Republic Day in India is not merely a celebration of constitutional principles; it's a vibrant testament to the nation's strong foundation in both defence and economy. This significant day, observed on January 26th each year, commemorates the day when India adopted its Constitution in 1950 and officially became a sovereign republic. It intertwines the concepts of defence and economy as it marks the country's commitment to safeguarding its democratic values while striving for economic growth and prosperity. The celebration also serves as a poignant reminder of the sacrifices made during the struggle for independence.
On this auspicious occasion, India proudly showcases its military prowess through grand parades and displays of unity and strength. The participation of the defence forces in the Republic Day parade underscores the nation's dedication to safeguarding its sovereignty and territorial integrity. The display of advanced weaponry and military precision serves as a reminder of India's preparedness to protect its democratic ideals and reaffirms the values that bind this diverse nation—equality, liberty, fraternity, and justice. This year, French President Emmanuel Macron will be the chief guest at the Republic Day celebrations. Asian Voice spoke to experts on the occasion of Republic Day about Indian history and defence.
Talking about indigenous defence production through initiatives like "Make in India," political analyst and researcher Niranjan Marjani said, “The Make in India initiative is intended to reduce India’s dependence on defence imports. Under this initiative, India’s domestic defence manufacturing has received a boost. The indigenisation is carried out according to the Defence Acquisition Procedure 2020, a document that lays down the policy and procedure for arms procurement. Particularly, it lays strong emphasis on acquiring capital items from domestic manufacturers.
“Some significant defence products manufactured under the Make in India initiative are the 155 mm Artillery Gun System Dhanush, Light Combat Aircraft Tejas, Surface to Air Missile System Akash, Main Battle Tank Arjun, Weapon Locating Radar, Integrated Air Command and Control System, Cheetah helicopter, Advanced Light Helicopter Dornier Do-228, etc. The increase in indigenization has also gradually facilitated India's becoming a defence exporter. In recent years, India has been exporting its defence equipment to countries like Armenia, Egypt, and the Philippines," he added.
Speaking about relations between India and France in defence cooperation and strategic partnership, Mr Marjani said, “French President Emmanuel Macron's visit to India as the Chief Guest at the Republic Day Parade holds significant importance in further strengthening the robust India-France ties. Over the past three decades, their relations have evolved, with France emerging as a major strategic partner for India. Notably, France is the second-largest supplier of defence equipment to India, accounting for around 30% of the country's total defence procurement.”
“During Macron's visit, defence cooperation is expected to expand, with potential deals on the procurement of 26 Rafale Marine combat aircraft and the construction of three submarines in India. The focus will also be on adopting a defence-industrial cooperation roadmap and exploring areas of joint design, development, testing, and manufacture of advanced defence technologies. Additionally, India and France will explore cooperation in small modular reactor development. Beyond defence, the two countries collaborate in technology domains like artificial intelligence, supercomputing, cloud computing, and fintech, he added.
Historian and writer Padmashri Vishnu Pandya emphasised the historical overview of India’s transition from colonial rule to becoming a republic in 1950. “India's quest for independence from the British Empire spanned over 200 years, involving diverse struggles from 1757 to 1945. The armed freedom wars encompassed tribal uprisings, the pivotal 1857 struggle, sacrifices made by revolutionaries during the anti-partition movement of 1905, activities at India House in London and the Abhinav Bharat initiative, Lala Hardayal's efforts in San Francisco in 1914, and Virendranath Chattopadhya of Berlin Committee, Raja Mahendra Pratap's Azad government in Afghanistan, Netaji Subhash Chandra Bose's Azad Hind Sena and government in Rangoon, Anushilan Samiti organisation in Bengal, Bhagat Singh and Chandra Shekhar's from Hindustan Republican Army, Abhinav Bharat Mandir in Maharashtra, Surya Sen's rebellion in Bengal, and the naval mutiny in 1945 were significant chapters, collectively resulting in the sacrifice of six lakh people.” he said.
He added, “From 1915 to 1942, non-cooperation and non-violent struggles under the leadership of Satyagraha Gandhiji played a crucial role, ultimately leading to the attainment of freedom."
Speaking about values and principles enshrined in the Indian Constitution that continue to shape the nation’s identity, he said, “Indian culture and philosophy towards life reflect a commitment to the well-being of all, not just a specific group (Bahujan). This principle aligns with the concept of Vasudhaiva Kutumbakam, emphasising the idea that the world is one family.”
