Kaku Nakhate, President & India Country Head, Bank of America is confident that the digital economy will be a key growth driver for India, contributing nearly 20% of the GDP by 2030 from approximately 8% now.
“India is poised for a remarkable decade, and we anticipate that the digital economy will substantially contribute to our economic landscape,” Nakhate said, adding that “This represents a fundamental shift in our economic structure.”
Nakhate’s comments echo the government’s recent assertions that digitalisation will be a defining element in India’s growth narrative in the 21st century, as highlighted in the finance ministry’s monthly economic report from September 22.
The digital economy’s contribution to India’s GDP has increased. it was 4-4.5% of the GDP in 2014 and is expected to cross 20% by 2026, a Hindustan Times report said quoting the finance ministry report.
Nakhate also highlighted the positive impact of increased government capital expenditure on the economy, remarking, “I personally believe that India is embarking on a path of sustained and multifaceted growth. One of the key drivers of this growth is the government’s investment in public infrastructure.”
Private sector capital expenditure has begun to align with government initiatives, with the private capex witnessing an 8% growth just last year, bringing it close to 59% of the total. With capacity utilisation at approximately 80%, Nakhate foresees a convergence between the public and private sectors as a significant development.
Nakhate also underlined India’s consumption story highlighting the evolving dynamics of the middle class and its role in driving consumption. “Within the middle class, we observe various strata, all progressing in terms of their consumption patterns. It’s safe to say that everyone within the middle class is participating in this consumption story, marking a noteworthy trend in our economic journey.”