India wants to be a developed nation by 2047. Here are 4 critical areas Modi can’t ignore

For
the
last
two
years,
Prime
Minister
Narendra
Modi
has
spoken
confidently
about
his
ambitious
goal
to

make
India
a
developed
economy
by
2047.

All
eyes
will
now
be
on
Modi
and
his
Bharatiya
Janata
Party-led
alliance
to
see
if
they
can
keep
the
economic
momentum
going
and

continue
to
improve
the
lives
of
millions
in
their
third
consecutive
term
in
office.

Confidence
in
the
BJP
has
plunged.
Modi’s
ruling
party
failed
to
win
an
outright
majority
in
the
lower
house
of
Parliament
for
the
first
time
since
2014,
and
is
now
forced
to
rely
on
its
allies
in
the
coalition.

“The
government
will
have
to
find
common
ground
and
build
consensus
on
multiple
fronts,
not
just
with
alliance
partners
but
also
with
other
stakeholder
groups,
to
push
through
key
legislation
in
parliament
and
quell
the
rising
anti-incumbency
sentiment
nationwide,”
said
Reema
Bhattacharya,
head
of
Asia
research
at
risk
intelligence
firm
Verisk
Maplecroft.

“A
failure
to
do
so
could
also
result
in
further
political
setbacks
for
the
ruling
party
in
the
next
round
of
state
elections
scheduled
for
later
in
the
year,”
she
warned.

A
Modi-led
coalition
won’t
likely
derail
India’s
economic
and
development,
analysts
say.
However,
they
point
out
that
the
new
government
will
now
have
to
restore
faith
in
the
people
and
ensure
India’s
standing
in
the
Global
South
remains.

The
new
government
has
yet
to
outline
its
key
priorities.
Analysts,
however,
are
predicting
that
these
four
areas
will
feature
high
on
the
agenda.

India
has
undergone
a

massive
infrastructure
push
and
has
made
significant
strides
in
connecting
and
modernizing
its
highways,
railways
and
airports.

Last
year,
consultancy
firm
EY
projected
that

India
will
become
a
$26
trillion
economy
by
2047,
and
highlighted
that
building
up
the
country’s
infrastructure
capabilities
will
be
pivotal
in
making
this
happen.

“Since
Modi’s
been
in
office,
he’s
done
his
utmost
to
build
ports,
railways,
and
all
kinds
of
hardline
infrastructure
to
make
business
fluid.
He’s
going
to
double
down
on
that,”
said
Samir
Kapadia,
CEO
of
India
Index
and
managing
principal
at
Vogel
Group.

India
still
lags
China
in
this
area,
and
more
needs
to
be
done
if
it
is
seeking
high-growth
trajectory
to
continue
attracting
foreign
investors.

At
the

interim
budget
in
February,
Finance
Minister
Nirmala
Sitharaman estimated
capital
expenditure
will
rise
by
11.1%
to
11.11
trillion
Indian
rupees
($133.9
billion)
in
the
fiscal
year
2025,
largely
focused
on
constructing
railways
and
airports.

But
improving
connectivity
between
cities
should
not
be
the
only
area
of
focus,
noted
Santanu Sengupta,
India
economist
at Goldman
Sachs.

“Along
with
creating
physical
infrastructure,
India
needs
to
remain
steadfast
on
the
structural
reforms
…
It
needs
to
look
at
land
and
unlock
land
to
set
up
more
infrastructure
in
terms
of
factories,”
Sengupta
told
CNBC,
adding
that
this
will
drive
jobs
growth
in
the
sector.

However,
analysts
highlighted
the
government
might
face
pushback
on
this
as
Modi’s
weakened
hand
could
make
it
more
tedious
to
acquire
land
for
projects.

“Such
targets
may
be
more
difficult
if
state-level
parties
have
a
quasi-veto
due
to
the
coalition
structure,”
said
Richard
Rossow,
senior
advisor
and
chair
in
U.S.-India
policy
studies
at
the Center
for
Strategic
and
International
Studies.

Projections
from
Counterpoint
Research
and
the
India
Electronics
and
Semiconductor
Association
show
that

India’s
semiconductor
industry
will
be
valued
at
$64
billion
by
2026,
a
three-fold
growth
from
$23
billion
in
2019.

