Sansad TV Perspective: India’s GDP Growth in FY23

In the series Sansad TV Perspective, we bring you an analysis of the discussion featured on the insightful programme ‘Perspective’ on Sansad TV, on various important topics affecting India and also the world. This analysis will help you immensely for the IAS exam, especially the mains exam, where a well-rounded understanding of topics is a prerequisite for writing answers that fetch good marks.

In this article, we feature the discussion on the topic: India’s GDP Growth in FY23.

Anchor: Teena Jha

Participants:

1. Subhomoy Bhattacharjee, Consulting Editor, Business Standard
2. R. Gopalan, Former Secretary, Financial Services, Ministry of Finance
3. Rajeev Mantri, Founder & MD, Navam Capital

Context – The Indian economy is estimated to grow at 7% in the 2022-23 fiscal, down from 8.7 per cent a year ago. 

First Advance Estimates of National Income by NSO (National Statistical Office)

• The Indian economy is estimated to grow at 7% in the 2022-23 fiscal, down from 8.7 per cent a year ago. As per the first advance estimates of national income released by the National Statistical Office (NSO), this slip is mainly due to the poor performance of the mining and manufacturing sectors.
• The projections are much lower than the government’s earlier forecast of 8-8.5 per cent growth but above the Reserve Bank’s projection of 6.8 per cent. The Reserve Bank had lowered the country’s GDP growth forecast from 7% to 6.8% for the current fiscal owing to the continued geopolitical tensions and tightening of global financial conditions.
• The World Bank’s GDP estimation stands at 6.9%.
• Private consumption is expected to see a 7.7% growth in FY23.
• The manufacturing sector output is estimated to decelerate to 1.6 per cent in the current fiscal from 9.9 per cent in 2021-22.
• Similarly, mining sector growth is estimated at 2.4 per cent in the current fiscal as against 11.5 per cent in 2021-22.
• The projections suggest that despite the global headwinds and continued geopolitical uncertainty caused by the Russia-Ukraine conflict, the recovery is on track though there are pressure points.
• The International Monetary Fund (IMF)  has recently mentioned that India is a relative “bright spot” in the world economy.
• The growth in GVA (gross value added) at basic prices is pegged at 6.7 per cent this fiscal, down from 8.1 per cent in 2021-22.
• The growth in nominal GDP during 2022-23 is estimated at 15.4 per cent as compared to 19.5 per cent in 2021-22. Nominal GDP is the gross domestic product without any effect of inflation. Real GDP is the inflation-adjusted GDP of a country. The nominal GDP of a country is expressed in terms of current-year prices of goods and services.

Global Headwinds –

• Europe is suffering from a major energy crisis and is widely expected to be hit by a recession this year. Indian companies in the auto and IT sectors, for whom Europe is a key market could see difficulties leading to production challenges owing to weakened demand. 
• Russia – Ukraine Conflict – The war has had a negative impact on equity markets while leading to a surge in prices of crude oil, base metal and agricultural commodities. The military situation has taken a bigger toll than one could have expected. The war will continue to be a difficult situation for some of the export industries of India.

Major output loss-

The Covid-19 pandemic hit the global economy hard. And even as the economy struggled hard to recover from this, the Russia-Ukraine war arrived as another great setback.

Russia, Indonesia, India, the UK and Germany are among the countries that may contribute the most to this global output loss. (As per the report by the UNCTAD).

India – Island of Stability in the Region

India is an island of stability in the region, as it has been able to register a growth of 7% amidst global shocks and challenges, thereby representing a picture of resilience. According to the panellists, it speaks about the efficient economic management by the government. Some of the measures taken by the government to sustain & improve the growth in the country are-

• Structural reforms like labour codes – The four labour codes enacted by the parliament in 2020 & 2019 are yet to be implemented by all the state governments. The new labour laws will boost investments in the country and will also increase employment opportunities.
• Service exports – The services sector in India includes various industries such as healthcare, transport, information technology, business process outsourcing, hotels, restaurants, tourism logistics, transport, and space. The service sector also contributes significantly to India’s overall exports. To maximise the potential of the services sector, the government announced boosting services exports and reaching a target of US$ 1 trillion by 2030.
• Ethanol Blended Petrol Programme – Blending petrol with ethanol can reduce India’s oil import bill by $4 billion a year, and is great news for sugar mills as it is produced from a byproduct.
• The Government has undertaken major reforms/measures to boost the manufacturing sector in the country and to make India a favoured manufacturing and investment destination. For example, the Production Linked Incentive Scheme (PLI) in 14 key sectors; Start-up India, the flagship initiative of the Government of India, intended to build a strong ecosystem for nurturing innovation and Startups in the country that will drive sustainable economic growth and generate large scale employment opportunities; investor-friendly policy to promote FDI, etc.
• Electrifying India’s transport – The Government of India (GoI) is taking various steps to reduce the country’s reliance on fossil fuels and place EVs as the primary alternative to internal combustion engine (ICE) vehicles. 

Conclusion – The challenges before the government and the Reserve Bank in the new year would be to arrest inflation, check the declining value of the rupee against the US dollar and promote private investment and growth, with a view to ensure that the country remains one the fastest growing major economies of the world.

Read all the previous Sansad TV Perspective articles in the link.

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