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Indian Economy: We Still Have a Long Way Ahead
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Context
The recent GDP estimates released by the National Statistical Office (NSO) for 2023-24 show an impressive growth rate of 8.2%, surpassing most optimistic estimates and indicating a robust growth story for India. However, despite this positive outlook, the country still has a long way to go in terms of per capita income and poverty alleviation.
Impressive GDP Growth and Its Implications
- Introduction to the Issue: The GDP growth for 2023-24 is at 8.2%, much ahead of the Reserve Bank of India’s estimate of 7% till as late as December 2023. This growth seems to be broad-based, with all sectors except agriculture showing good performance.
- Statistical Perspective: After taking into account the GDP growth in the first three quarters of 2023-24 (8.2%, 8.1% and 8.4% respectively), the NSO’s second advance estimate of 7.6% GDP growth for the year had implied a 5.7% GDP expansion in the January-March quarter. However, the actual figure was a stunning 7.8%, taking the annual figure to 8.2%.
- International Optimism: There is growing international optimism that India is on the cusp of a long-awaited economic take-off, as evidenced by the recent revision in our sovereign-credit outlook from ‘stable’ to ‘positive’ by S&P Global Ratings.
Challenges Ahead Despite GDP Growth
- Per Capita Income: Despite India becoming the world’s fifth-largest economy, when it comes to per capita income, we are close to the bottom of the global league tables, at No. 144. It is only by 2029 that India is forecast to overtake countries like Uzbekistan, Papua New Guinea and Angola in per capita terms.
- Policy Implications: The upcoming government has significant challenges to address, including ensuring sustainable and inclusive growth, enhancing per capita income, and improving the overall quality of life for the population.
UPSC Mains Questions
Q. Critically examine the role of domestic demand and demographic trends in India's recent economic performance. How can India sustain this growth while addressing the disparities in per capita income?
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