Furthermore, Republic Day highlights the nation's economic aspirations. It reflects India's ongoing journey towards becoming a global economic powerhouse. The celebrations encompass various aspects of economic progress, including technological advancements, industrial growth, and entrepreneurial spirit. It's a day when India salutes its economic achievements and reaffirms its commitment to inclusive and sustainable development. We have got guest articles in Asian Voice that talk about the trajectory of the Indian economy's growth and its potential to join the world’s largest economies. It also mentions the surge in digital payments and the Indian diaspora powerhouse.
India's economy to reach $10 trillion by 2030, predicts WEF President
In a significant statement, World Economic Forum (WEF) President Borge Brende has predicted that India's economy will reach the USD 10 trillion mark by the end of this decade. Brende has expressed confidence in the Indian economy's growth trajectory, emphasising its potential to join the ranks of the world's largest economies.
Speaking to Business Today Executive Director Rahul Kanwal on the sidelines of the 54th annual World Economic Forum (WEF) meeting in Davos, WEF President Brende highlighted India's robust economic performance amidst global slowdown and geopolitical tensions.
"We think, in the coming decade, we can be speaking about a USD 10 trillion economy, at least in the coming two decades," Brende said, reflecting on India's economic prospects. The WEF President acknowledged India's rapid growth in the digital economy, which is expanding twice as fast as the rest of the economy, positioning the nation favourably on the global stage.
The optimism for India's economy is rooted in its significant growth rate, with Brende projecting an 8% growth for the current year. This positive outlook comes despite global trade growth slowing to 0.8% last year from 3.4%. Brende's confidence in the Indian economy is further supported by its resilience in the face of rising oil prices and the ongoing Israel-Hamas conflict, which pose threats to global supply chains and have implications for oil-importing nations like India.
In his interaction with an Indian TV channel, Brende elaborated on India's potential for exponential economic growth, likening it to a "snowball effect." He emphasised that continued reforms, geopolitical peace, and investments in R&D and infrastructure are key to realising this ambitious economic goal.
Brende's remarks come at a time when India, currently the world's fifth-largest economy with a GDP of approximately USD 3.7 trillion, is prepared to grow even faster due to its service-oriented economy and the global boom in digital services trade.
Brende also touched upon the global economic scenario, noting that despite slowdowns and geopolitical conflicts dragging down the growth outlook worldwide, there are signs of recovery. He expects the US to avoid a recession and China to regain momentum in the latter part of the year.
India's digital payment surge: UPI transactions soar in FY 2023-24
In the realm of digital payments, India has witnessed a monumental shift, spearheaded by the Unified Payments Interface (UPI). As of December 2023, UPI recorded a staggering 857 million transactions in the current financial year, a testament to its dominant role in India's digital payment landscape, commanding an impressive 62% market share in FY 2022-23. This surge in UPI transactions is a clear indicator of the country's move towards a digitised economy.
The growth trajectory of UPI is nothing short of remarkable. Starting with a modest base in the financial year (FY) 2017-18, UPI transactions stood at 9.2 million. This initial figure, though significant for its time, was just a glimpse of the potential of UPI. Over the next five years, these transactions witnessed an extraordinary increase, culminating in 837.5 million transactions by FY 2022-23.
This rapid growth represents a Compound Annual Growth Rate (CAGR) of 147%, a rate that signifies not just growth but a seismic shift in consumer behaviour and technology adoption.
The remarkable aspect of this growth is not just in the number of transactions but also in their monetary value. In FY 2017-18, the total value of UPI transactions was USD 12 billion, a noteworthy figure for a nascent technology at that time. However, by FY 2022-23, this value had escalated to an astonishing USD 1671 billion. The CAGR of 168% in value terms is even more impressive than the transaction count, indicating that UPI is not only being used more frequently but also for higher-value transactions.
Behind this digital revolution are concerted efforts by the Indian government and the Reserve Bank of India (RBI). Government initiatives have been crucial, including incentive schemes for RuPay Debit cards and BHIM UPI transactions, advisories for improving payment infrastructure, the Pradhan Mantri Gramin Digital Saksharta Abhiyaan (PMGDISHA) for enhancing digital literacy in rural areas, and setting targets for digital transactions and merchant acquisitions for banks.
The RBI has complemented these efforts with awareness programs like Electronic Banking Awareness and Training (e-BAAT), Digital Payments Awareness Week. The RBI's multimedia campaigns, particularly 'RBI Says' or 'RBI Kehta Hai', take a more broad-based approach to awareness. These campaigns, spread across various media channels, serve as a continuous source of information and reassurance to the public.
