India’s unhindered economic growth
International Monetary Fund (IMF) released global growth projections on 30th January - one day ahead of the release of India’s Economic Survey 2022-23. Global growth is projected to fall from an estimated 3.4 per cent in 2022 to 2.9 per cent in 2023, then rise to 3.1 per cent in 2024. The global fight against inflation, the crisis in Ukraine, and a resurgence of COVID-19 in China weighed down on the global economic activity in 2022 and may continue to do so in 2023.
Despite these headwinds, India’s GDP growth remained remarkably strong. India has emerged as the fifth-largest economy and is to remain the fastest-growing economy in the world. India is projected to grow at 6.1 per cent in 2023 before reaching 6.8 per cent in 2024 due to resilient domestic demand, stronger private consumption, public and private investments and continued fiscal support from the government. The World Bank has also forecasted the Indian economy to grow at 6.6 per cent in the 2023-24 fiscal year. "India’s economy has been remarkably resilient to the deteriorating external environment, and strong macroeconomic fundamentals have placed it in good stead compared to other emerging market economies," said Auguste Tano Kouame, World Bank's Country Director in India.
Research has shown that capital expenditure (or capex) on investment and productive activities is the surest means upon which the collective needs of the citizens can be fulfilled by the government. A higher capex also helps generate demand in the economy, attract private investments and sustain economic growth through the multiplier effect. Capex of the private corporate sector also plays a significant role in driving the overall investment climate in the economy.
The capex of the central government, which increased by 63.4 per cent in the first eight months of FY23, was another growth driver of the Indian economy in the current year, crowding in the private Capex since the January-March quarter of 2022 (see Figure 1). Total investment projects in the first nine months of 2022-23 crossed INR 21 lakh crore, 53.2 per cent higher than 2021-22 and nearly 2.5 times the investment plans announced in the pre-COVID year of 2019. During the same period, outlays for irrigation projects rose nearly five times, while investments in electricity, manufacturing and infrastructure, grew 64 per cent, 55 per cent and 50.6 per cent, respectively.
Given the current trend, the Economic Survey 2022-23 predicts that the Budget 20233-23 target of INR 7.5 lakh crore ($ 91.30 billion) for the current financial year is likely to be met. For the Union Budget 2023-24, the capital expenditure has been increased by 33 per cent to INR 10 Lakh Crores. This allocation is the highest on record. The government will also continue to provide INR 1.3 trillion in loans to states for longer-term investments.
India is at a momentous turning point in her journey towards economic prosperity – a journey towards $ 30 trillion by 2047. This spirited surge in both material and non-material well-being will not be concentrated only within the territorial boundaries of our nation but will manifest itself on the global stage. The next 25 years – India’s ‘Amrit kaal’ – will witness the rise of a futuristic, prosperous, inclusive and developed society, distinguished by a human-centric approach at its core.