- There are positive signs visible for the Indian economic think tank and the general public going by the fourth quarter GDP growth for the year 2023. As you are aware, the Indian establishment did whatever was expected to ensure the nation’s economic activities remain positive despite facing humongous challenges courtesy of the pandemic restrictions and the ongoing Russia-Ukraine conflict. The economic challenges are not unique to India alone even as the global community grapples to stay afloat in the face of turbulent tidings owing to the once-in-a-century happenings. In hindsight, every country worth its salt would rue the fact that the Russian adventure was not only ill-timed but also helped further exacerbate the already fluid situation worldwide.
PC: BS Web Team
- However, due credit should be accorded to the Indian leadership for coming out with timely economic packages and also for initiating several fiscal measures to ensure the country does not face more burdens amid global meltdowns. As such, the fourth-quarter GDP for FY 23 result showing growth of 6.1% to Rs. 43.6 lakh crore is most welcome. However, the consumption pattern remains a weak point. The resilience of the Indian economy must be lauded which has outpaced all forecasts by a wide margin. Consequently, the growth also helped the 2022-23 GDP grow at 7.2% to Rs. 160.06 lakh crore, a level higher than both RBI and private projections. This rate of growth makes India a standout performer among major economies in the world.
- The economy, when viewed from the standpoint of producers, showed broad-based growth. Agriculture in the January-March quarter surprised on the upside growing 5.5% while construction surged to 10.4% to Rs. 3.0 lakh crore. The takeaway from the production side is that not only is India’s economy resilient, but there’s also an underlying momentum that has offset unfavorable global factors. A sector that helped neutralize the fallout of the Ukraine war and the attendant commodity price surge was services exports. In the GDP data, on the production side, finance, real estate, and professional services in the fourth quarter grew 7.1% to Rs. 7.6 lakh crore. Services exports helped compress the excess of imports over exports to just 0.1 percentage points of GDP.
PC: Agencies
- As mentioned above, the biggest challenge in the economy is the anemic performance of private consumption. In the fourth quarter, it grew 2.8% to Rs 23.9 lakh crore, the second successive time it’s grown less than 3%. It indicates that in an economy with a strong production momentum, there’s a distribution challenge. This is also corroborated by GOI’s urban jobs data for the January-March quarter. There’s a marked deterioration over the last year in the quality of jobs, especially for women. Its impact is showing up in weak consumption growth. Here, RBI can help by avoiding more policy interest rate increases. India needs stronger consumption to build on this momentum and that is linked to enabling better-quality jobs. The focus should be on this.
