After Narendra Modi became the Prime Minister in 2014, 2019 and now in 2024, the expectations of the countrymen for further improvement on the development front have increased, because during this period, remarkable work has been done to develop and improve the sectors like health, education, infrastructure, energy, service etc. In this sequence, the most effective and appropriate steps have been taken in the economic and banking sector. During 2014 to 2023, India has emerged as an economically strong country in the world. Therefore, now the countrymen feel that under the leadership of Prime Minister Modi, India can become a 5 trillion-dollar economy in 2027, the fourth largest economy of the world in 2030 and a developed country in 2047.
Exactly 60 years after 1947, India’s GDP reached $1 trillion in 2007 and increased to $2 trillion in 2014 and $3 trillion in 2019. In 2014, the Indian economy became the tenth largest economy in the world, while in 2019, i.e. within just 5 years, it became the fifth largest economy in the world.
In the March quarter of the financial year 2023-24, GDP growth was recorded at a rate of 7.8 percent and overall growth rate in the financial year 2023-24 was 8.2 percent, while in the financial year 2022-23, it was 7 percent. According to the report “The Indian Economy: A Review”, India’s GDP growth rate may be more than 7 percent for the fourth consecutive year in the financial year 2024-25, while currently the growth rate of the world’s major economies is around 3 percent.
The unemployment rate in India was 8.7 percent in 2023, while it was 7.3 percent in 2022. Since the Indian economy is currently growing strongly, the unemployment rate is expected to remain below 8 percent from 2024 to 2027. The inflation rate in India was 5.5 percent in 2023, while it was 6.7 percent in 2022. Retail inflation was 4.75 percent in May 2024, which was a 12-month low. Meanwhile, it is estimated to be 4.6, 4.1, 4.1 and 4.0 percent respectively during 2024 to 2027. On this basis, it can be said that the Indian economy can easily become $ 5 trillion by 2027.
The report “The Indian Economy: A Review” clearly states that the Indian economy has become the fifth largest economy in the world only due to the economic reforms being carried out by the government. This report also predicts that India’s GDP can grow at a rate of 7 percent by 2030. Global rating agency S&P Global has also confirmed this claim due to the strengthening of India’s financial sector and the recent structural reforms done by the government.
S&P Global said in its Global Credit Outlook 2024 report “New Risks, New Playbook” that India’s nominal GDP will grow from $3.5 trillion in 2022 to $7.3 trillion by 2030. This target can be achieved by currently projecting GDP growth at a rate of 6.3 percent. According to “The Indian Economy: A Review” and S&P Global’s report, the Indian economy can grow at a rate of more than 7 percent by 2030. If this happens, the size of the Indian economy will be more than $7 trillion in 2030.
In recent months, the performance of Indian banks has been the best compared to their counterparts in Asia. The country’s 3 big banks namely State Bank of India, HDFC Bank and ICICI Bank have made their place in the list of top 50 banks in the world in 2023, whereas in 2022 only 2 banks of the country made their place in the top 50 banks of the world. According to the report of S&P Global, Indian banks have become stronger due to improvement in financial condition, strong economic condition, rapid increase in loans, reduction in NPA and increase in profits.
According to this report, the assets of banks have increased by 50.5 percent to $ 1.51 trillion in 2023. In July 2022, HDFC Bank’s assets increased by 51.3 percent to $ 466.35 billion. With this, the bank moved up 13 places to 33rd position in the top 50 list. According to S&P Global, there has been a sharp increase in the loans given by Indian banks in recent months. As of 29 December 2023, it had reached the level of 15.6 percent, which was 14.9 percent a year ago.
In the financial year 2023-24, Bank of Baroda and Canara Bank have earned a profit of more than Rs 10,000 crore. State Bank of India has earned a profit of Rs 61,077 crore during this period, which is more than 40 percent of the total earnings of government banks. In the last financial year, State Bank of India had earned a profit of Rs.50,232 crore. Out of the 12 public sector banks, only Punjab & Sind Bank has registered a decline in profit. On 31 March 2024, the cumulative profit of public sector banks crossed the level of Rs.1.4 lakh crore, which is 35 percent more than last year. In the financial year 2023-24, the net non-performing asset (NPA) of all banks also came down to below 1.70 percent.
There are some standards to become a developed country. In this sequence, work is being done in India to strengthen the field of industrialization, education, infrastructure, mechanization, digitalization, health etc. Life expectancy and education of people is improving. With the help of Pradhan Mantri Mudra Yojana, PM Swanidhi, Self Help Group etc., inclusive development is being strengthened in the country. A large number of people have become self-reliant. In the last few years, 25 crore people have been successful in getting out of the poverty line. In this way, India can stand in the category of developed country by meeting other standards except the criteria of per capita income.
The work of the Finance Ministry is again in the hands of Nirmala Sitharaman. Therefore, the policies and steps taken by the government and the Reserve Bank of India will remain favourable for the Indian economy and Indian banks in the future as well. Therefore, the countrymen want the government to take the economy and banking sector to new heights during its tenure.
Satish Singh, Ahmedabad based Senior Columnist, Views are personal.
