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Patchy expansion

  • Published
    2nd Dec, 2023

Context:

A broad growth base is a must to sustain momentum and reduce inequality.

Economic Growth Trends

  • Moderate Economic Growth: India's GDP for Q3 shows a slight dip to 7.6%, with Gross Value Added at 7.4%, signaling a moderate slowdown.
  • Sectoral Variations: Robust growth in manufacturing and construction, but agriculture and services, especially post-pandemic, experience significant slowdowns.
  • Mixed Services Performance: Trade, hotels, transport, and communication sectors show a marked decline, raising concerns about the post-pandemic recovery of services.

Government’s Role

  • Private Consumption Decline: Lynchpin private consumption expenditure drops to 3.1% in September quarter, impacting overall economic growth, and signaling rural demand challenges.
  • Government-Led Growth: Economic momentum attributed to front-loaded government spending, both in consumption demand and capital investments, requires broader growth strategies.
  • Challenges for Policymakers: Policymakers face the task of sustaining and broadening economic growth to ensure equitable benefits and tackle growing inequality.

Policy Challenges:

  • Dependency on Government Spending: The economic upturn relies on significant government spending, necessitating a shift towards a more inclusive and sustainable growth model.
  • Addressing Rural Precarity: Agricultural and rural sectors face challenges, demanding policies to enhance stability and income security for those dependent on farming.
  • Post-Pandemic Service Sector: Services, hit by a slowdown, need special attention for a robust recovery post-pandemic, necessitating targeted policy interventions.
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