Economy on fire, not on all cylinders though

Going by the steady growth of Indian economy over the years since its ascent to power, the Narendra Modi regime can claim to have done the country proud and set it on a blooming course to become a Viksit Bharat. Amid volatile headwinds caused by recession, conflicts and wars, and consequent supply shocks, inflaming the inflationary trends across the globe with prospects of interest rate hikes, India has emerged a shining star of global economy. India’s resilience to withstand external shocks has served as a great fillip to draw in the global investors in droves. India’s vibrancy is reflected in its stock markets soaring to record levels of market caps in a way not seen before. A rapidly expanding middle class, huge advantages of demographic dividend, technological leaps, a strong services sector - and also a growing manufacturing base - are helping India stand apart among big economies with ageing populations, wooing the investors never like before.

This is borne by a continuing surge in the gross domestic product (GDP) growth which has surged to a six-quarter high of 8.4% in October-December, promising the growth rate for 2023-24 upwards of 7.3% estimated in the previous quarters. The data for third quarter GDP and second advance estimates for 2023-24 released by the National Statistical Office (NSO) show an over 8% growth in manufacturing, mining and financial services. One thing that should prove skeptics wrong is the pace of manufacturing growth rate at double digit rise at 11.6%. The construction sector grew 9.5%. The data shows that private final consumption expenditure, an indicator of consumption demand, is up by 3.5% over the corresponding period in the previous financial year. In the case of investments, the main barometer, gross fixed capital formation, grew by 10.6% during the third quarter. Capital formation in respect of businesses adds to operational capabilities and ensures the growth of a business, while in the case of economy as a whole, it stimulates demand for products and services.

However, a key concern remains the subdued growth of agricultural which is expected to fare about 0.7% for the current financial year. The sector recorded a contraction of 0.8% in October-December. Prospects of healthy rabi harvest, and likelihood of weakening of El Nino and forecast of a normal monsoon are hoped to bring a good kharif sowing, according to CEO Chief Economic Advisor V Anantha Nageswaran. Agriculture potential shall be unleashed to rev up rural economy, while industrial progress offers a way out for the excess labour on the country side, thereby boosting consumption demand. Raising hopes of a scope for further growth, he adds that a structural transformation of the economy is indeed underway, both in terms of physical infrastructure and digital infrastructure as well as inclusion agenda, boosting the purchasing power of Indian households. After a surge in the growth of net indirect taxes to a six-quarter high of 32% in the quarter, and rise in exports after negative growth, both must be ensured sustainable.

Prime Minister Modi enthused confidence thus on ‘X’: “Robust 8.4% GDP growth in Q3 2023-24 shows the strength of Indian economy and its potential. Our efforts will continue to bring fast economic growth which shall help 140 crore Indians lead a better life and create a Viksit Bharat.” With European uncertainties aggravated by the Russian invasion of Ukraine, the spotlight is now on India, which is seen as a beacon for global investors. India’s share of world manufacturing is 3 per cent compared to China’s 28 per cent. And, finally, GDP growth shall mean better livelihoods, improved social and health scenarios. India is currently ranked at 132 out of 191 nations in the Human Development Index. Governments need to do a lot to make India a Viksit Bharat by 2047.