and resilient financial system is at the root of a stronger economy. India’s financial system has transformed rapidly to support the growing needs of the economy. While banks have been the primary channels of credit in the economy, recent trends suggest increasing role of non-bank funding channels. Assets of non-bank financial intermediaries like NBFCs and mutual funds have been growing; funding through market instruments like corporate bonds has also been increasing. This is a sign of a steadily maturing financial system – moving from a bank-dominated financial system to a hybrid one. Substantial progress has been made to fortify internal defence mechanism of financial institutions to identify, measure and mitigate risks. This is a continuing process and efforts by all stakeholders have to be sustained.
Das said that "to achieve our objectives in all the areas which I have outlined so far, we need a big push to infrastructure particularly in areas of health, education, low carbon and digital economy in addition to transport and communication."
"In addition, the warehousing and supply-chain infrastructure will be critical to bolster value addition and productivity in the agriculture and horticulture sector. This will create employment opportunities in semi-urban and rural areas and promote inclusive growth. The demand for warehousing infrastructure has also gone up in tier-2 and tier-3 cities in the wake of steep jump in online trading. Moreover, investment in intangible capital such as research and development and skill upgradation of human resource has strong and positive impact on productivity. Some empirical evidence suggests that the impact of investment in intangible capital on labour productivity is more than investment in tangible capital," Das added.