Year in Review | How India’s economic indicators fared in 2023
The Hindu
2023 saw India's GDP grow at a higher-than-expected rate, with inflation & unemployment rates varying, and repo rate remaining unchanged.
The year was marked by significant global events like the U.S. hitting its debt ceiling in January, huge bank failures such as the collapse of Silicon Valley Bank in March, and the ongoing Israel-Hamas war. On the domestic front, there were stories about soaring tomato prices and six Assembly elections. Those elections and the upcoming Lok Sabha elections in 2024 will be observed keenly by investors for change in government economic policies and reforms.
Through these events, how has the Indian economy fared in 2023?
India’s economic growth prospects should remain strong over the medium term, with GDP expanding 6-7.1% annually in fiscal years 2024-2026 according to S&P Global. India’s real GDP grew by 7.8% year-on-year in the first quarter (April to June). What made the highlights was that the GDP grew at a higher-than-expected 7.6% in the July to September 2023 quarter, as per initial estimates from the National Statistical Office.
Although the second quarter’s growth of 7.6% was lower than that of the first quarter’s 7.8%, it was still well over the central bank’s prediction of 6.5%. Overall, India’s GDP has grown at a reasonably impressive pace and India remains the fifth largest economy in the world behind Japan and ahead of the United Kingdom.
After the inflation rate in October 2023 eased to a four-month low at 4.87%, the consumer prices surged by 5.55% in November 2023. In 2023, the inflation rate was the highest in July at 7.44%, the second-highest inflation rate since November 2021, with April 2022 recording an inflation rate of 7.79%.
Consumer prices of food and beverages surged by 8.02% in November 2023, after they had eased to a four-month low of 6.24% in October. Among these items, the major drivers were cereals, fruits, vegetables, pulses, and spices - all of them surging over 10% with the latter two surpassing the 20% mark as well. Among food and beverages, oils & fats were the only component that recorded a decline in prices by around 15%.
Clothing, housing, and fuel prices, all saw their lowest inflation rates of 2023 in November. While clothing & footwear recorded an inflation rate of 3.9% in November 2023, as compared to the 9.1% inflation rate in January 2023, housing inflation rates eased to 3.55%, and fuel & light prices continued to decline over the prices last year by 0.77%, thereby continuing its trend from September and October.