“This
will
probably
be
the
biggest
breadwinner
for
India
over
the
next
five
to
10
years,”
Kapadia
said.
“Modi
firmly
believes
that
if
India
is
able
to
be
in
the
semiconductor
manufacturing
business
and
if
he
gets
it
right,
India
can
become
an
economy
that
will
not
be
fussed
with.”

Unemployment
is
currently
one
of
the
biggest
problem‘s
the
world’s
most
populous
country
is
facing,
and
a
mismatch
in
skills
is
further
exacerbating
this
issue,
Sumedha
Gupta,
senior
analyst
at
The
Economist
Intelligence
Unit
said.

“There
is
already
a
mismatch
between
the
skill
level
of
the
country’s
workers
and
the
demand
for
high
innovation
from
employers.
This
will
persist
definitely
over
this
decade,
possibly
into
the
2030s
as
well,”
she
told
CNBC.

Unemployment
rate
in
India
rose
to
8.1%
in
April
from
7.4%
in
March,
according
to
the

Centre
for
Monitoring
Indian
Economy.

A
survey
conducted
by
the
Centre
for
the
Study
of
Developing
Societies
in
April,
ahead
of
the
election,
showed
that

unemployment
was
the
top
concern
for
27%
of
the
10,000
surveyed.
More
than
half
(62%)
of
those
surveyed
said
it
had
become
more
difficult
to
find
a
job
in
the
last
five
years
during
Modi’s
second
term.

It
is
now
up
to
the
new
coalition
government
to
improve
local
education
standards
and
skills-based
training
to
ensure
people
are
gainfully
employed
in
the
right
sectors,
analysts
highlighted.

“While
those
with
advanced
education
and
practical
experience
are
poised
to
secure
jobs
in
this
sector,
creating
widespread,
equitable
employment
opportunities
requires
a
more
inclusive
approach,”
said
Vivek
Prasad,
markets
leader
at
PwC
India.

New
education
policies
and
vocational
training
will
“engage
individuals
at
all
levels
of
the
manufacturing
value
chain,
ensuring
that
the
benefits
of
economic
progress
are
shared
across
society,”
Prasad
told
CNBC,
adding
that
boosting
the
employment
of
women
is
paramount
to
driving
India’s
growth.

From
veteran
emerging
markets
investor
Mark
Mobius
to
global
strategist
David
Roche,
market
experts
remain
bullish
on
India.

The
National
Stock
Exchange
of
India
has
a
total
market
capitalization
of
$4.9
trillion
—
the
third
largest
in
Asia-Pacific,
according
to
data
from
the
World
Federation
of
Exchanges.
India’s
market
cap
is
projected
to
grow
to

$40
trillion
in
the
next
two
decades.

Benchmark
indexes

Nifty
50
and
the

Sensex
have
been
strong
outperformers
this
year
—
respectively
rising
by
8%
and
7%
year-to-date,
according
to
LSEG
data.

Foreign
direct
investments
into
the
country
needs
to
however
pick
up
pace
to
further
drive
economic
growth
and
development,
analysts
told
CNBC.

Foreign
direct
investments
into
India
last
year
were
relatively
soft
due
to
a
difficult
private
equity
funding
environment
as
a
result
of
high
U.S.
interest
rates,
said
Goldman
Sachs’
Sengupta
said.

“India
will
likely
attract
more
FDI
inflows
from
the
U.S.
once
interest
rates
soften
and
the
funding
environment
becomes
easier,”
Sengupta
told
CNBC.

Ease
of
investing
in
India
also
“has
some
ways
to
go”
in
order
to
continue
attracting
foreign
funds,
noted
Prabhat
Ojha,
partner
and
head
of
Asia
client
business
at
Cambridge
Associates.

He
recommended
investors
pay
more
attention
to
India’s
banking
sector
—
one
that
now
has
good
quality
growth
and
capital
allocation
practices.

“From
2017
to
2019,
there
was
really
a
cleanup
of
Indian
banks
and
they
are
in
a
very
healthy
state
today,”
Ojha
told
CNBC.