India’s $5 Trillion Dream: Fueled by Innovation, Driven by Technology

Frontier Technologies:

1. It refers to new and advanced technologies that are at the cutting edge of innovation.
2. These are still developing and have the potential to change industries and society in big ways.
3. Examples: Artificial Intelligence (AI), Quantum Computing, Biotechnology, Blockchain, etc.

IMF – International Monetary Fund:

1. The IMF is a global financial institution that supports countries facing balance of payment problems by providing loans, policy advice, and technical assistance.
2. It aims to ensure global financial stability, promote international trade, and reduce poverty by fostering economic growth and monetary cooperation.

1947 – India gained independence

1. It was merely a $33 billion economy due to being weakened by British exploitation.

Post-Independence – Soviet Style Central Planning

1. Adopted by the Jawaharlal Nehru government.
2. Promotion of heavy industries and public sector.
3. Low economic growth of 3-4% only. (Hindu rate of growth)
4. Till 1991, it could only reach $266 billion mark.

1991: New Economic Policy

1. The Narasimha Rao government introduced the economic reforms – liberalisation, privatisation and globalisation.
2. This brought the digital revolution in the economy with the introduction of the internet.
3. The economy grew manifold in the next 2 decades (Major share of service sector – approx. 60%)
4. The economy crossed $2 trillion by 2015.

2015-2025

1. The recent government has given emphasis on faster economic growth with initiatives like Start-Up India, Stand-Up India and Make in India.
2. The current impressive growth is due to the corrective actions taken, like the removal of the parallel economy, allowing for proper distribution of wealth and encouraging greater consumption.
3. The government targets to make India a $5 trillion economy by 2027 and a $10 trillion economy by 2035.

Key Terms:

1. Hindu Rate of Growth: Refers to India’s slow GDP growth (3–4%) before liberalisation, due to excessive regulation and low productivity.
2. Start-Up India: A government initiative to promote innovation and entrepreneurship by supporting startups with funding, tax benefits, and easier compliance.
3. Stand-Up India: Provides bank loans to SC/ST and women entrepreneurs to help them start new businesses.
4. Make in India: A program to boost manufacturing in India and create jobs by encouraging companies to produce locally.
5. Parallel economy: The unaccounted or black economy that operates outside official financial systems, often involving tax evasion and illegal transactions.

Historical Background of $5 trillion Economy Goal:

1. The $5 trillion economy goal was first announced in July 2019, with the target set for 2024–25.
2. However, the COVID-19 pandemic caused economic disruptions, delaying the timeline.
3. The revised goal is now to achieve the $5 trillion mark by 2027–28.
4. To achieve this goal, India is planning to increase public and private investments, improve infrastructure, expand the digital economy, promote skill and innovation and diversify exports.

Sector-Wise Impact of a $5 Trillion Economy:

Per Capita Income:

1. It shows the average money earned by each person in a place (like a city or country) over a certain time, usually a year.
2. It is found by dividing the total income of that place by the total number of people living there.

Monthly Per Capita Expenditure:

1. It is the average amount of money spent by each person in a household every month on goods and services, and other daily needs.
2. It is calculated by dividing the total monthly household expenditure by the number of household members.

Baseline Poverty:

1. It refers to the minimum level of income or consumption required for a person or household to meet basic needs like food, shelter, clothing, and healthcare, ensuring a minimum standard of living.
2. It acts as a reference point to measure poverty levels in a population.

Disposable Income:

1. It is the amount of money a person or household has left after paying taxes, which can be used for spending on goods and services or saving.

Industrial Revolutions:

1. Industrial Revolution 1.0: The Steam Age - Shift from handcrafted production to mechanised manufacturing.
2. Industrial Revolution 2.0: The Technological Revolution – Advent of electricity and assembly lines, which enabled mass production and the rise of the consumer goods industry
3. Industrial Revolution 3.0: The Digital Revolution – Rise of computers, automation and Information technology, which further enhanced productivity.
4. Industrial Revolution 4.0: Driven by Frontier Technologies - Integration of Artificial Intelligence, robotics, quantum technologies and big data.

Challenges

Way Forward

Low investment in research and innovation

Increase funding for research, especially in deep technologies, and encourage innovation

Skill gap for future jobs

Teach skills like AI, robotics, and green energy

Weak factories and industries

Support manufacturing and small businesses via schemes

Poor infrastructure

Improve transport, digital infrastructure and power infrastructure

Unequal regional growth

Invest in backward areas for balanced and inclusive development

Ensure IAS Mains Question

Q. India’s aspiration to become a $5 trillion economy requires more than just GDP growth; it demands structural transformation through technology and innovation. Critically examine in light of recent economic trends and government initiatives. (250 Words)

Ensure IAS Prelims Question:

Q. In the context of economic growth, which of the following best describes the term “frontier technologies”, often mentioned as key to India’s $5 trillion economy goal?

1. Technologies that help in improving agricultural productivity through traditional practices.
2. Technologies that are widely adopted and used in mature industries for incremental gains.
3. Cutting-edge innovations such as Artificial Intelligence, quantum computing, and robotics that drive transformative change in economies.
4. Low-cost technologies adapted from developed countries to serve the needs of developing countries.

Answer: c

Explanation:

1. Frontier technologies are cutting-edge, innovative technologies that have the potential to drastically transform economies and societies.
2. These include Artificial Intelligence (AI), quantum computing, robotics, space tech, and biotechnology.
3. They drive productivity, efficiency, and new industry creation, helping economies move beyond traditional stages of growth.
4. India must embrace these technologies to move beyond traditional manufacturing and become a tech-driven economy.