India, the world’s most populous nation, aims to transition into a developed country, contingent on implementing vital reforms in education, infrastructure, healthcare, and technology. A recent Reuter’s poll of economists suggests that while India’s economy will exhibit robust growth for the remainder of this fiscal year and the next, it will fall short of its full potential. The nation’s ambition to achieve developed status relies on sustaining an annual GDP growth rate of approximately 8% for the next quarter-century, necessitating significant reforms in various sectors.
To realize this growth potential, policymakers face the significant challenge of redirecting surplus labor from agriculture to more productive sectors with substantial job opportunities. Without strong reform momentum, India’s prospects may be less promising. The poll of 53 economists conducted between July 1 and 21 anticipates India’s economy growing at a respectable rate of 6.1% this fiscal year, contrasting with anticipated slowdowns in other major economies, which should help facilitate job creation. Projections indicate 6.5% growth in the following fiscal year, with expectations of 6.2% growth in the current quarter, followed by 6.0% and 5.5%. World Bank President Ajay Banga emphasized the importance of job creation for India’s growth prospects, particularly by capitalizing on the “China plus One” strategy.
Regarding the employment situation, 17 out of 25 economists surveyed anticipate slight improvement over the coming year, but challenges persist, including unemployment and skill gaps. Opinions regarding the impact of the Production-Linked Incentive (PLI) scheme, designed to attract foreign manufacturers to establish operations in India, are divided. While 21 out of 27 economists believe it will have a modest positive effect on India’s GDP this fiscal year, the remaining six foresee no impact. The scheme has spurred growth in various sectors but has yet to demonstrate its full impact on on-the-ground employment.
While India has work ahead to position itself as the world’s manufacturing hub, economists acknowledge the PLI scheme as a step in the right direction. Further economic reforms have the potential to strengthen the scheme’s prospects and create millions of jobs, particularly in the manufacturing sector, which requires sustained growth and resolution of investment-related issues.