An upbeat report works best with clarity on risks
The Indian economy stands at a crucial crossroads, with paths leading to growth and sustainable prosperity, or to a cliff edge and sheer drop. Technically, going by official statements, it looks set to carry its growth momentum into fiscal 2023-24, buoyed by favourable tailwinds and signs of a resurgence during 2022-23 (with the year’s real GDP coming in at 7.2%), thereby setting the stage for a broader recovery and good times ahead.
The finance ministry’s Annual Economic Review for 2022-23 provides an upbeat analysis for 2023-24 based on how a concatenation of various growth drivers has propitiously emerged. On the demand side, both consumption and investment provide some signs of a revival in impetus.
For consumption growth, the ministry’s report draws inspiration from incipient signs of recovery and visibility of traction in various high-frequency indicators, such as sales of two-wheelers and UPI transactions. Even an investment uptick in the last quarter instills hope for India’s capex thrust continuing over the next few months with an attendant spike in private money invested.
On the supply side, the report exudes similar optimism by pointing to green shoots in farm output, the economy’s manufacturing potential and buoyancy in services. But, is it all panglossian, a report that basks in the glow of a resplendent future? Truth be told, it does mention risks to the outlook—such as El Niño prevailing over the Met’s predictions of normal monsoons, or slowing global demand—but it seems to have been tucked in right at the end, almost like an after-thought.
The report glosses over many of the risks that could imperil individual components of demand or sectors on the supply side of the equation. The annual review exults
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