India’s fast emerging economy can surely do better

livemint.com:

The first advance estimates of our national income for 2023-24 issued by the National Statistical Office on Friday show India’s economy blazing ahead, with gross domestic product (GDP) seen rising 7.3%. As China sputters, India is poised to retain its fastest-growing major economy tag, having rebounded sharply from the pandemic on the back of infrastructure spending by the government. In 2021-22, we made up for the previous year’s covid contraction, and then logged 7.2% GDP growth last fiscal year.

With spring-back effects wearing off, an acceleration this year would be remarkable. Although the central bank’s projection is 7%, a likely higher rate speaks of how robustly the Centre’s fiscal pedal has fuelled economic expansion. With world output expected to grow just 3% in 2023 by the International Monetary Fund, our bounce-back stands out globally, especially since growth had been slowing before the covid crisis called for stimulus action and pump-priming began.

While order books and tax collections from businesses support growth optimism, India’s macro readings have not looked this good in a long time. The overhang of a past debt binge has lifted, making space for banks to fund corporate expansion, India’s external balances are in good shape, and foreign exchange reserves are back at record levels. In general, double-digit inflation has begun to look like a risk that belongs to a past era of no targeting mandate.

Nevertheless, pain points exist. India’s farm growth, for instance, is pegged at 1.8% by the advance estimates, down from 4% in 2022-23. Clearly, the rural economy is struggling.