Express View on India’s economy: Sweet and sour

Source– The post is based on the article “Express View on India’s economy: Sweet and sour” published in the “The Indian Express” on 1st August 2023.

Syllabus: GS3- Indian economy and growth

Relevance: Growth prospects of Indian economy

News- The article explains the present economic scenario

Which indicators show a favourable economic situation?

The IMF has recently upgraded its projection for the country’s economic growth to 6.1%. Inflation has been kept below the upper limit set by the central bank’s inflation targeting framework.

India’s foreign exchange reserves are at approximately $600 billion. The government has also successfully maintained its investment in infrastructure development throughout the nation.

MNCs are increasingly considering India as a viable option in their business strategy, often referred to as the “China plus one” approach.

What are challenges for economic growth?

Economic growth has been uneven, leaving significant segments of the population with limited benefits. Lower sections have not experienced substantial improvements, especially after the Covid pandemic.

Several indicators show signs of distress. Real wages in rural areas have remained nearly stagnant, and more households are resorting to work opportunities provided by the MGNREGA compared to pre-pandemic levels.

FMCG companies have not witnessed significant volume growth in consumer staples. Two-wheeler sales remain below pre-Covid levels, and non-suburban railway traffic has declined.

Way forward-

Complacency is not an option. While some countries have experienced periods of growth, only a small subset has achieved sustained high growth rates over several decades.

According to a recent study conducted by economists at the RBI, the Indian economy must maintain a growth rate of 7.6 per cent over the next twenty-five years to attain high-income status by 2047.

The policy framework must be designed with the aim of enhancing the country’s growth prospects over the medium to long term. This calls for focused and urgent action to ensure progress in the desired direction.

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