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A bright future for India
In our conversations with business leaders, including at Davos 2023, we find that many are pessimistic about the world’s prospects for economic growth. PwC’s new 26th Annual Global CEO Survey shows that 73% of CEOs expect economic growth to decline in the next 12 months - the deepest pessimism in a decade.
But there is a bright light in the gloom - India. We believe India could not only grow its economy this year, but do so at one of the fastest rates of any nation in the world. In this brief article, we explain why we believe India could have a bright future not just this year but for decades to come, and what it will take to achieve this.
Modi’s ambition
India is entering an exciting, but also uniquely challenging phase in its history. Prime Minister Narendra Modi has declared that India will achieve developed country status by 2047. PwC’s own projections show that India could become the world’s third biggest economy as early as 2030 and have a GDP exceeding that of the US by 2060.
By any measure, India is already an economic powerhouse, achieving one of the world’s highest growth rates in the past two decades and quintupling per capita income since 2000.[1]
To realise its future ambitions, however, India must transition from a largely agrarian, informal economy to a services, advanced manufacturing, and knowledge-led hub, positioning itself to take full advantage of the world’s increasing technological sophistication and drive for sustainability. In fact, PwC’s Global CEO Survey shows that business leaders believe the economic winners of the future will be those that achieve profound transformation, aligning with major forces changing the game from tech disruption to decarbonisation.
India’s population - expected to overtake China’s in size in the year ahead, making India the most populous nation on earth - represents at once its greatest opportunity, but also one of its greatest challenges. Only if India can find a way to harness more of its people’s creative energies, ensuring they have the skills and opportunities to propel the transformation, will Prime Minister Modi’s dream become reality.
If India navigates these challenges, it can provide a model for the world of inclusive, sustainable economic growth. It is in all the world’s interest that India succeeds.
India’s rise in action: Bangalore airport
To see an inspiring example of how India is making good on these challenges, visit the new Terminal 2 at Bangalore Airport. Made mostly of renewable materials like bamboo and run entirely on green energy, it’s admirably sustainable. The terminal is packed with cutting-edge technology such as biometric security. Built by a diverse team from female executives to young apprentices, the terminal will bring 25 million people a year to the ‘Silicon Valley of India.’ The new terminal demonstrates India’s ability to draw on the talents of all its people to deliver sustainable projects that power its knowledge and tech-led economy.
Below, we identify five springboards for India to accelerate its economic growth in a way that is good for both people and the planet. These springboards can propel India faster to developed country status, achieving more exemplary projects like Terminal 2 at pace and scale.
Springboard One: Seize the opportunities of the green revolution.
The transition from a high to a low carbon economy will involve a profound rewiring of the global economy, birthing whole new industries. India is at the forefront of this transition, growing new sectors from renewable energy to biofuel. For example, India announced the National Hydrogen Mission to make itself a hub for the production and export of green hydrogen, enabled by a sunny climate that can provide cheap, plentiful solar power to make green hydrogen in vast amounts.[2] India is striving to scale up emerging technologies like low-carbon steel, cement and fertilisers. The International Energy Agency believes India could become a global leader in renewable batteries and green hydrogen, bringing India potential revenues of $80 billion.[3] Our Global CEO Survey shows that 60% of CEOs in India plan to innovate new, climate-friendly products or processes.
India is making moves to transition its own economy to a low carbon model, supporting the growth of its green industries while positioning it to thrive in a global economy that increasingly demands alignment with net zero. For example, though it still relies on oil and coal, India is now the world’s third largest producer of renewable energy, sourcing 40% of its electricity from renewables and adding renewable energy capacity faster than any other major economy.[4] India is particularly vulnerable to a changing climate - PwC’s own research shows that climate-related drought threatens an expanse of India’s farmland the size of Italy - underlining the importance of India reducing its emissions while helping to make a low carbon economy a reality.
Springboard Two: Be a leader in tech.
We’ve heard it said that society is in the first minute of the first hour of the first day of the tech revolution. That may or may not be true, but what we do know is that technology disruption will continue changing the game for all businesses, creating massive opportunities for those who can lead the shift. So we’re pleased to see Modi herald the 2020s as India’s “techade” (‘technological decade’).
Some outside India do not yet recognise it as the tech pioneer that it really is - in our opinion rivaling the United States and China, with tech companies equal in their sophistication and prominence to international counterparts. For example, India is a leader in digital transactions, processing about as many digital payments in India alone as Visa processes payments in any form - globally.[5] Incredibly, India has rolled out biometric identification to 99% of its population, even those in rural areas. India is boldly adopting cutting-edge tech, rolling out India’s first digital rupee pilot in December 2022. The digital rupee could grow India’s economy by making its financial system more efficient, secure, and inclusive.[6]
This kind of boldness can make India an even bigger tech contender in coming years, making the most of its young, digitally-savvy population, rapidly expanding internet connectivity, impending national launch of 5G, and data costs that are among the lowest in the world.[7]
Springboard Three: Develop the sectors of tomorrow.
