India’s economy sprang a pleasant surprise last week by registering better than expected growth of 7.6 per cent in July-September quarter
India’s economy sprang a pleasant surprise last week by registering better than expected growth of 7.6 per cent in the July-September quarter as against the RBI’s projected growth rate of 6.5 per cent. A 110 basis point higher growth for an over $3 trillion economy was indeed a great achievement, which was attributed to the robust growth posted by the manufacturing sector.
According to government data for the second quarter of financial year 2023-24, the manufacturing sector grew at 13.9 per cent, construction by 13.3 per cent, agriculture by 1.2 per cent and services sector by 5.8 per cent.
Following the new numbers, Barclays Plc and Citigroup Inc. revised India’s annual economic growth to 6.7 per cent, up from previous forecasts of 6.3 per cent and 6.2 per cent, respectively. The State Bank of India has revised its FY24 growth projection for India to seven per cent from 6.7 per cent. This cements India’s position as the fastest growing large economy in the world.
A higher-than-expected economic growth, especially when the world is going through uncertainty caused by two near-global conflicts in Ukraine and Palestine, is a harbinger of interesting times ahead. The higher growth in the manufacturing sector will also help the governments to see a large number of people being employed, which is most important to maintain social harmony in a democratic society.
As the economic growth has gathered pace, it will allow the Reserve Bank of India (RBI) to focus on fighting inflation, which continues to remain in a zone which it is not comfortable with. Impending general elections for the Lok Sabha, domestic climate patterns and global supply issues make the RBI keep inflation tightly under control. If the RBI succeeds in its endeavour, India will have an ideal scenario of high economic growth and low inflation which will herald a virtuous economic cycle in the country.