India’s economy grew by more than 8% in the fiscal year that ended in March.
The relevant data were released by the authorities of the mentioned South Asian country on Friday, May 31. This information is likely to be encouraging for Indian Prime Minister Narendra Modi and his political prospects against the background of the completion of large-scale week-long national elections.
Data from the Ministry of Statistics of the South Asian country indicate that the local gross domestic product (GDP) for the fiscal year ended in March increased by 8.2%. This result will greatly strengthen India’s status as the fastest-growing economic system in the world. It is worth noting that the rate of GDP rise exceeded the preliminary forecasts of the government of Narendra Modi. The authorities expected that the mentioned indicator for the last financial year would show an increase of 7.6%. In the period from January to March, India’s GDP increased by 7.8%, exceeding the pace of the corresponding dynamic for the same period in 2023. From October to December, this indicator grew by 8.6%.
Ankita Amajuri, the assistant economist at Capital Economics, expects economic activity in the South Asian country to show a slight decline in the coming quarters, but India will remain a global outperformer.
It is worth noting that over the past 10 years, the government of Narendra Modi has been able to achieve significant success in the context of economic development. Impressive results in the historical space have even formed something like a period of active growth, which has not been seen in the South Asian country for a long time. Over the past 10 years, India’s economic system has become the fifth largest in the world, rising from the ninth position in the corresponding ranking. This is a significant result, the value of which increases given the fact that in the last few years, the global economy has faced such a challenge as the coronavirus pandemic, and continues to be in a zone of negative impact of growing geopolitical tensions, which does not demonstrate prospects for an early improvement in the situation.
India has also experienced the highest percentage of GDP growth over the past 10 years compared to other countries.
The results of the above-mentioned national elections will be declared on June 4. Ankita Amajuri says that any potential subsequent slowdown in India’s economy will be negligible if Narendra Modi is re-elected for a third term. The continuation of the positive economic dynamic will further strengthen the status of the South Asian country. By 2027, India’s economic system is expected to be the third largest in the world, behind China and the United States.
It is worth noting that New Delhi may become a beneficiary of the current state of affairs in the plane of geopolitical relations. Against the background of tensions between China and the United States, which already have consequences in the form of various restrictions, many companies consider India as an alternative manufacturing and financial center in Asia. Some large firms, such as Apple’s main supplier Foxconn, are already expanding their cooperation with New Delhi.
Nomura experts, in a report published this week, noted that after China, India is the only economy that can achieve economies of scale due to its large market. They also noted that the South Asian country gained the interest of investors in various industries.
At the same time, the current euphoria about the present condition of India’s economy and its prospects does not mean that in this case, it implies a kind of system in which there are no problems. Shortly, New Delhi will have to create hundreds of millions of jobs for a population that continues to be largely impoverished.
Currently, the average age of the population in India is 29 years old. At the same time, the South Asian country is not yet able to take advantage of the potential economic benefits from its demographic situation. A report by the International Labour Organization shows that educated Indians between the ages of 15 and 29 are more likely to be unemployed than those who do not even have a school education. The unemployment rate among local youth is currently higher than the global average.
If Narendra Modi’s party loses the elections, extremely important land and labor reforms may take a back seat in the system of state priorities. The corresponding opinion is circulating in the expert community.
Climate change is also one of the most serious long-term threats to India’s economy. The South Asian country is located in a geographical area where extreme heat is the norm. In some places in India, temperature indicators exceed the capabilities of the human body. This week, the capital of the South Asian country recorded the highest air temperature in the history of local meteorological observations, amounting to 49.9 degrees Celsius (121.8 degrees Fahrenheit). Against this background, the Indian leadership was forced to impose water rationing.
Rising mercury levels in India could undo and make impossible progress in poverty alleviation, health care, and economic growth. By the end of the current decade, the South Asian country is expected to lose about 5.8% of its daily working hours due to the heat. The corresponding forecast is contained in the United Nations Economic and Social Commission for Asia and the Pacific (ESCAP) report published in April.
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