India’s GDP Crossed USD 3.5 Trillion in 2022

India's GDP Crossed USD 3.5 Trillion in 2022

India’s GDP crossed USD 3.5 trillion in 2022, the world’s fifth-largest economy in current terms, according to the Economic Survey tabled in Parliament on Tuesday. It is expected to grow at around 7 percent for the financial year ending March 2023. In the coming decades, the services share of the economy is likely to rise further, and manufacturing’s decline will be halted. As a result, the country is projected to become the fourth largest economy in global terms by 2030, surpassing Germany and Italy and becoming more significant than Japan, the fifth largest. The country’s GDP will be bigger than the combined size of the six biggest Western European economies, including France and the UK, and nearly double that of the US.

The economic expansion is fuelled by a rapidly expanding service sector, buoyant domestic consumption, and substantial investment inflows from foreign technology companies. This is even though the rupee has been under pressure from high oil prices and a reversal in the trajectory of US interest rates.

In a research report, Moodys said India would be the fastest-growing G-20 economy over the next few years. But it warned that reform and policy barriers could hamper investment. The US-based rating agency said bureaucracy could slow approval processes in obtaining licenses and setting up businesses, prolonging project gestation.

Moodys said India’s growth path would be supported by a predominantly young and educated workforce, increasing nuclear families, and urbanization, driving demand for housing, cement, and new cars. Moodys said the demographic dividend would also boost consumption, and the government’s Make in India program has boosted domestic manufacturing.

Other rating agencies have echoed this view. For example, Moodys said a critical risk was the possibility of higher-than-expected inflation in the medium term, stemming from higher food prices and reversals in the trajectory of monetary policy in the advanced economies of the US and Europe. In addition, it added that higher interest rates in the US and Europe would slow investment and reshape trade flows in favor of emerging economies.

However, India is a resilient economy and has the potential to escape its emerging-economy orbit and accelerate toward becoming an economic superpower. The four engines that will power it to achieve escape velocity include demography, manufacturing, exports, and internalization. Moreover, the country’s growing middle class is gaining purchasing power and will likely continue to drive consumption and domestic investments. The Moodys report said that the country’s upcoming G-20 Presidency is a timely opportunity to work for coordinated solutions to global problems and challenges. The theme of the G-20 Presidency, ‘Vasudhaiva Kutumbakam: One Earth, One Family, One Future,’ aligns with this objective. The Presidency will be held in Delhi from December 2022 to January 2023. Several outreach events and summits will mark it.

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