Looking Back: Tracking Indian Economy’s Growth Trajectory In 2023

In the process, India managed to improve its world ranking, becoming the fifth-largest economy with a GDP (in dollar terms) of US$ 3.75 trillion, after the US ($23.3 trillion), China ($17.7 trillion), Japan ($4.9 trillion) and Germany ($4.3 trillion).

Despite a huge gap between India and its main Asian rival China’s economies as well as their per capita GDP (nearly 5 times), what gave cheer to policymakers in the South Bloc was the fact that the South Asian economy was growing at the fastest pace among the top five.

Forbes magazine attributed India’s performance to its “strong economic foundations, thriving domestic demand, careful financial management, high saving rates, and favourable demographic trends”.

The industry momentum, which had been stuttering in the aftermath of the pandemic, grew to near full-capacity. According to the latest data by the Centre for Monitoring Indian Economy, listed companies saw their income growing by 15.5 per cent in December compared to 4.5 per cent in June this year.

A slew of fresh investments by industrial giants Apple, Reliance and Tatas continued to grab headlines. At the same time, brisk government spending in infrastructure such as roadways, airports and railways helped the growth rate.

The stock market predictably caught the boom fever. And in December, the Bombay Stock Exchange benchmark index - the Sensex – crossed the 72,000 mark for the first time. As the year ended, Nifty, the benchmark index of the other major Indian bourse, NSE, reported a gain of 20 per cent in a calendar year.

Economists noted that India’s growth statistics and demographic figures now resemble those of China’s in the 1990s-early 2000s, when it took off rapidly to become an economic powerhouse in the 21st century.

The median age in India is at 27.9 years, which is below the world average, while its population growth over the last decade has been around 1.1 per cent a year, according to the United Nations.

About 35 per cent of India’s total population lives in urban areas and its major cities now report high levels of air pollution, a sure sign that urban development along with a fast pace of automobilization is happening (a record 28.54 lakh vehicles were sold in November 2023, according to the Federation of Automobile Dealers’ Associations).

However, worries remain due to rising geopolitical uncertainties in West Asia and Russia-Ukraine conflict. These issues could push inflation, which has remained mostly between 4 and 5 per cent this year after crossing 6 per cent in early 2023.

This is because India depends largely on imported oil and gas for its energy needs and food prices have remained high for most of the year. Unemployment has gone down but still remains at 8.7 per cent, according to the CMIE data. Despite the clouds, India seems to be moving on an upward trajectory.

(Graphics by Sunil Pew; Writing by Jayanta Roy Chowdhury)