Economic surge

SURPASSING expectations, the Indian economy grew by 8.4 per cent in the October-December quarter of 2023. This pace of growth, the fastest in a year and a half, has led to an upward revision of the estimate for the current financial year (2023-24) to 7.6 per cent, according to data released by the National Statistical Office (NSO). This estimate is better than the 7.3 per cent projection made by the NSO in January and well above the outlook of 6.7 per cent and 6.3 per cent by the International Monetary Fund and the World Bank, respectively. The impressive GDP trajectory is set to ensure that India will continue to be the fastest-growing major economy in the world, and that too at a time when global growth is largely witnessing a downturn.

The surge during the last three months of 2023 was spurred by an 11.6 per cent uptick in the manufacturing sector, which had seen a contraction of 4.8 per cent in the year-ago quarter. The mining and quarrying sector grew by 7.5 per cent in this period, up from 1.4 per cent during October-December 2022, while the construction sector has maintained a growth rate of 9.5 per cent.

The cherry on the cake is that the Indian manufacturing sector’s growth rose to a five-month high in February on the back of a jump in factory production and sales. In contrast, manufacturing in China has contracted for the fifth consecutive month, according to an official survey. It is evident that the ‘Make in India’ initiative is bearing fruit, with ease of doing business apparently improving. However, there is no room for complacency. India must consolidate the gains and capitalise on China’s patchy performance. Due attention needs to be paid to the backbone of India’s rural economy, the agriculture sector, which saw a contraction of 0.8 per cent during the October-December quarter.