India is the fifth-largest economy in the world, according to the World Bank, in terms of nominal 2019 GDP in dollars, and ranks second by population (1.38bn). Although it is one of the world’s fastest-growing economies, its GDP per capita is more than 29x and 4x lower than the USt or China, respectively (also according to the World Bank, nominal 2019 per-capita GDP in dollars). The potential for a catch-up in income over the next decades looks huge.
There have been several developments that could help reshape initiatives the economy and unlock its long-tem potential. Different government inititiaves are in place to reinforce and modernise the economic structure to facilitate:
1) a shift from an unorganised to a formal economy, working in favour of setting up new businesses and attracting investment;
2) financial inclusion and modernisation of the financial sector to channel the highest gross savings rate (30%) after China (46%) into efficient financial instruments;
3) a broad set of structural reforms affecting a vast majority of sectors and offering significant benefits to the country in the medium to long term; and
4) a huge infrastructure development plan of $1.5tn, which could help to support growth through investment and productivity channels.
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