India registers annual GDP growth of 7.2 pc, making it world’s fastest-growing major economy

India’s Gross Domestic Product (GDP) grew 7.2 per cent in the financial year 2023, making the country the world’s fastest-growing major economy.

Real GDP at 7.2 per cent comes even as quarterly growth improved from 4.4 per cent in the October-to-December period to clock in at 6.1 per cent in the January-to-March period.

Real GDP at constant prices hit Rs 160.06 lakh crore in the financial year ending March 31, 2023, as against Rs 149.26 lakh crore the previous year.

The revival is on the strength of the services sector, which re-emerged as a money spinner post-Covid. While private consumption and services sector performance are being attributed to the GDP figures, worry abounds as consumption is visible only in urban areas, indicating that rural regions are yet to get over the post-Covid slump.

Economic growth at 7.2 per cent is in tune with predictions, with the Reserve Bank predicting it to be 7 per cent while SBI had called it at 7.1 per cent. World Bank had also predicted India to grow at 7 per cent in the same period, while ICRA indicated a sub-7 per cent growth. B&K Securities too had pegged it at 7 per cent.

India managed to stay on top in a period of recessions and slowdowns, sparked off by high inflation and geo-political turmoil in Ukraine, also primarily due to the fact that big neighbour China grew just 3 per cent in 2022.

However, this year’s figure of 7.2 per cent is still lower than the 9.1 per cent GDP growth India registered in the financial year 2022 (albeit on a smaller base of the previous year which was all but washed out due to the pandemic).

“In almost all the high-frequency indicators which we monitored at the Reserve Bank of India, the momentum was maintained in the fourth quarter. So therefore, we should not be surprised if the (overall annual) growth is slightly more than 7 per cent,” RBI Governor Shaktikanta Das had said Wednesday afternoon, hours before the GDP figure was officially announced.

However, this could be as good as it gets at least for some time, as all indications are that GDP growth will slow down in the ongoing financial year. Thanks to the global slowdown and inflation having an impact on India’s manufacturing and exports, it is expected that GDP for FY2024 could reduce to anywhere around 6 per cent or 5.5 per cent, depending on who you ask.

Officially, RBI has advance estimated it at 6.5 per cent, but most other estimates have been more circumspect and conservative. World Bank pegged India’s growth in FY24 at 5.9 per cent, while Emkay Financial Services said it will be lesser at 5.7 per cent.