Services and Five Trillion Dollar Economy.

Essentially, a $5-trillion economy refers to the size of an economy measured by the annual Gross Domestic Product (GDP). GDP represents the total monetary value of all goods and services produced within an economy within a year. It serves as a benchmark among countries to gauge their economic standings.

In 2014, India’s GDP stood at $1.85 trillion. By 2018, it had risen to $2.7 trillion, positioning India as the sixth-largest economy globally.

Beyond its monetary definition, achieving a $5 Trillion Economy entails leveraging all economic growth levers—investment, consumption, exports—across all three sectors: agriculture, manufacturing, and services. This ambitious goal also necessitates improving all three sectors to align with India's Sustainable Development Goals (SDGs).

By attaining double-digit growth, India can aspire to provide employment opportunities for its burgeoning youth population. Favorable demographics can position India as an upper-middle-income economy, fostering a prosperous and thriving middle class.

Contribution of Different Sectors in achieving the goal of $5 Trillion Economy

Services sector includes improving rail connectivity and seamless connectivity to major attractions; facilitating visa regime for medical travel; allowing expatriate professionals to perform surgeries in identified hospitals; and e-commerce policy and regulatory framework for logistics segment. This sector contributes significantly to India’s GDP, aiming for around 60% contribution by 2024. Exports, job creation, increased productivity, and competitiveness of Champion Services Sectors like IT, tourism, medical value travel, and legal will further boost exports.

• The Commerce Minister has identified 15 strategic overseas locations for the creation of Trade Promotion Organisations (TPOs). 
• The Multi-Modal Logistics Parks Policy (MMLPs) aims to improve the country’s logistics sector by lowering freight costs, reducing vehicular pollution and congestion, and cutting warehouse costs to promote movements of goods for domestic and global trade.

• In the defence sector, there is a need to identify key components and systems and encourage global leaders to set up manufacturing bases in India by offering limited period incentives, ensuring technology/process transfer. 
• To promote growth of accounting and financial services, there is a need for FDI in the domestic accounting and auditing sector, transparent regulatory framework, and easing restrictions on client base. 
• Measures like exploring the introduction of insurance in the film industry, promoting private investments in film schools, exploring franchise business models, and promoting gaming industry value chains aim to push audio-visual services.
• Foreign universities are allowed to set up campuses in India, with an easy visa regime for students and education service providers, removing regulatory bottlenecks, providing recognition of online degrees, and setting up appropriate evaluation techniques for online courses in the education sector.

Initiatives by India

• The Champion Services sector initiative is also underway to accelerate the expansion of select service sectors. 
• The 2019 Union Budget discusses plans with a pan-India focus to give a further boost to Sagarmala, Bharatmala, and UDAN projects, besides the dedicated industrial and freight corridors. 
• The budget proposes further opening of FDI in aviation sector, media, animation AVGC, and insurance sectors in consultation with all stakeholders. 100% FDI will be permitted for insurance intermediaries.

Challenges

• The primary issue in this sector is that jobs with lower salaries struggle to attract significant employment. This persists as a future dilemma, particularly as India aims for double-digit growth in the near future.

Way Forward

• There is a need to place India’s official statistics on a firmer footing, ensuring that economic policy-making is based on reality. However, achieving accurate numbers will not alone suffice.
• The government alone cannot meet the target of achieving a $5 trillion economy. The private sector must take the lead. Budget 2018-19 included a hike in the disinvestment target, governmental support to NBFCs, and a long-term plan to deepen the corporate bond markets.
• Structural reforms in the agriculture sector are also necessary. Modernizing the farm sector is imperative.
• States should recognize their core competence and aim to increase their economy by 2 to 2.5 times, focusing on raising GDP targets from the district level and working towards growing exports.
• Development should commence at birth, fostering a proactive approach to human development that will ultimately contribute to real economic growth.
• The global healthcare and wellness industry is valued at $8 trillion. India should convert its 600 district hospitals into medical, nursing, and paramedical schools to train 5 million doctors, nurses, and paramedics to meet global requirements.