The Finance Ministry recently unveiled the Annual Economic Review report for May 2023, providing valuable insights into India’s economic performance. The report highlights the country’s GDP growth, recovery in consumption and investment, sectoral performances, employment trends, and the impact of policy measures.
Robust GDP Growth: The Annual Economic Review report reveals that India’s GDP grew by 7.2%, surpassing the earlier estimated growth rate of 7% in February. This signifies a positive trajectory for the country’s economy, showcasing resilience and recovery from the challenges posed by the pandemic. The growth in GDP indicates that India’s economic engine is gaining momentum.
Consumption and Investment Recovery: One of the notable aspects highlighted in the report is the recovery of both consumption and investment levels. The report indicates that consumption and investment have surpassed their pre-pandemic levels, demonstrating a positive recovery in the post-pandemic period. This indicates increasing confidence among consumers and investors, stimulating economic activity and growth.
Sectoral Performances: The report highlights the performance of various sectors of the Indian economy. The agriculture sector registered a twelve-quarter record high growth rate in the last quarter, showcasing the resilience of the agricultural sector despite the challenges faced during the pandemic. The industrial sector, particularly manufacturing, rebounded in Q4, contributing to the overall growth. Furthermore, the contact-intensive services sector fully recovered to its pre-pandemic levels, indicating a revival in consumer demand and economic activities.
Employment Trends: The Annual Economic Review report sheds light on the employment trends in India. The labour force participation rate (LFPR) in the country continued to rise during the pandemic, following the pre-pandemic trend. The overall unemployment rate declined to a five-year low of 4.1% in FY22, accompanied by an increase in the worker-population ratio. In FY23, the urban unemployment rate declined in each quarter, reflecting steady growth in employment levels. These trends signify the positive impact of policy measures aimed at strengthening the corporate sector, supporting small enterprises, improving the ease of doing business, and attracting foreign capital.
Policy Measures and Transmission of Repo Rates: The report emphasizes the role of policy measures in driving employment generation and economic growth. Various policy initiatives implemented over the last few years have contributed to strengthening the corporate sector, supporting small businesses, and attracting foreign capital. These measures have enhanced the employment generation capacity of the economy, resulting in steady employment growth.
The report also highlights the impact of an increase in repo rates, which has facilitated transmission in lending and deposit rates. By the end of FY23, lending and deposit rates experienced a transmission of 40-45%. This has encouraged borrowing and lending activities, facilitating economic expansion and investment.
