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India's Economic Growth Accelerates in 2023-24: NSO
Context
India's economy witnessed a significant upswing in the fiscal year 2023-24, with a robust GDP growth of 8.2%, surpassing the 7% growth recorded in the previous fiscal year, according to data released by the National Statistical Office (NSO). This growth marks the fastest pace since 2016-17, excluding the rebound from the COVID-19 lockdown in 2021-22.
Key-highlights:
- Industrial Sector: The manufacturing sector led the charge with a remarkable growth of 9.9% in 2023-24, a notable improvement from the 2.2% contraction in the previous year. However, growth in the fourth quarter slowed compared to earlier quarters. The construction sector also thrived, expanding by 9.9%, building upon a strong base from the preceding year.
- Manufacturing exports have registered highest ever annual exports of US$ 447.46 billion with 6.03% growth during FY23.
- Factors responsible for growth: Competitive advantage of a skilled workforce, lower cost of labour, increased inflow of capex.
- Government’s support: Production Linked Incentive (PLI) scheme, Make in India, Investment Clearance Cell (ICC), One District One Product (ODOP), Setting up Special Economic Zones (SEZs)
- Agriculture: In contrast, the agriculture sector experienced a notable slowdown, growing at only 2.1% in 2023-24, likely due to erratic monsoon patterns. This marks a significant deceleration from the 4.4% growth recorded in the prior fiscal year.
- Largest producer of: milk, coconuts, black tea, ginger, and turmeric; and the 2nd largest producer of cashew nuts, and tea in the world
- 2nd largest producer of: fruits and vegetables, rice, wheat, groundnuts, cashew, and tea globally; and accounts for 10% of the world’s fruit production with first rank in the production of mango, bananas, sapota, and acid lime
- Factor responsible for slowdown: climate change, reduced water levels, saturation of employment, poverty.
- Impact of slowdown: food inflation, threatened food security
- Government support: Growing institutional credit, Increasing MSP, Paramparagat Krishi Vikas Yojana, Pradhanmantri Gram, Sinchai Yojana, and Sansad Adarsh Gram Yojana, Inception of Agri Infrastructure Fund, e-NAM, promotion of agricultural mechanization and subsidy for machines and supports drones.
- Tertiary Sector: The tertiary sector, comprising services, exhibited a sturdy growth of 7.6% in 2023-24, albeit slower than the previous year's 10% growth. Notably, the financial, real estate, and professional services segment led the growth, although at a slightly reduced pace compared to the previous year.
- In September 2023, India retains to 40th rank in the Global Innovation Index (GII), d
- Government support: Start-up India, Stand-up India, Digital India and Skill India.
- Household Consumption and Capital Formation: Contribution of household consumption to the economy decreased further, with private final consumption expenditure accounting for 55.8% of GDP in 2023-24, down from 58% in the previous fiscal year. Conversely, the contribution of capital formation remained stable at 33.5% of GDP.
- Current economic challenges: Geopolitical tensions, geoeconomic fragmentation, global financial market volatility, international commodity price movements and erratic weather developments
This data underscores the shifting dynamics within India's economic landscape, with manufacturing and construction sectors driving growth, while agriculture faces challenges from weather fluctuations.
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