India's Ministry of Finance recently announced that India will overtake Japan and Germany in 2027 to become the world's third-largest economy after the United States and China. India also expects economic growth of 7% or more in the 2023-2024 fiscal year, which would be the third consecutive year that India has maintained a high growth rate of more than 7%. India's economic growth is unique in that it is service-oriented, rather than manufacturing-based, as in other countries. The service sector accounts for more than 50% of India's GDP, while the manufacturing sector accounts for only about 25%.
Yaltkin, dean of the Simon School of Business at the University of Rochester and macroeconomist, believes that for emerging economies like India, it may not be difficult to achieve rapid growth, but maintaining sustainable and healthy growth is the real test. While India's manufacturing sector has performed well in electronics exports, its overall size remains limited. Indian Prime Minister Narendra Modi has proposed to increase the share of manufacturing in GDP from 15% to 25% of GDP and create 100 million manufacturing jobs by 2020, but this target has been postponed twice and is now set for 2025. The development of the manufacturing sector is crucial for India as it can provide employment opportunities for India's huge population. However, India's unemployment rate reached its highest point in more than two years at the end of last year, according to the Centre for Monitoring India's Economy.
In its 2024 Global Credit Outlook, released in December, S&P Global said that India will remain the world's fastest-growing major economy for at least the next three years, but the report also noted that "India's emergence as the next global manufacturing hub is a huge challenge and a huge opportunity."
The main challenges to India's economic growth include the small size of the manufacturing sector and the inadequacy of the industrial structure. India's manufacturing industry is mainly concentrated in labor-intensive industries, and the development of high value-added industries is relatively lagging behind. Inadequate infrastructure development. India's infrastructure construction such as transportation, energy, and communications is relatively lagging behind, which restricts economic growth. The gap between the rich and the poor is wide. India still has a high proportion of the population living in poverty, which affects social stability and economic development.
India's economic growth also faces a number of opportunities, including: a huge demographic dividend. India's huge population and abundant labor resources provide ample impetus for economic development. Fast-growing consumer market. With the economic development of India, the income level of residents continues to increase, and the consumer demand continues to grow. Global economic integration. India's active integration into the global economy has provided new impetus to economic growth. India's economic growth faces challenges, but there are also opportunities. India** should take measures to overcome challenges and seize opportunities to promote sustained and healthy economic development.
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