Summary
Before 2030, more Indians as a percentage of the population will use AI every day than in any other country. India is on the cusp of a technological revolution that could alter its social and economic future.
While well behind China today, it will soon be the largest economy in the world and the USA will be well back at 3rd. When this will occur varies from 2030 according to the Standard Chartered Bank to 2081 by the Centre for Economic and Business Research (CEBR).
The video below shows how fast India’s economy is expanding compared to other countries. India doesn’t appear at the start of the video, then shoots upwards and increases rapidly.
Please click here to watch an excellent Morgan Stanley Video about India’s growth.
Digital Money Instead of Cash
In October 2023, the government’s Unified Payments Interface (UPI) processed a staggering 11.4 billion digital transactions, up 56 per cent in a year.
Low cost mobile phones and ultra cheap data have helped the payment revolution. The country has about 1.2 billion mobile phone subscribers. This has allowed most small vendors to trade without cash, using QR codes. Unlike most countries, the UPI system has stopped the migration to cities as farmers and vendors use the system to trade locally. Growth for individual digital payment users is set to triple in five years to 750 million.
UPI was a response to the nation’s patchwork of rules and paperwork for payments. The goal was to make transfers easier and safer by allowing multiple bank accounts on the same mobile platform for individual and business use alike. It rapidly came of age.
The Young Make This Happen
With a mostly cashless society, the old ways are increasingly forgotten by the country’s hundreds of millions of young people. The average age in India is 28 compared the the EU which is 44. They have helped increase the use of Paytm, a huge mobile money services provider to more than 400 million.
With the memory of cash reliance already rapidly fading since the beginning of the smartphone era, the pandemic helped further accelerate the embrace of contactless digital transactions, especially for small amounts, as people tried to protect themselves from the virus.
Central Bank Digital Currency
Meanwhile, policymakers are planning the future of digital money, with even more far ranging effects on the economy. The RBI is exploring a single central bank digital currency (CBDC) designed for financial stability and efficient payments.
References
That Morgan Stanley animated bar-chart is extraordinarily instructive as to how rapidly economies (as measure simply by GDP) can change. Of course it also creates the classic academic delusion that you can project the future by examining changes in the past … while at the same time, illustrating why that often doesn’t work, and is sometimes very wide of the mark.
The real measure must be something akin to “Well-being” of course … not to GDP in raw inflationary dollar units and with useless, ephemeral and dangerous goods and services summed (in dollar-value terms) equally with the beneficial — and little included (+ and -) showing the legacies of past generations. Environment must be a factor in economics these days.
I’ve spent a considerable amount of time in India over the years, and it certainly is an extraordinarily vibrant country, heavily bogged down by religious and traditions — but benefitting enormously by its use of English an emphasis on education.
Thanks Stewart.
I think the changes in the past such as rapid digitisation has already increased the GDP, so logically it would be expected to cause further increases. Whether GDP is the best measure, I agree is debatable. However it is a readily available indicator of wealth that is and has been used by the world’s leading authorities for as long as I can remember.
All countries will be affected by environments and as you say, India’s fluency in English will help in dealing with most of the world’s economies. Both India and China are rich in fertile pasture lands which I suspect is the cause of their large populations.
India in the past was hampered by old world democracy in which It might take 8 years to buy a car, bogged down with paperwork and government regulation. Fortunately revisionary governments saw the need for change and they leap frogged many other countries The recent progress is astounding.
Very interesting and we need to identify how Australia can benefit from this situation RE exports etc
Warwick
It’s always good to hear from you. I have noticed the federal government here has been wooing India for trade deals and a closer alliance, so hopefully that will accelerate our alliance and trade with them.
One of your best issues, Campbell!
As India, China and others rapidly redefine their roles in ‘The Game of Nations’ , current events should surprise no one who takes a dispassionate, long view of history.
(Those dynamic graphics certainly make the point,)
Tony
Tony
Thanks as always and as I have noted in my reply to John Shand’s comment, our association and security alliances with India are building.
With such a huge population of potential consumers and an education system and public service together with transportation, admittedly unable to cope at present, system bequeathed by the British “colonisers” the potential is enormous! Already it would seem our own IT system is dominated by Indians. Thanks for the interesting thoughts. John
John
Thanks.
Yes and the good part is that Australia is increasing its alliances with India – see https://www.lowyinstitute.org/the-interpreter/india-australia-security-relations-they-ve-only-just-begun