RBI's multifaceted approach to promoting digital payments is to increase the volume of transactions and equally empower every stratum of society with the knowledge and confidence to participate in India's burgeoning digital economy. A significant innovation in this domain is the RBI's approval for linking RuPay credit cards to UPI. This move enhances customer convenience by enabling cardless transactions and widening credit card acceptance, even at small merchant outlets equipped with QR codes.
India's diaspora powerhouse: Leading the 2023 global remittance list with a record $125 Billion
India has achieved a remarkable milestone in 2023 by leading the global remittance charts with a staggering $125 billion, as reported by the World Bank. India's position at the top of the global remittance charts reflects the strength and impact of its global diaspora, marking their economic contribution to their home country.
This is particularly notable considering the size and spread of the Indian diaspora, which constitutes a significant workforce in various countries, especially in the United States, the United Kingdom, Singapore, and the Gulf Cooperation Council nations.
According to the World Bank’s latest Migration and Development Brief released on December 18, 2023, the total remittance flow to low- and middle-income countries (LMIC) reached approximately $669 billion in 2023. India's share, amounting to $125 billion, registers a significant increase from the previous year's figure of $111.22 billion. This growth elevates India's contribution to South Asian remittances to 66% in 2023, up from 63% in 2022.
The United States, the United Kingdom, and Singapore emerge as the most significant contributors to India's remittance inflow, collectively accounting for 36% of the total. The Gulf Cooperation Council (GCC) countries, particularly the United Arab Emirates, also play a substantial role, contributing 18% to India's remittance inflow.
Several government initiatives have been pivotal in boosting these remittances. The linkage of India's Unified Payments Interface (UPI) with Singapore's payment systems and the cooperation between India and the UAE, which involves using local currencies for cross-border transactions, have significantly facilitated the flow of remittances.
India has also implemented non-residential deposit programs, attracting substantial foreign currency. As of September 2023, non-residential deposits in India amounted to $143 billion, witnessing an increase of $10 billion from the previous year, the World Bank report said.
The report indicates that remittance costs play a crucial role in these flows. South Asia, and particularly the remittance corridor between India and Malaysia, boasts the lowest remittance costs globally, standing at just 1.9%. This factor, along with strong labour markets and declining inflation in high-income source countries, has been instrumental in the surge of remittances to India.
However, the World Bank cautions about the potential risks, including the possibility of a decline in real income for migrants in 2024 due to global inflation and low growth prospects. Despite these concerns, remittances to low- and middle-income countries are expected to grow, albeit at a slower pace, in the coming years.
Most importantly, this report sheds light on the multifaceted impact of these financial inflows on the Indian economy. The significance of this phenomenon extends beyond mere monetary value; it reflects a complex interplay of global migration, economic policy, and the pivotal role of the Indian diaspora.
At 7.2%, India was one of the fastest-growing major economies in FY22/23: World Bank report
India continues to show resilience against the backdrop of a challenging global environment, says the latest India Development Update (IDU) released by the World Bank.
Despite significant global challenges, India was one of the fastest-growing major economies in FY22/23 at 7.2%, says the update. According to IDU, India’s growth rate was the second highest among G20 countries and almost twice the average for emerging market economies.
"This resilience was underpinned by robust domestic demand, strong public infrastructure investment and a strengthening financial sector. Bank credit growth increased to 15.8% in the first quarter of FY23/24 compared with 13.3% in the first quarter of FY22/23," says the IDU.
Released in October 2023, the IDU is the World Bank’s flagship half-yearly report on the Indian economy.
The report expects that global headwinds "will continue to persist and intensify" due to high global interest rates, geopolitical tensions, and sluggish global demand. As a result, global economic growth is also set to slow down over the medium term against a background of these combined factors.
In this context, the World Bank forecasts India’s GDP growth for FY23/24 to be at 6.3%. The expected moderation is mainly due to challenging external conditions and waning pent-up demand. However, service sector activity is expected to remain strong with growth of 7.4% and investment growth is also projected to remain robust at 8.9%.
“An adverse global environment will continue to pose challenges in the short-term," said World Bank's Country Director in India Auguste Tano Kouame. “Tapping public spending that crowds in more private investments will create more favorable conditions for India to seize global opportunities in the future and thus achieve higher growth,” he explained.