Setting up shop for turbo policy
India's economic growth of 8.2% in 2023-24 is notable on three counts. First, it surpasses the 8% hurdle rate seldom breached in India's post-Independence history. Second, it reinforces a strengthening of India's economic momentum after the Covid shock.
Third, it speaks to the rising correlation between policy continuity and economic performance. The 2023-24 number pulls up average growth during the NDA decade closer to the preceding UPA decade. Both regimes experienced global economic shocks and bounced back, emphasising the role conservative regulation has played in keeping the economy on an even keel.
The Indian economy has gained in resilience and can now aspire to raise its growth trajectory.
Numbers from the last quarter of 2023-24 show consumption to be growing slowly, while manufacturing exports are sprinting ahead. Investment growth tapered, but this is a transient effect of national elections and can be expected to revive with policy continuity. Government spending stopped shrinking, and tax collections made an oversized contribution to fourth-quarter growth.
Manufacturing and construction were the main drivers of growth replacing services during 2023-24. The role of the government is visible here in production incentives for manufacturing and stepped-up infrastructure spending. The outstanding performance of manufacturing exports during the last quarter provides corroborative evidence of the effectiveness of policy intervention.
An incoming government could not expect a better economic report card under the circumstances.
