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5 Trillion Dollar Economy - A Dream Come True for India

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10-Aug-2023

Indian Economy, Economy, GDP, Growth, Taxation,

5 Trillion Dollar Economy - A Dream Come True for India

The agriculture sector stands as one of the most promising sectors to actualize the ambitious goal of India's 5 trillion-dollar economy. According to the 2023 report, India's agriculture sector contributes 18.3% to the country's GDP and engages 43.96% of its workforce. Despite its significance, the agriculture sector's contribution to GDP has experienced a decline over the years, dropping from 20.3% in 2016. Nonetheless, it remains the largest employer, with over 40% of Indians involved in agricultural activities.

The Government of India has undertaken various measures to bolster the agriculture sector. These include providing subsidies to farmers, investing in irrigation and agricultural infrastructure, promoting technological integration within farming practices, and encouraging the cultivation of high-value crops. These efforts have undoubtedly increased the sector's productivity; however, they have yet to reverse its diminishing share in GDP. To revitalize the sector and attract more investment, further substantial actions are imperative.

The economic growth of any nation hinges on the empowerment of small and medium-sized businesses (SMBs). In India, the Micro, Small, and Medium Enterprises (MSME) sector has become the second-largest employer after agriculture. Presently, the MSME sector employs nearly 11.10 crore people and contributes nearly 30% to India’s GDP. It’s classified as follows:

SMBs in India encounter a multitude of challenges that necessitate focused attention. Infrastructure barriers, such as inadequate roads and unreliable electricity, hamper their growth. The bureaucratic red tape that SMBs often contend with can be both time-consuming and expensive, hindering their establishment and expansion. Corruption, another significant obstacle, permeates various aspects of Indian business. SMBs might find themselves compelled to offer bribes to government officials in order to expedite processes. This not only depletes resources but also undermines fair competition. The burden of taxation is also a pressing concern for Indian SMBs, particularly those in their nascent stages, as they grapple with income tax, excise duty, and sales tax.

The Government of India has launched a series of initiatives to address these challenges, most notably the establishment of a dedicated ministry for SMBs. Mr. Narayan Rane leads this department as the MSME minister, tasked with devising and implementing policies that facilitate SMB growth. Through financial aid, skill development promotion, and regulatory reduction, the government aims to cultivate a favourable environment for SMBs in India.

A study conducted by CISCO in July ’20 projects that Small and Medium Businesses could potentially contribute 158 billion USD to 216 billion USD to the GDP by 2024. These strategic government interventions align well with the trajectory toward building a support system that nurtures SMBs to their full potential, propelling India towards achieving its 5 trillion-dollar economy aspiration.

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