India’s gross domestic product (GDP) for the fiscal year 2022-2023 (FY23) has exceeded expectations, recording a growth rate of 7.2 percent, which surpasses the Reserve Bank of India’s (RBI) projected estimate of 7 percent. The latest data from the National Statistical Office reveals that the GDP growth gained significant momentum during the January-March quarter, expanding impressively by 6.1 percent.
This signifies a remarkable improvement compared to the previous quarter, which had a growth rate of 4.4 percent. It is noteworthy that the growth rate during this period also surpassed earlier estimates, as the RBI had initially projected a growth rate of 5.1 percent. Additionally, on an annual basis, the economy experienced a growth rate of 13.1 percent in FY23, with both Q1 and Q2 growing at 6.2 percent each.
As India achieves and exceeds its set targets and expectations in GDP growth under the leadership of the Modi government, it is important to recall how the opposition had raised concerns about the so-called economic crisis in the country and criticized the government for its alleged failure on the economic front.
Morgan Stanley’s recent analysis delves into India’s growth trajectory. On May 29, 2023, Morgan Stanley released a report titled ‘India Equity Strategy and Economics: How India Has Transformed in Less than a Decade.’ In this report, Morgan Stanley acknowledges, “The India of today is vastly different from what it was in 2013. Over the span of just 10 years, India has achieved a significant position in the global order, leading to positive outcomes for the overall macroeconomic and market outlook.”
Highlighting key transformations in India over the past decade, the report emphasizes the stabilization of corporate tax rates at 15 percent and the unprecedented growth in infrastructure development. The Modi government’s focused efforts on areas such as highway construction, broadband internet access, renewable energy production, and railway electrification during its nine-year tenure have yielded tangible results, as evidenced by the current economic growth.
Having emphasized the supply-side policy reforms, Morgan Stanley also acknowledged the formalization of the Indian economy. In terms of this aspect, India’s growth narrative is characterized by the remarkable monthly additions to GST collections and the increasing contribution of digital transactions to the GDP, facilitated by the UPI revolution.
The report further provided growth projections for India in the coming decade, asserting that India will emerge as a pivotal driver of both Asian and global growth. Morgan Stanley’s report drew parallels between India’s growth trajectory in the next decade and China’s growth trajectory from 2007 to 2011. It also predicted that India would experience a favorable shift in terms of GDP and productivity growth differentials when compared to China. The report’s optimism regarding India’s economic growth was evident as it confidently stated that the new India would account for one-fifth of global growth by the end of this decade.
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