Shining Economic Parameters

SATISH SINGH

According to the data released by the National Statistical Office (NSO) on November 30, the Gross Domestic Product (GDP) grew at the rate of 7.6 percent in the second quarter of the current financial year, while the GDP growth rate in the same period of the last financial year was 6.3 percent. This growth rate is more than the Monetary Policy Committee's estimate of 6.5 percent. Even in the first quarter of the financial year 2023-24, the GDP growth rate was 7.8 percent. It is noteworthy that in the September quarter, real GDP was Rs.41.75 lakh crore, while nominal GDP was Rs.74.66 lakh crore.

In the last 5 years i.e., in the financial year 2018-19, GDP grew at the rate of 6.80 percent, while in the financial year 2019-20 it was 3.70 percent, in the financial year 2020-21 it was minus 6.60 percent, in the financial year 2021-22 it was 8.70 percent and in the financial year 2022-23, GDP growth was recorded at the rate of 7.2 percent.

The GDP growth rate in the June quarter of FY 2023 was 13.1 percent, while it was 6.3 percent in the September quarter, 4.4 percent in the December quarter and 6.1 percent in the March quarter. The growth rate in Gross Value Added (GVA) in the September quarter of the current financial year was 7.4 percent, whereas it was expected to grow at the rate of 6.8 percent. In the first quarter it had grown at the rate of 7.8 percent, whereas in the same period last year it had grown at the rate of 5.4 percent. GVA reflects economic activities related to the supply of products, while GDP reflects economic activities related to demand.

Urban consumption, manufacturing and government expenditure have contributed significantly to the growth of GDP. The growth rate in the manufacturing sector was 13.9 percent, while the growth rate in the construction sector was 13.3 percent. At the same time, the growth rate of mining sector was 10 percent, while the growth rate of electricity-water sector was 0.1 percent, defence sector was 7.6 percent, finance and property sector were 6 percent and business and transportation sector was 4.3 percent. However, the agriculture sector grew at just 1.2 percent in the second quarter of FY24.

The infrastructure or core sector grew at the rate of 12.1 percent in the month of October, whereas this sector had grown at the rate of 0.7 percent in the last financial year. In the month of October, except fertilizer, all other sectors have registered a growth, while in the month of September, an average growth of 9.2 percent was recorded in the sectors of coal, crude oil, steel, cement, refinery, natural gas and electricity. The production growth rate of 8 major sectors during April to October was 8.6 percent, which was 8.4 percent a year ago.

According to the Governor of Reserve Bank of India, Shri Shaktikanta Das, the GDP growth rate may also see a rise in the next quarter, because the inflation in the month of October was 4.87 percent, which was 5.02 percent in the month of September and 6.83 percent in the month of August and all the sectors of the economy are improving. Key economy related parameters also remain strong.

India's fiscal deficit in October stood at Rs.8.03 trillion, 45 percent of the full-year budget estimate of Rs.17.86 trillion. In the same period last year, this deficit was 45.6 percent of the budget estimate for the financial year 2022-23. Thus, a reduction of 0.06 percent has been recorded in the fiscal deficit. Fiscal deficit refers to the difference between expenditure and revenue.

According to the data released by NSO, the urban unemployment rate remained stable at 6.6 percent in the September quarter of the current financial year. The unemployment rate among men increased to 6 percent in the September quarter from 5.9 percent in the June quarter, while the unemployment rate among women declined to 8.6 percent in the September quarter from 9.1 percent in the June quarter.

Women's participation in the labour force was 20.4 percent in the March quarter of 2022, which increased to 20.9 percent in the June quarter, 21.7 percent in the September quarter, 22.3 percent in the December quarter and 22.7 percent in the March quarter of 2023. It was 23.2 percent in the June quarter of 2023 and 24.0 percent in the September quarter.

The unemployment rate among youth above 15 years of age has been the lowest in the last 5 years. At the same time, the unemployment rate among youth aged 15 to 29 years was 17.6 percent in the June quarter, which came down to 17.3 percent in the September quarter. It may be noted that after the high unemployment rate of 12.6 percent recorded in the June quarter of 2022, there is a continuous decline in the unemployment rate in urban areas.

The unemployment rate in the urban sector was 8.2 percent in the March quarter of 2022, which declined to 7.6 percent in the June quarter, 7.2 percent in the September quarter, 7.2 percent in the December quarter, 6.8 percent in the March quarter of 2023, 6.6 percent in the June quarter and 6.6 percent in the September quarter.

Standard & Poor's Global (S&P Global) has increased the GDP growth forecast for the financial year 2023-24 from 6 percent to 6.4 percent. According to the agency, the reason for this is the strengthening of economic standards in the domestic market. However, S&P Global has reduced its GDP growth forecast for fiscal year 2024-25 to 6.4 percent from 6.9 percent. The agency feels that economic activity in India may weaken in the second half of fiscal year 2024.

According to S&P Global, apart from India, the economies of Indonesia, Malaysia and Philippines are also growing strongly, while China's economy, which is ranked second in the world, is expected to grow at the rate of 4.6 percent in the financial year 2024.

It is clear from the increase in both GDP and GVA that the demand and supply of various products remains strong, due to which all economic activities are also gaining momentum. Reduction in fiscal deficit indicates that revenue collection exceeds expenditure, which is an indicator of a strong economy. Core sectors remain strong. The stable unemployment rate indicates that our economy is strong and has completely emerged from the ill effects of the Corona pandemic. The increase in participation of half the population in the labour force speaks of a positive change in the country.

Due to the continued strength of the Indian economy, S&P Global has increased the GDP growth forecast for the financial year 2023-24 from 6 percent to 6.4 percent, while the GDP of China, the world's second largest economy is estimated to grow at a rate of 4.6 percent in FY24, which is much lower than India's GDP growth rate estimate. Today, when many countries of the world are struggling with the negative effects of global recession, India's growth rate is continuously mounting.

(Email: singhsatish@sbi.co.in)