India GDP Growth: Will it lose ‘Fastest Growing Economy Title’ in 2023?

India GDP Growth

According to government data, the economy expanded by 6.8% from April 2018 to March 2019. And for the first time in nearly two years, it fell behind China’s pace in the quarter between January and March, growing just 5.8%. Thus, India no longer leads the world in terms of economic growth as domestic and international demand declines. Therefore, Nirmala Sitharaman, the new finance minister, will face a substantial challenge. 

In this fiscal year, GDP expanded by 7%

Sole credits to an increase in energy prices; this performance follows 8.7% growth in the previous year. Saudi Arabia is expected to expand by 7.6%.

A first official estimate released by the Statistics Ministry Friday predicted 7% growth in the gross domestic product in the fiscal year ending in March. As measured by Bloomberg, the Reserve Bank of India forecasts a 6.8% expansion, compared with the median estimate in its survey of economists.

In the upcoming Indian federal budget on Feb. 1, the government will decide its spending priorities based on the advance estimate, which will also represent the last full-year expenditure plan for Prime Minister Narendra Modi’s government before elections in 2024.

India GDP Growth

Economic Growth in India Slows, Gross Domestic Product

As Asia’s third-largest economy recovers, India’s economy has had a promising start to this fiscal year. However, it quickly faded when many advanced economies entered recession as central banks tightened monetary policy to tame rising inflation, which dampened growth elsewhere.

Russia-Ukraine conflict and global headwinds have caused geopolitical uncertainty, but the recovery appears to be on track despite the pressure

Having raised its benchmark rate by 225 basis points so far this fiscal, the Reserve Bank of India isn’t yet done with tightening. Inflation remains sticky and economists expect another quarter-point tightening at the central bank’s next policy meeting on Feb. 8.

Growth of 6.7% is projected for gross value added without tax and subsidy transfers. There will be a 1.6% rise in manufacturing output, a 2.4% increase in mining, and a 3.5% increase in agriculture.

Moreover, “3.1 percent growth was the only indicator of slow growth in private final consumption expenditure (18 quarter low). Fixed capital formation also grew at 4.0 percent (4QFY19: 3.6%), but only government expenditures contributed to growth of 8.8 percent.,”

A proxy for investment, gross fixed capital formation, is expected to grow by 18%. On the other hand, government spending is expected to grow 11.2%. Private consumption is expected to grow 16.3%.

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