India’s remarkable journey to a $4 trillion GDP is a testament to its robust economic growth and strategic advancements. This historic achievement, realized on November 19, 2023, marks India’s emergence as a formidable player in the global economic landscape.
The journey to this milestone was fueled by consistent efforts across various sectors, strategic policies, and entrepreneurial vigor, underscoring India’s position as one of the fastest-growing major economies worldwide.
Economic Growth and Forecasts
- GDP Growth: In 2023, India experienced significant economic momentum, recording a GDP growth of 7.8% year-on-year in the April-June quarter, an increase from the 6.1% growth in the previous quarter.
- Sectors’ Performance:
- The service sector, especially financial, real estate, and professional services, grew by 12.2% y/y in the April-June quarter.
- Trade, hotels, transport, and communications services also saw a rise, up by 9.2% y/y.
- Manufacturing growth, however, was more moderate at 4.7% y/y.
- Private Consumption and Capital Formation:
- Private consumption grew by 6.0% y/y in real terms in the April-June quarter of 2023.
- Gross domestic fixed capital formation remained strong, growing at 8.0% y/y during the same period.
- Industrial and Manufacturing Output:
- The index of industrial production grew by 4.5% y/y, with manufacturing output rising by the same rate in the April-June quarter of 2023.
- Production of capital goods and infrastructure and construction goods also saw significant growth.
- Foreign Direct Investment (FDI):
- India witnessed a substantial rise in FDI, reaching a record level of USD 85 billion in the 2021-22 fiscal year.
- This rise in FDI reflects the favorable long-term growth outlook of the Indian economy.
- Exports and Imports:
- Exports of goods and services contracted by 6.0% y/y in the April-July 2023 period, largely due to a decline in merchandise exports.
- Inflation Trends:
- The consumer price index (CPI) inflation rate surged to 7.4% y/y in July 2023.
Future Projections
- Medium-Term Growth: S&P Global projects an annual GDP expansion ranging from 6 to 7.1 percent between FY24 and FY26.
- Banking Sector Outlook: A reduction in non-performing loans within the banking sector is anticipated, declining to 3-3.5 percent of gross advances by the end of FY25.
- Long-term Economic Outlook: India’s nominal GDP is forecast to rise from USD 3.5 trillion in 2022 to USD 7.3 trillion by 2030, potentially exceeding the GDP of Japan, making it the second-largest economy in the Asia-Pacific region.
- Digital Transformation: The ongoing digital transformation in India is expected to spur the growth of e-commerce and attract global tech giants. By 2030, around 1.1 billion Indians are projected to have internet access, boosting sectors like online retail and logistics.
Conclusion
India’s crossing of the $4 trillion GDP threshold is more than a numeric milestone; it symbolizes the nation’s dynamic economic progress, resilience, and potential for future growth. This achievement not only positions India prominently on the global economic stage but also sets the stage for further economic expansion and development.