After two consecutive quarters of sluggish economic growth, policymakers and economists are banking on a turnaround in the second half of the fiscal year, driven by increased government spending, a boost from the ongoing festive season, and resilient rural consumption.
These drivers are anticipated to counterbalance the downturn in manufacturing, subdued urban consumption, and lackluster corporate earnings-factors that led to the moderation of India's GDP growth to 5.4% in the September quarter, from 6.7% in the June quarter and 8.2% in the year-ago period.
Economists note that while India is expected to retain its status as the fastest-growing major economy over the next five years, a growth rate of 5.4%-even if the highest among large economies in a sluggish global environment-should not invite complacency, as restoring India's economy to its pre-pandemic trajectory remains vital, particularly for the millions in the economically weaker sections of the society.
Despite ranking among the world's top five economies, India grapples with the lowest per capita income in this group, and stark regional disparities persist, said Debopam Chaudhuri, chief economist at Piramal Enterprises Ltd.
"Per capita income in India's more developed western and southern states is 2.2 times that of the weaker eastern states," he said.
"Without translating economic growth into inclusive development, particularly for underserved regions, India's long-term economic ambitions will face significant headwinds," he added.
During the September quarter, an industrial slowdown-driven by weak government capex, sluggish bank credit, and falling global demand-hit sectors with mass employment like mining, manufacturing, and construction, dampening consumption, which drives 60% of India's GDP.
Meanwhile, agriculture, a pandemic-era growth driver employing over 40% of the workforce, remains overly reliant on good monsoons, exposing it to climate risks.
This story is from the {{IssueName}} edition of {{MagazineName}}.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 9,000+ magazines and newspapers.
Already a subscriber ? Sign In
This story is from the {{IssueName}} edition of {{MagazineName}}.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 9,000+ magazines and newspapers.
Already a subscriber? Sign In
How Bhansali Elevates The First Encounter
Love At First Sight Is An Emotionally Dense Moment, Predicting The Intensity Of The Journey That The Lovers Will Chart
The Treasures of Nimrud Pieced Together Again
The UNESCO-listed archaeological site was ravaged by Islamic State fighters
From arrack to wine, a bar crawl across Sri Lanka
Cocktail bars in the island nation are drawing on local traditions and flavours to give a heady twist to familiar spirits
Only human-centred AI can charm humans to adopt it
The AI industry could learn from carmakers how to focus on the consumer and modify perceptions
The Asian Dream is waking up to realities of middle-class life
Asians are realizing that staying middle-class is not guaranteed
How Emerging Economies Could Prosper in a Protectionist World
As manufacturing export success gets harder, they should focus on service exports. These are unlikely to face big trade barriers
Lessons from the 75-year-old National Sample Survey
Its impressive history tells us much about innovation, autonomy and state-level data collection
Fix India's bond market to lift economic growth
As India's economy slows, we should revive public-private partnerships to attract private investment. But, for debt funding, we'll need to reform and invigorate our market for bonds
We should let clarity prevail over nonsense: Here's a handy guide
We must use simple language, empathize with people, not take ourselves too seriously and be kind
Clear Goals and Discipline: How Small Investors Can Build Lasting Wealth
There is no one-size-fits-all, the answer will depend on your needs, personal preferences