INDIA 2025- SEEING THE INVISIBLE

Authors - Srinivas H. Prabhu1

ABSTRACT

India has long been viewed as a potential economic tiger that is yet to achieve its potential.
India is considered the world’s fastest-growing large economy. The International Monetary
Fund (IMF) predicted that India would retain the status of fastest growing economy until 2020.
A young India, with a large digitally enabled middle class is asking for growth and change.
Without building the skills and capabilities necessary to drive innovation, the nation risks
stagnation. However, if India can create capabilities for growth and new solutions, the
opportunities, both at home and abroad, are limitless. This paper Vision 2025 is driven by the
belief that India can build shared prosperity for its 1.25 billion citizens by transforming the
way the economy creates value. Corporate India has a critical role to play in this story, not
only by creating value by addressing key societal needs, but in supporting a vibrant
entrepreneurial sector. Additionally, it needs to partner with the government in order to
implement new developmental approaches. This paper analyses the key sectors such as
education, healthcare, agriculture, financial services, power, manufacturing, and retail, and
urbanization, and suggests that new solutions are necessary in each sector. The solutions will
enable sectoral growth to attain desired outcomes. As the world increasingly confronts
technological change and sustainability challenges, we believe India can offer an exemplar for
other growth markets. This paper also outlines how government will need to create national
platforms and improve the ease of doing business. The Indian economy itself has shown
resilience in the face of global downturns, and has stood up to be one of the fastest growing
economies in the world. The performance of the USD 2 trillion-economy at current price is
being keenly observed by the world and this paper explains how India can triple its economy
to be a 6-7 trillion economy by 2025. These are expected to bring forth a number of investment
opportunities.

1
[email protected]
 1. INTRODUCTION

The narrative of India is gradually changing. At a time when the global economies are facing
headwinds in recent years, India is moving on a higher economic growth trajectory. While cities and
urban areas show progressive rise in the average per capita spending, proactive measures directed
towards benefitting rural India to help increase its income opportunities would contribute towards
increasing total domestic consumption in India. In this context, large rural infrastructure projects such
as interlinking the rivers and building rural roads, would ensure less dependence on the monsoons for
the agricultural output and a more efficient farm to fork supply chain. This in turn shall help ensure a
more broad-based consumption pattern. On the other hand, the rising efficiency of the cities, through
Smart Cities initiative, is expected to allow for higher productivity, leading to increased wages and
disposable incomes, contributing to the growth of domestic consumption. The Indian economy itself
has shown resilience in the face of global downturns, and has stood up to be one of the fastest growing
economies in the world. The performance of the USD2+ trillion-economy at current price is being
keenly observed by the world. Investments into India are accelerating, demonstrating increased
investor confidence on what India has to offer Proactive policy reforms along with several campaigns
and initiatives, such as Make in India, Digital India, Skill India, Start-up India and Swachh Bharat
Abhiyan (Clean India Mission), are likely to transform the extent and the quality of rural and urban
infrastructure. Young Indians, particularly members of the emerging middle and the middle class—a
billion strong by 2025—have rising aspirations. They are also more empowered to demand change,
thanks to ever-greater access to the internet and mobile connectivity. The recent electoral mandate for
development is a more immediate signal of Indians’ desire for growth and for the benefits of growth
to be extended to all members of society. A 9% GDP growth rate with a per capita income rising from
US$1,500 to just under US$7,000 per year will boost quality of life for more than 1.25bn citizens. This
would be the largest national development effort any democracy has ever attempted. Reaching this
goal will call for a concerted effort—from businesses, entrepreneurs, investors, and government
leaders.
NEED FOR THE STUDY

There is no ease of doing business in India and India holds 100th place according to the World
Bank report. India is restricted as a global supply chain and there is no much boosting for the
domestic businesses. India still imports major of the goods from other countries and it has still
not become a manufacture based country compared to China. There is need to strengthen R&D
in India and Urbanization being a major problem.

2. OBJECTIVES OF THE STUDY

 To examine the key factors to make India a $6 trillion economy by 2025.

 To analyze the key sectors viz., agriculture, education, healthcare, financial services, power,
manufacturing, and retail, and urbanization.

3. SCOPE OF THE STUDY

This study includes the overview of each potential sector that is covered in this paper. It also
covers the demand drivers of those sectors, strengths, opportunities, growth enablers of each
sector. It also includes linkages and potential for a global expansion to make India a strong
economic country compared to all the developed nations by increasing the economy from 2.9$
trillion economy to a 6-7 $ trillion economy by 2025.

4. LIMITATIONS OF THE STUDY

As there a lot of sectors contributing to the economy, only few limited sectors are concentrated
in this paper

5. METHODOLOGY OF THE STUDY

The paper is an exploratory study. The study is based on secondary data collected from various
surveys conducted by various BIG 4 companies, Governments and the data is also collected
from various newspapers, journals and e-magazines and various official websites.
6. FINDINGS OF THE STUDY
 Objective 1 - To examine the key factors to make India a $6 trillion economy by 2025.
Key factors such as agriculture power , energy, telecom , skills , professional services ,
education, manufacturing, education, start-ups, event management, petroleum, crude oil, sports
, information technology and so on will contribute 3 times more than it is contributing now to
the economy.

