Present Indian Economic State
It takes several decades of sincere implementation of economic policies for any nation to make a dent in its destiny . It is worthwhile to look continuously into our economic wellness. A vigilante country keeps track of economic indicators for any timely course correction. India, with its largest population in the world, is in many ways a remarkable country. Although India, like many other countries, remains obsessed with its politics, it is slowly and steadily emerging in the world.
India’s growth continues to be resilient despite some signs of moderation in growth, says the World Bank in its latest India Development Update. The overall growth remains robust and is estimated to be 6.9% in FY 22-23. Growth was encouraged by strong investment activity bolstered by the government’s infrastructure expenditure. Buoyant private consumption, particularly among higher income earners is evident from rise in sale of automobiles and luxury items, has helped the economy. Inflation remained high, averaging around 6.7 percent in FY22-23 but the current-account deficit somewhat narrowed on the back of strong growth in service exports and easing global commodity prices.
This April has given good indication. Manufacturing activity in India has touched a four-month high in April. Purchasing Manager’s Index (PMI) increased from 56.4 in March to 57.2 in April indicating the fastest improvement in manufacturing. Reading above 50 means extension in manufacturing activity. It is a good sign as manufacturing is the weakest link in India’s economy.
Collection of goods and services. tax rose 11.6% in April to a record high of Rs.1.87 lakh crore. In April smaller states and union territories reported higher growth with Sikkim registering the highest increase of 61%. On 24 April, the highest ever tax collection in history on a single day was Rs.68,288 crore. Rising tax collection despite lower tax rates shows the success of how GST has increased integration and compliance.
There is a flip side of this rosy picture. The GDP forecasts for the fiscal FY23-24 are gloomier. CRISIL expects 6 per cent GDP growth in FY23-24, and IMF expects 6.1 per cent. The sentiment is similar among other agencies too. RBI has to walk tightrope to contain inflation in coming days because only this can ensure higher GDP growth. Secondly, unemployment has become a great problem for a vast population of Indian youth. India’s unemployment rate has risen to a three-month high of 7.8% in March 2023, according to the latest data released by the Centre for Monitoring Indian Economy (CMIE). India needs nimble policies and their implementation to derive the demographic advantage. Our economy is still only 1/5th of China and we have to go a long way in 21st century.
