India is shining! Yes, what else can explain an unusually robust growth of the Indian economy in a world plagued by slowdown? The Indian economy has beaten all estimates to grow by 8.4 per cent in the October-December quarter in 2023 — which is 190 basis points more than the RBI forecast of 6.5 per cent. The higher growth in the third quarter means the country’s economy is expected to grow faster than expected in the current financial year, which is at 7.6 per cent.
Although such a great divergence in the estimates and real growth numbers puzzled many economists, they tried to explain their collective failure to forecast the third quarter by speculating higher tax collection and lower subsidy payouts.
Achieving such a high growth of 7.6 per cent when the global economy was expected to slow down to 3.1 per cent is indeed a miracle. This growth metric is also backed by GST collections in the period between April and December which rose by 12 per cent over the same period year ago. The Narendra Modi government must be congratulated for navigating the economy through troubled waters like the Covid-19 pandemic, global slowdown and a persistently high global inflation.
While applauding the government for its achievement, it is appropriate to advise it against losing sight of widening economic inequality as shown up by the recent household consumption expenditure survey. Economic growth means the growth in national production. However, it is important to know where the demand that drove the growth came from. Because higher spending by a smaller section of the super rich can also mask a declining purchasing power of a large section of the poor. It is, therefore, important to understand the factors that led to such an unusual jump in growth figures in order to implement Prime Minister Modi’s stated objective of Sab ka Vikas.