 Objective 2 - To analyse the key sectors viz., education, healthcare, financial services,
power, manufacturing.

EDUCATION –
In the education sector, instead of adding only traditional brick and-mortar facilities, this
involve online and offline learning channels, varying the mix across levels of schooling. For
instance, technology-enabled solutions are well suited for higher grades and vocational
education, while the brick-and-mortar format (backed by quality infrastructure) is best suited
for elementary education. Overall, Winning Leap interventions could help save US$175bn over
the next two decades, thanks to lower upfront capital costs as compared to traditional schools.
To meet the desired outcomes of improved enrolment, India will need to add another 500,000
schools with a shift in focus towards higher grades. In addition, these schools need to have
basic infrastructure facilities that enable fewer dropouts. For instance, roughly 63% of
government schools in rural India do not have usable toilet facilities which results in lower
retention of female students. Such an outcome would effectively mean an investment outlay of
US$ 535bn by 2025. While addition of brick and mortar infrastructure will be effective in
addressing the enrolment ratio, improving the quality of education would require pervasive
dissemination of quality content and teaching standards.
 HEALTH CARE
Enabling universal access to healthcare through the adoption of solutions could help save
US$90bn in capital costs in India’s healthcare delivery infrastructure. As outlined in the section
on increasing life expectancy at birth, non-linear solutions could achieve the same outcomes
more effectively and efficiently, with less investment, if the solutions are designed around
preventive care, technology enablement, best-practice scaling, and Government support.
Currently, the healthcare delivery system suffers from acute problems in terms of limited
availability of hospital infrastructure and required workforce. Consider the metric of beds per
1,000 population: India with 1.3 beds per 1,000 people is well behind the 3.5 guideline
prescribed by the WHO. Similarly, access to doctors and nurses is low due to the limited number
of medical professionals in the country. The issue of doctor and nurse training is even more
pertinent, given the fact that the hard infrastructure is of no use without the people who are
equipped to operate it. To meet the desired outcomes in terms of hard and soft infrastructure
capability, the healthcare delivery system will need to add 3.6m beds, 3m doctors and 6 million
nurses over the next 20 years (Deloitte University, 2017). This would require an investment of
around US$ 245 billion through traditional means. Such an investment would not only put fiscal
pressure, but would be difficult to implement considering the nature and scale of new additions.
For instance, over the last decade roughly 100,000 hospital beds have been added annually.13
If India continues to maintain this rate, it will fall short of the target by 1.6m beds by 2025.
Therefore, it is essential for India to leverage solutions that are non-linear in nature. The country
needs solutions that can help maximize reach and efficacy and are cost-effective by a quantum
margin.
-
POWER - Solutions could save approximately US$200bn in capital outlays across power
generation, transmission, and distribution, while also ensuring universal and reliable access to
power. Diversifying and optimizing fuel sources, focusing investments on transmission,
strengthening R&D in advanced storage facilities, and bringing in smart-grid solution
elements are examples of the non-linear moves that could benefit India’s power sector. To
meet the desired outcome of tripling per capita power consumption to 1800 kWh, India would
require an additional 455 GW of installed capacity along with significant investments and
operational improvements in transmission and distribution (T&D) networks. Using traditional
means to achieve these targets would require investments of almost US$ 900bn over the next
two decades. To put things into perspective, India spent only US$ 120bn of the available US$
170 billion in the Eleventh Five Year Plan on power infrastructure.14 hence, achieving the
target through traditional means would require current investments to be doubled on an annual
basis. India’s dependence on fossil fuels for energy generation has also resulted
in high greenhouse emissions, with India being ranked fourth, behind China, the US and the
EU in global emissions.15 Moreover, growing dependence on coal as a source will require
increasing imports which may not be a viable solution for India’s economy in the long run. All
these factors strengthen the need for Winning Leap methods for India to achieve its universal
access targets. Winning Leap solutions could save 20% of projected investment (US$ 200bn)
to provide universal access to power while tripling consumption on a per capita basis.

FINANCIAL SERVICES - Adoption of branchless banking channels and partnerships with

players in sectors other than financial services could help banks reduce their infrastructure
investments by 30% to achieve the Winning leap target. While creation of a bank account is
typically the first stage in the adoption of financial services, the ability of customers to carry out
transactions remains the most critical aspect in their evolution. This would entail enabling
greater access by addition of physical infrastructure of bank branches and ATMs across the
country and significant expansion in the scale of emerging branchless channels such as mobile
and internet banking. Overall, the traditional branch heavy approach to financial inclusion
would require an addition of almost 400,000 bank branches and 175,000 ATMs by 2025, to a
network of only 100,000 branches and 115, 000 ATMs existing at present. Such a significant
transformation for both urban and rural India would require an investment outlay of around US$
40bn by 2025 through traditional means. The traditional approach to growth in the banking
industry—building ever more brick-and-mortar bank branches—will however always be a
profitable proposition, especially in rural markets. Many accounts opened in rural parts, at
present, remain comparably inactive and hence operationally inefficient and less profitable for
the banks. Branchless banking solutions could therefore be a smarter choice for enabling scale.
To deploy such solutions, banks must forge crosssector partnerships with established players,
shift from traditional to emerging low-cost solutions such as solar ATMs, and ride the mobility
wave to maximize their reach to customers. As a result, India could hit the target of 90% of
citizens having access to banking services (and actively using those services) by 2025 through
much lower investments of US$ 28 bn.

