There is only one word that does justice to the gross domestic product (GDP) estimates released by the National Statistical Office (NSO) on 31 May 2024: Incredible. At 8.2%, GDP growth for 2023-24 is streets ahead of the most optimistic estimates put out by brokerages and much ahead of the Reserve Bank of India’s (RBI) estimate of 7% till as late as December 2023.
It is possible, of course, that the numbers will undergo some revision in the months to come. It is also almost certain that some of this increase in our economic output is explained by how we compute the GDP deflator (used to get the real numbers from nominal) and on account of how net taxes behaved during the year (GDP is GVA or gross value added plus taxes less subsidies).
But regardless of how you dice the numbers, how many caveats you add, there’s no getting away from the fact that the India growth story is real. Better still, it seems to be both broad-based—other than agriculture, where growth still lags, all other sectors have done well—and here to stay.
Statistically speaking, after taking into account the GDP growth in the first three quarters of 2023-24 (8.2%, 8.1% and 8.4% respectively), the NSO’s second advance estimate of 7.6% GDP growth for the year had implied a 5.7% GDP expansion in the January-March quarter. What we got, however, was a stunning 7.8%, taking the annual figure to a neck-turning 8.2%.
Internationally, there is growing optimism that India is on the cusp of a long-awaited economic take-off, as evidenced by the recent revision in our sovereign-credit outlook from ‘stable’ to ‘positive’ by S&P Global Ratings, even if the actual credit rating remains barely investment grade (for now).
While revising India’s GDP growth upwards by close to 2 percentage points for 2023-24, the International Monetary Fund’s (IMF) April 2024 World Economic Outlook alludes to the robustness of growth expected in 2024 and 2025 as “reflecting continuing strength in domestic demand and a rising working-age population.”
It may be tempting to conclude from all this that India has reached what development economist W.W. Rostow called the ‘take-off’ stage. And to fondly imagine that from here, it is only a “hop, skip and jump away” to the next two stages: the “drive to maturity” stage and the developed one of a “high mass consumption” economy.
Unfortunately, this remains wishful thinking. We have a long way to go. For all the pride we can justifiably take in India having become the world’s fifth largest economy (and IMF projections of becoming the fourth biggest by 2025 and third by 2027), the reality is that when it comes to per capita income, we are close to the bottom of the global league tables, at No. 144.
Yes, this is an improvement from our rank of No. 153 in 2018, but it is nowhere near good enough if we are to lift our people out of poverty and give them a decent quality of life. It is a sobering thought that in per capita terms, it is only by 2029 that India is forecast to overtake countries like Uzbekistan, Papua New Guinea and Angola.
Clearly, the new government that will take office in a few days has its task cut out for it. As we await the results of elections to the 18th Lok Sabha, due on Tuesday, there’s no mistaking the size of the challenge before us. But the good news is that we start on a strong wicket.
#Indias #GDP #growth #long
