Economic Growth and Recovery: India’s Performance in 2023-24
According to the Gross Domestic Product (GDP) data of the National
Statistical Office (NSO), India’s economy grew by 7.6 percent in 2023-24, as
compared to a contraction of 6.6 percent in 2020-21. This is the highest growth
rate recorded by India since 2016-17, and reflects the strong recovery of the
economy from the impact of the COVID-19 pandemic. The nominal GDP or GDP at
current prices in 2023-24 is estimated to attain a level of ₹293.90 lakh crore,
showing a growth rate of 9.1 percent.
What are the drivers of India’s economic growth and recovery?
The drivers of India’s economic growth and recovery in 2023-24 are:
Consumption: The private final consumption expenditure (PFCE), which
accounts for about 55 percent of the GDP, grew by 8.9 percent in 2023-24, as
compared to a decline of 8.2 percent in 2020-21. This indicates the revival of
consumer demand and confidence, supported by the easing of lockdown
restrictions, the vaccination drive, the fiscal stimulus, and the improvement
in income and employment. The government final consumption expenditure (GFCE),
which accounts for about 11 percent of the GDP, grew by 5.8 percent in 2023-24,
as compared to a growth of 2.9 percent in 2020-21. This reflects the continued
public spending on health, education, and social welfare schemes.
Investment: The gross fixed capital formation (GFCF), which accounts for
about 30 percent of the GDP, grew by 10.4 percent in 2023-24, as compared to a
decline of 10.8 percent in 2020-21. This indicates the recovery of investment
activity and sentiment, driven by the low interest rates, the credit guarantee
schemes, the production linked incentive (PLI) schemes, and the infrastructure
push by the government. The gross capital formation (GCF), which includes the
changes in stocks and valuables, grew by 9.8 percent in 2023-24, as compared to
a decline of 10.6 percent in 2020-21.
Exports and Imports: The net exports, which account for about 4 percent of
the GDP, grew by 13.6 percent in 2023-24, as compared to a growth of 5.8
percent in 2020-21. This indicates the improvement in the external sector
performance, supported by the global economic recovery, the diversification of
export markets and products, and the competitiveness of the Indian exporters.
The exports of goods and services grew by 18.4 percent in 2023-24, as compared
to a decline of 12.9 percent in 2020-21. The imports of goods and services grew
by 19.1 percent in 2023-24, as compared to a decline of 17.6 percent in
2020-21.
What are the sectoral trends of India’s economic growth and recovery?
The sectoral trends of India’s economic growth and recovery in 2023-24 are:
Agriculture: The agriculture, forestry and fishing sector grew by 3.9
percent in 2023-24, as compared to a growth of 3.6 percent in 2020-21. This
indicates the resilience and robustness of the sector, which benefited from the
normal monsoon, the higher crop production, the favourable terms of trade, and
the policy reforms. The sector contributed about 16 percent to the GDP in
2023-24.
Industry: The industry sector grew by 9.6 percent in 2023-24, as compared
to a contraction of 8.4 percent in 2020-21. This indicates the recovery of the
industrial activity and output, supported by the easing of supply chain
disruptions, the pent-up demand, the inventory restocking, and the policy
measures. The sector contributed about 25 percent to the GDP in 2023-24. Within
the industry sector, the mining and quarrying sub-sector grew by 10.6 percent,
the manufacturing sub-sector grew by 9.8 percent, the electricity, gas, water
supply and other utility services sub-sector grew by 8.4 percent, and the
construction sub-sector grew by 9.7 percent in 2023-24.
Services: The services sector grew by 7.4 percent in 2023-24, as compared
to a contraction of 5.4 percent in 2020-21. This indicates the revival of the
services activity and demand, supported by the vaccination drive, the
digitalisation, the e-commerce, and the relaxation of social distancing norms.
The sector contributed about 59 percent to the GDP in 2023-24. Within the
services sector, the trade, hotels, transport, communication and services
related to broadcasting sub-sector grew by 10.1 percent, the financial, real
estate and professional services sub-sector grew by 6.9 percent, the public
administration, defence and other services sub-sector grew by 5.8 percent, and
the gross value added (GVA) at basic prices grew by 7.5 percent in 2023-24.
What are the challenges and opportunities for India’s economic growth and recovery?
The challenges and opportunities for India’s economic growth and recovery
in the coming years are:
Challenges: The challenges include the uncertainty and risks posed by the
COVID-19 pandemic and its variants, the inflationary pressures due to the high
commodity and fuel prices, the fiscal constraints due to the high public debt
and deficit, the structural and institutional bottlenecks and reforms, and the
global and regional geopolitical and economic developments.
Opportunities: The opportunities include the demographic dividend and the
potential of the young and skilled workforce, the digital transformation and
the innovation ecosystem, the domestic and global demand for the Indian
products and services, the favourable policies and incentives of the
government, and the regional and sub-regional cooperation and integration
initiatives.
Conclusion
India’s economy has shown a remarkable growth and recovery in 2023-24,
after the unprecedented shock of the COVID-19 pandemic. The economy has grown
by 7.6 percent, driven by the consumption, investment, and exports. The
sectoral trends have also shown a positive and balanced performance, with the
agriculture, industry, and services sectors growing by 3.9 percent, 9.6
percent, and 7.4 percent, respectively. The economy faces several challenges
and opportunities in the coming years, which require a careful and calibrated
policy response and strategy. India’s economic growth and recovery is a
testimony to the resilience and potential of the country, and a step towards
the vision of a self-reliant and prosperous India.
UPSC Prelims MCQ
1. What is the nominal GDP or GDP at current prices of India in 2023-24, as
per the NSO data?
(A) ₹193.90 lakh crore
(B) ₹223.90 lakh crore
(C) ₹253.90 lakh crore
(D) ₹293.90 lakh crore
Answer: (D) ₹293.90 lakh crore
2. What is the growth rate of the private final consumption expenditure (PFCE)
in 2023-24, as compared to 2020-21?
(A) 8.2 percent
(B) 8.9 percent
(C) 9.2 percent
(D) 9.9 percent
Answer: (B) 8.9 percent
3. What is the growth rate of the gross fixed capital formation (GFCF) in
2023-24, as compared to 2020-21?
(A) 10.4 percent
(B) 10.6 percent
(C) 10.8 percent
(D) 11 percent
Answer: (A) 10.4 percent
4. What is the growth rate of the net exports in 2023-24, as compared to
2020-21?
(A) 5.8 percent
(B) 9.8 percent
(C) 13.6 percent
(D) 17.6 percent
Answer: (C) 13.6 percent
5. What is the growth rate of the agriculture, forestry and fishing sector in
2023-24, as compared to 2020-21?
(A) 3.6 percent
(B) 3.9 percent
(C) 4.2 percent
(D) 4.5 percent
Answer: (B) 3.9 percent
