India’s Economic Rebound: Real GDP Growth Surges to 8.7% in 2021-22
Lucy G.Chattopadhyay, Akashvani News Analyst
Introduction:
India’s economy has displayed remarkable resilience in the face of the COVID-19 pandemic, rebounding strongly to achieve a real GDP growth rate of 8.7% in the fiscal year 2021-22. This growth not only marks a significant recovery from the contraction witnessed during the pandemic but also surpasses the pre-pandemic levels of 2019-20 by 1.5%.
The National Statistical Office (NSO), under the Ministry of Statistics and Program Implementation (MoSPI), has released the Second Advance Estimates (SAE) of National Income for 2023-24, along with the Quarterly Estimates of Gross Domestic Product (GDP) for the October-December quarter (Q3) of 2023-24, including its expenditure components.
These estimates are presented at both Constant (2011-12) and Current Prices, following the National Accounts release calendar. The SRE (Second Revised Estimates) is now considered the Final Estimate, and the practice of issuing TRE (Third Revised Estimates) is discontinued. Therefore, the TRE for 2020-21 and SRE for 2021-22 are the Final Estimates for their respective years.
In 2023-24, the Real GDP, adjusted for inflation, is estimated to reach ₹172.90 lakh crore, up from ₹160.71 lakh crore in 2022-23, showing a growth rate of 7.6%. Nominal GDP, not adjusted for inflation, is projected to be ₹293.90 lakh crore, up from ₹269.50 lakh crore in 2022-23, representing a growth rate of 9.1%.
For the third quarter (Q3) of 2023-24, Real GDP is estimated at ₹43.72 lakh crore, compared to ₹40.35 lakh crore in Q3 of 2022-23, indicating a growth rate of 8.4%. Nominal GDP for Q3 of 2023-24 is estimated at ₹75.49 lakh crore, up from ₹68.58 lakh crore in Q3 of 2022-23, showing a growth rate of 10.1%.
Factors Driving the Economic Revival:
The government’s Proactive Fiscal and Monetary Policies introduced a series of stimulus measures to support businesses and households, including loan moratoriums, credit guarantees, and direct cash transfers. These measures helped sustain demand and mitigate the economic impact of the pandemic.
The government has been facilitating food processing through various measures such as infrastructure development, subsidized transportation, and support for the formalization of microfood enterprises. India has one of the largest food management programs globally, and the government has further extended the coverage of food security networks through schemes like PM Garib Kalyan Yojana (PMGKY).
Rebound in the Manufacturing Sector witnessed a rapid V-shaped recovery, surpassing pre-pandemic output levels. This recovery was driven by initiatives such as ‘Make in India’ and efforts to improve the ease of doing business.
Recovery in the Services Sector such as information technology (IT), healthcare, and e-commerce showed strong growth, supported by increased digitization and changing consumer behavior patterns. Services exports have bounced back, with global demand for software and IT services exports driving growth. India has become the third-largest start-up ecosystem in the world, and 44 Indian start-ups have achieved unicorn status in 2021, taking the overall tally of unicorns to 83, most of which are in the services sector.
Despite the challenges posed by the pandemic, the agriculture sector remained resilient. Favorable monsoons, government support, and the adoption of technology contributed to increased agricultural productivity and incomes. The agriculture sector has experienced significant growth over the past two years, contributing to 18.8% of the country’s Gross Value Added (GVA) in 2021-22, with a growth rate of 3.6% in 2020-21 and 3.9% in 2021-22. The Minimum Support Price (MSP) policy has been implemented to promote crop diversification.
Allied sectors, including animal husbandry, dairying, and fisheries, are also emerging as high-growth sectors and major drivers of overall growth in the agriculture sector. The livestock sector has grown at a Compound Annual Growth Rate (CAGR) of 8.15% over the last five years, ending in 2019-20. It has been a stable source of income for agricultural households, accounting for about 15% of their average monthly income.
The livestock sector has grown at a Compound Annual Growth Rate (CAGR) of 8.15% over the last five years, ending in 2019-20. It has been a stable source of income for agricultural households, accounting for about 15% of their average monthly income.
Challenges and Future Outlook:
Threat of New COVID-19 Variants emergence of new variants remains a significant concern and could potentially disrupt economic activities and recovery efforts.
Rising Inflationary pressures, especially in food and fuel prices, pose a challenge and need to be carefully managed to ensure sustainable economic growth.
Global Supply Chain Disruptions in global supply chains, as witnessed during the pandemic, could impact India’s export-oriented sectors and hinder economic growth.
Sustainable Growth Agenda for the current growth momentum, the government needs to continue its reform agenda, focus on infrastructure development, and support key sectors such as manufacturing, services, and agriculture.
Conclusion:
India’s real GDP growth of 8.7% in 2021-22 is a testament to its economic resilience and ability to bounce back from adversity. However, sustaining this growth will require ongoing policy support, reforms, and investments in key sectors. It is essential to focus on building a resilient and vibrant economy that can withstand future shocks and ensure inclusive growth for all segments of society.