Although, as we’ve seen, a significant share of India’s population is dependent on the agrarian and informal economies, the country is making the right moves to grow sectors from manufacturing to services. India is building the infrastructure to support a modern, connected, service-led economy. The Indian government has committed a full 10% of GDP, or £270bn, to the Self Reliant India initiative to achieve a range of development goals, including building the infrastructure and technology to support a vibrant, modernising economy. Public-private partnerships are funneling massive amounts of capital to economy-growing projects like building roads and airports, helping to double India’s miles of national highways since 2014.[8] The government is offering production-linked incentives (PLI) to attract manufacturing to India and support domestic producers, speeding India’s progress toward being a global manufacturing and export hub. These incentives have been big draws for mobile phone and electronics manufacturers, making India one of the world’s biggest exporters of smartphones. India is well-positioned to attract companies seeking to diversify their global supply chains, spurring the growth of India’s industries.
Springboard Four: Build skills for the 21st century.
Every nation faces a challenge to ensure its people have the skills for the future from creativity to tech know-how. The challenge for India is a formidable one - given the sheer size of the population, with the majority currently working in agrarian or informal roles - but it is imperative that it overcomes it. India’s government is striving to upskill working-age people nationwide to prepare them for the jobs of the 21st century as part of its New Education Policy. The Policy helps people build skills needed for the modern economy by moving away from rote learning towards flexible, creative thinking, offering a strong programme of vocational education, and emphasising modular and lifelong learning to help people update their skills in a fast-changing economy. For our part, PwC has worked with UNICEF and GenU to identify the pragmatic life skills youth need to meet this century’s challenges. PwC is supporting GenU to upskill 300 million of India’s young people to compete in today’s digital era.
Springboard Five: Harness the potential of young people and women.
India can super-charge its rise if it taps into the productive capacities of more of its people. For any country, the greater the number of people who can join the workforce, the faster the economy can grow. People under 30 and women make up more than 70% of India’s population, so they represent a huge energy source for India’s economy - if they have opportunities to fulfil their potential.[9]
Start with youth. India’s population is young (most are under 30) so its number of working-age people is expanding rapidly, outpacing China’s which has peaked. By 2030, India is projected to have the largest working-age population in the world. If these people can find jobs, India could see a huge ‘demographic dividend’ - speedy economic growth from millions of new workers entering the labour force. (There is danger too; if these people can’t find jobs, millions of potential workers could instead become disaffected, fuelling social instability; this danger underlines the importance of the government’s work to help youth build skills.)
Women are another potential engine of future economic growth. Currently less than 20% of India’s women work outside the home. Giving its women employment parity with men would provide India with more extra workers than the EU has of either gender, which would, according to the International Monetary Fund, make India at least 27% richer.[10] The path won’t be easy - India’s female labour force participation has been declining[11] - but the government is working to change that by, for example, removing laws that inhibit women working.
In conclusion: India could be a model of inclusive, sustainable prosperity
The five springboards we have identified could propel a meteoric rise for India, aligning the nation with some of the most powerful forces shaping the global economy from tech to sustainability. The road is fraught with challenges such as still-poor infrastructure in many rural areas. But through continued investment in these five areas, India could make itself one of the world’s great economic powerhouses while offering the global community a model of how to achieve inclusive, sustainable prosperity. What a great service it would be to the world if the full might of India’s nearly 1.4 billion people were applied to creating a cleaner, greener, tech-smart future for us all.
Learn more about business leaders’ views of the economic forces affecting countries like India - and why India’s CEOs are so optimistic about their nation’s future - in our 26th Annual Global CEO Survey.
[1] World Bank data
[2] Economist, ‘Will India become a green superpower?’ Oct ‘22
[3] International Energy Agency, ‘India’s clean energy transition is rapidly underway’
[4] Renewable Energy in India, Press Information Bureau of the Government of India, 2022.
[5] India’s digital payments are processed through the United Payment Interface (UPI).
[6] ‘Reserve Bank of India to launch first pilot for retail digital rupee,’ Times of India, Nov 22
[7] Schroders analysis, The case for a standalone India allocation.
[8] Urban Transport News, Dec ‘21, ‘India constructs 140,000km of national highways in past seven years’
[9] India’s Median Age, World Economics.
[10] The Economist, Why India needs women to work.
[11] Business Line, ‘India’s growth story is missing women.’
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