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Digitisation 2.0, democratisation of credit, and infra expansion will be the drivers for India’s growth trajectory


The global economic outlook is gloomy once again with growth prospects dampened by high inflation and central bank tightening, geopolitical conflict, and the continued impact of Covid.

India, however, seems to shine under a different sun. In 2023, the country hopes to emerge as a bright spot amid the looming uncertainty in the global economy. Compared to most other emerging markets, the Indian economy is relatively well-positioned to weather the change in the global business climate.

It is undeniable that India is on a new growth trajectory with manufacturing and services booming and as global supply chains look to de-risk, India stands to benefit. From achieving major milestones in space to leading the global fight against the pandemic to now assuming the G20 leadership, New India has emerged as a credible and stronger voice on the world stage. An opportunity that we must leverage in 2023 and beyond.

Leading the global recovery
With a robust domestic market and limited exposure to international trade flows, India should remain one of the world’s fastest-growing major economies. Prudent policies in response to global headwinds are helping India navigate and even turn domestic and global challenges into opportunities.

Currently the fifth-largest economy, India is predicted to surpass Japan and Germany by 2027 to become the third-largest. A young demographic profile, continuing economic liberalisation and increasing employment are all expected to act as strong growth drivers. With the world currently experiencing a growth drought, investors are taking notice of the opportunities in India.

According to one study, India’s GDP could more than double from $3.5 trillion today to surpass $7.5 trillion by 2031. India’s share of global exports may also double in the same period, ushering in a new era of economic development that will potentially boost its share of global manufacturing, expand credit availability, create new businesses and spur consumer spending.

Sharper focus on key growth sectors
Now is the time for India to leapfrog ahead and achieve the employment and productivity growth needed. Global trends that were accelerated by the pandemic, including digitisation and automation, shifting supply chains, urbanisation and rising incomes could prove to be growth boosters. The three pillars key to driving and sustaining this are – strengthening MSMEs, a well-developed transit infrastructure, and expanding digital financial services, including digital payments.

Digitisation of commerce will speed up
India’s digitisation has been impressive in scope and scale. Digital public infrastructure like Aadhaar and the Open Network for Digital Commerce (ONDC) can transform society and the economy.

Banking and payments, essential pillars of the economy, are experiencing a significant increase in digital offers and uptake. Digitisation is altering the business landscape and reshaping the drivers of value creation and customer engagement. India has adapted to e-commerce rapidly, and in 2023 we foresee B2C and B2B e-commerce volumes being further driven by continuous digitisation. With e-commerce being a breeding ground for digital innovation, India is poised to gain significantly from the proliferation of digital payments, thanks partly to tokenisation.

The Reserve Bank of India has played a stellar role in fostering the growth of digital payments, securing the payment ecosystem, and building trust and credibility for market participants, especially on card rails (infrastructure and network behind card payments). The displacement of cash will continue thanks to the democratisation of real-time payments (RTP), as well as an expansion of credit on the back of open data, quicker and better risk analytics, digital penetration, and the proliferation of co-branded cards.


Digital payments: The growth catalyst

The success of Account-to-Account (A2A) transfers and RTPs is changing the way money moves among consumers and businesses and is catalysing the modernisation of payment systems. This is essential for strengthening MSMEs, the backbone of our economy that face barriers in getting access to adequate and timely finance. Helping them scale is crucial to achieving higher, system-wide productivity.

The Open Credit Enablement Network (OCEN) will enable MSMEs to avail of digital fintech solutions that have so far been the preserve of banks and NBFCs, thus helping expand the range of credit available to MSMEs. The Account Aggregator (AA) network will further revolutionise the growth of credit by enabling the speedy sharing of data with financial organisations while giving individuals control over how their data is shared.

Similarly, ONDC has the potential to democratise and exponentially grow e-commerce and enable millions of small traders to take advantage of the opportunities it presents.

To help e-commerce take off, infrastructure – from the perspective of improved supply chains and distribution – is most crucial. Particularly for MSMEs, inefficient logistics systems have long been a problem. A well-developed transit infrastructure that provides a seamless and integrated multi-modal last-mile connectivity will have a multiplier effect on trade and commerce, enhancing accessibility to markets.

Sandeep Ghosh, Group Country Manager India & South Asia



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