MANUFACTURING AND PRIVATE SECTOR

India has 48m SMEs, the second highest number in the world after China (with 50m). SMEs’
impact is not trivial, either: they contribute 45% to India’s manufacturing output, account for
40% of total exports, and play an important role in job creation.5 However, the regulatory
environment is difficult in terms of multiple procedures and the high paid-in capital required to
 Start a new business. As a result, 94% of SMEs are currently unregistered, which leaves them
struggling with issues such as a shortage of skilled workers, limited market exposure, and
restricted access to capital needed for growth. Such an unfavorable regulatory environment
limits Indian SMEs’ ability to grow. Of the total number of SMEs, only 0.2% are medium size,
employing between 100 and 1,000 people. And although SMEs employ 40% of India’s overall
workforce, they contribute only 17% to the nation’s GDP. Lack of scale is a major issue, and
the constraints that SMEs face in growing puts considerable limits on India’s overall economic
growth. The presence of many unregistered SMEs also contributes to systemic inefficiencies
that sap productivity, such as low technology adoption due to limited access to finance. As a
result, SMEs contribute less to GDP than they might otherwise. If India increases its gross
domestic product (GDP) to US$10tr between now and 2034 (up from US$2tr in 2014), it could
push its per capita GDP from US$1,500 to US$7,000 in that same timeframe. To achieve such
unprecedented growth, the country may need to increase its annual investments to six times the
figures in 2014—through foreign direct investment (FDI), private domestic investment, and
government investment. The amount of FDI flowing into India would have to more than double
as a percentage of GDP by 2034. To boost FDI to these levels, the government and private
sector will need to build relationships with international companies. Private domestic
investment (bank lending, private domestic capital, retained earnings of Indian companies, and
household savings) along with government investment will have to grow five- and ninefold,
respectively.

7. CONCLUSION

The global community has viewed India through the twin lenses of admiration and skepticism—
admiring this vast nation for its democratic values and cultural heritage while expressing concerns
about pervasive corruption, fickle business rules, and slow pace of change. Today, India is poised
to transform itself—and improve the lives of its 1.25bn citizens—with unprecedented speed. All
told, its Winning Leap effort constitutes the largest such effort attempted by any country. India
brings to the table a rare set of strengths: a stable government that supports private effort, a
demographic dividend, a capable private sector, and restless entrepreneurs. Armed with these
advantages, India must seize this unique moment in its history. Imagine India 20 years from now:
per capita GDP is nearly US$7,000—about U$20,000 in purchasing power parity (PPP) terms. All
citizens have access to quality healthcare and education as well as reliable electricity. People in
every small village and town have just as much access to the Internet as their urban counterparts
do. Corporate India boasts as many as 50 global brands (up from the five it has today), 20 Nobel
Laureates (just two today), and 60 Olympic medal winners (six today). Ordinary citizens’
 assumptions that their lives are about merely subsisting have given way to expectations of
prosperity, dignity, and freedom to use their skills. To make this vision real, India will have to
marshal all of its people and channel all of its resources toward a common vision and purpose. It
will have to liberate entrepreneurs to create quality jobs at a pace never seen before in India’s
history. It will have to help citizens find and excel in those jobs. It will have to ensure the rule of
law and safeguard India’s democratic values. The private sector, for its part, will need to take a
leadership role that’s far bigger than the role it fills today. To date, this sector has operated in India
with admirable dedication, efficiency, and poise. But sector players will have to build new
capabilities to take the lead in India. They will have to lead with integrity and with a sense of
purpose that energies people, develop bold ambitions, and achieve those ambitions in a sustainable
and inclusive manner. Indeed, we think of the government’s role as building the arena, defining the
rules of the game, and constructing the infrastructure (physical and digital) needed to create the
bright future awaiting India. The government will create the environment for this achievement; the
private sector will shoulder responsibility for generating and executing solutions within that
environment. India could serve as an example for much of the developing world. Many countries
with emerging economies are seeking inspiration and a democratic model for such accelerated
development. If India builds its economy to US$6tr in 2025, its achievement will have enormous
significance not only for India but also for other ambitious economies. The coming century could
be India’s to lead. Clearly, the likelihood of any vision becoming realized hinges tightly on the
efforts and commitment of all stakeholders. No one can guarantee that India vision will come true
in the future.

8. SCOPE FOR FURTHER RESEARCH

 Cover other sectors

9. REFERENCES
 www.financialexpress.com
 www.mckinsey.com
 home.kpmg.com
 www.pwc.in
 www.deloitte.com
 www.dipp.nic.in
 www.commerce.gov.in