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Competitiveness is determined by
the productivity with which a location uses its human, capital, and natural
endowments to create value. Productivity ultimately depends on improving the
microeconomic capability of the economy. It is not what a location competes in
that determines its prosperity, but how productively it competes. The economic
view of growth is that increases in productivity lead to increased levels of
economic prosperity. So, it follows that more competitive economies tend to be
able to produce higher levels of income for their companies and citizens, not
to mention higher returns on investment and hence increases in the national
growth potential.

 

Recent data suggests that India’s
economic performance is consistent and IMF predicts a robust growth rate of 7.4
% for India’s economy in 2017. There are many long term changes such as
urbanization, the ever increasing middle class and the spending capacity of the
people powering it’s competitiveness and in turn the consistent economic
success. Citizens have better access to employment, education, health, and so
on.

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Urbanization:

Due to urbanization a huge
consumer base is formed which is a good indication for both global and local
companies.

The infrastructure also got a
boost as a result of urbanization. Again this is an opportunity for both
private companies as well as government. There will be need of more housing,
transportation, education & health institutions and utility services like
power, drinking water, sanitation and so on. State may compete with each other
provide better infrastructure to attract companies and tap resources.

 

But what makes it more
sustainable is recent government initiatives and technological advancements. If
the most significant and powerful changes to be listed the recent
implementation of goods and service tax (GST) will be the numero uno. Now India’s
29 states will be really a unified market. Earlier all the states had different
tax structures for different goods.

 

Tax Reforms:

Why some
states are very developed in India and why can’t industries come up in economically
underdeveloped states? The problem is – lack of infrastructure. Governments in underdeveloped
states cannot provide basic facilities such as electricity and water. This is
because these states are not rich. Why are these states not rich? Tax
collections are highest in manufacturing states. GST being consumption based
tax, tax collection will go to the states in which the goods are consumed, and
not where they are manufactured. This will give all the state the opportunities
to be competitive and opportunity to economically perform.

 

Historically,
manufacturing was scattered across the country based on where you got
advantageous tax breaks. It was not economically the best place to manufacture
and supply something. There were quite hilarious consequences where,
essentially, shipment of goods—let’s say 400 kilometers hinterland into India
to the port—was more expensive than taking a container from that port to
Brazil. That is the kind of complexity that India’s logistics networks, enabled
by local state taxes, was creating.

 

With the GST also India sees
major changes in direct taxes. In the recent years Income Tax rates and review
mechanisms reformed. The government is trying to include larger population, keep
rate low, simple and transparent. Besides raising revenues, it is required to incentivize
savings, promote exports, achieve balanced regional development, promote
investments in infrastructure, expand employment, promote scientific research
and development.

 

 

 

Financial inclusion:

Government’s push for financial
inclusion now showing the effective difference.

A large-scale independent national
survey shows 99 percent of households have at least one member with a bank
account (Bhattacharya 2016). Financial inclusion is linked to a country’s
economic and social development, and plays a role in growth and employment. Due
to financial inclusion bot the government and people truly involved in economy.
Further to fight the corruption and black money government run demonetization.
However some economic disturbance happened that may have diminished GDP growth
in the short-term but certainly but it could also prove to have long-term
benefits. It promoted no. of digital transaction and no. of banks and financial
companies got benefited due to this move. These transactions are easier to
track and to tax. A quick result, over twice as many Indians have filed tax
returns than in the same period last year.

 

 

A push for gentle prominence:

 

Recently India came in lime light
when it successfully launched 104 satellites in the space and successful mars mission
in its very first trial. India’s greatest asset has been its ability to manage
lower-cost launch vehicles and success rate. The demand for small and
inexpensive satellites is thought to dramatically increase, putting India in an
extremely advantageous position compared to its foreign counterparts, who focus
mainly on larger satellites. India’s space agency is planning a second mission
to Mars.

 

Now Indian economy is not only
accounted for FDI in India but also outbound investments from India to other
countries. In 2015 UK announced that India is the third largest source of FDI
for them as investments increased by 65 % and 9,000 jobs secured.

 

Now India is making its presence
globally and taking necessary steps. Major Outbound investment is the clear indication
that India has entered in the global marketplace and proves its
competitiveness. As per McKinsey & Co., the Indian economy is expected to
increase its revenue from information-technology, agriculture, pharmaceuticals,
infrastructure and FMCG to US$ 160 billion by 2025.

 

The Indian media &
entertainment sector is expected to grow at a Compound Annual Growth Rate
(CAGR) of 13.9 per cent, to reach US$ 37.55 billion by 2021 from US$ 19.59
billion in 2016, outshining the global average of 4.2 per cent.

 

The international outreach and
demand of films is expanding. A recent Bollywood film “Dangal” broke box office
records in China for a non-Hollywood movie.

 

India has shown its regional
economic leadership to neighbouring countries with substantial investment,
infrastructure improvement and strategic trade alliance. The development of Chabahar
Port in Iran which could give opportunity to Indian companies to potentially
invest over US $16 billion in Chabahar Special Economic zone. It’ll also extend
India’s commercial outreach to Central Asia.

 

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