The Indian economy continues to show resilience as per the Second Advance Estimates (SAE) of National Income released by the National Statistical Office (NSO) recently. It has continued to perform impressively amid several challenges posed to it in the domestic as well as global economy.
The real GDP or GDP at Constant (2011-12) Prices in the year 2023-24 is estimated to have attained a level of ₹172.90 lakh crore, against the first revised estimate of GDP for the year 2022-23 of ₹160.71 lakh crore.
The growth rate of real GDP during 2023-24 is estimated at 7.6 percent as compared to growth rate of 7.0 percent in 2022-23 on y-o-y basis. On the other hand, the nominal GDP (i.e. GDP at Current Prices) in the year 2023-24 is estimated to attain a level of ₹293.90 lakh crore, against ₹269.50 lakh crore in 2022-23, showing a growth rate of 9.1 percent.
It is observed that the India economy has shown impressive growth in all key parameters as compared to the previous year. No other economy in the world in the contemporary times has shown this rate of growth in the recent years. This is indicative of the growing maturity, depth, and inclusive growth in the Indian economy.
Major Per Capita Estimates are also impressive
As per the Second Advance Estimates of National Income and Expenditure Components of GDP (at 2011-12 prices), the Per Capita Gross Domestic Product, Gross Domestic Income and Net National Income are estimated to have increased at 6.7, 6.7 and 6.8 per cent respectively in the year 2022-23 much higher than the growth rates achieved in the preceding year 2021-22. (Refer Chart 2). This indicates that the fruits of growth are reaching out to the people on an average as millions of them have reportedly been pulled out of poverty in the recent years.
However, we observe that despite impressive increase in Gross Domestic Product and Income, there is a slow-down in the Per Capita Private Final Consumption Expenditure which has managed to grow at a meagre 2.1 per cent on Y-o-Y basis, which is being considered as a matter of concern. This could partly be due to the stagnancy in the agricultural growth as Indian economy continues to be predominantly agricultural with majority of its folks residing in the rural areas and thriving on agricultural produce and allied activities and partly due to inflation being a little higher than its lower threshold.
The sectoral data is projecting mixed trend
According to the Second Advance Estimates of GVA at basic prices, agriculture is estimated to have registered a growth rate of 0.7 per cent compared to 4.7 per cent achieved in the preceding year. India, being predominantly, an agrarian economy, this slow down in the growth rate is pulling the average growth rate down. Besides, the growth rate has been somewhat lower in the electricity and services sector. But the overall growth rate seems to have improved due to massive improvement in the mining and quarrying, manufacturing, and construction sector. (Refer Chart below)
This implies that there is a huge potential to even push the growth rates still higher in several sectors which seems quite probable given the better performance in the secondary sector and a fair expectation of better monsoon in the coming season.
For a better understanding of the movement of the growth rates, we may have to see the quarterly data as well. (Refer Chart below)
We observe that the primary sector, particularly agriculture, which is largely dependent on the moods of the monsoon, has achieved a mild growth rate in the second quarter and even negative (-0.8 percent) growth rate in the third quarter y-o-y basis. However, the economy has managed to do well in many other sectors due to several reforms and policy initiatives and improved infrastructure. For instance, increase in government capex and production linked incentive schemes and several other measures at macro and micro level have yielded positive results for the manufacturing and allied services.
The overall growth rate was estimated to be 8.4 percent in the third quarter of the year which was higher than many other projections made earlier and so it was like surprise performance for many analysts. It was even reported to be higher than the revised estimates at 8.1 per cent for the preceding quarter.
Unstoppable Indian Economy
In several articles published earlier, I have underscored the postulates like like ‘the unstoppable Indian economy’ and ‘the resilient Indian economy’ to highlight the fact that India is now fast moving towards a self-reliant stable economy with a self-propelling growth model where growth fuels growth through a virtuous cycle of development. The Indian economy is the world’s biggest consumer market and comprises of most diverse population blessed with demographic dividend. Increased digitalization and formalization of the Indian economy has not only increased employment opportunities for millions of its youth but is actually opening up several avenues where innovation and technology have potential to thrive even as India is chasing its Sustainable Development Goals as per the stipulated deadlines.
Many analysts have since raised India’s growth forecast. It’s like moving beyond believing in India’s growth story to actually acknowledging India’s growth performance as indicated by the revised /advance estimates in succeeding quarters, affirming resilience and stable economic environment