Striving for Inclusive Economic Growth
By registering a healthy growth rate of 7.6 per cent in the second quarter of the ongoing fiscal, India, the third largest Asian economy has retained the tag of the fastest growing economy in the world. More important is the fact that during this quarter, India has added 13.9 per cent to the manufacturing sector gross value (GVA) in constant prices, which is the highest in nine quarters. At the same time, GVA in the construction sector has grown to 13.3 per cent which is indicative of the fact that high-level capital expenditure (CAPEX) in infrastructure by the public sector is expected to expedite construction activities in the coming days. Moreover, after recording above seven per cent growth in two consecutive quarters, India is well poised to register higher than expected growth in the 2023-24 fiscal as the third quarter always shows impressive growth due to festivities and the fourth quarter can also contribute handsomely to the economy with a good harvest of Ravi crops.
However, despite the positive trends a close scrutiny of the GDP growth in the second quarter also reveals some problem areas, which need to be addressed to maintain a healthy growth rate. During the second quarter, growth in agriculture was dismal. The agriculture GVA grew only 1.2 per cent in constant prices in this quarter, which is even lower than the GVA in the first quarter. Striving for higher growth rate in agriculture is necessary as it is the backbone of the Indian economy with more than 50 per cent of the country’s workforce engaged in it. Thus, poor growth of this sector will definitely hamper the economic growth of the country at a later stage as the country’s economic progress largely depends on farm yields in at least two quarters.
Poor growth rate in agriculture will also affect rural development, which the country cannot afford as nearly 80 per cent of its populace still live in rural areas that provide much needed fillip to the economy in registering impressive growth. Sluggish growth in the primary sector will definitely have an effect on the purchasing capacity of this vast population, evidenced by the consumption of goods in rural areas. For instance, the automobile sector is looking healthy as the sales of sports utility vehicles, premium cars and two-wheelers have gone up considerably. But the worrying fact is that entry-level car sales have gone down considerably indicating that automobile sales in the rural sector have gone down, as rural areas see the maximum sale of entry-level cars. The Indian economy can only retain its position as the fastest growing economy of the world, if rural growth remains close to urban growth rate. Such a balance between rural and urban economy will ensure inclusive growth to strengthen the Indian economy. Otherwise, growth in India will always remain lopsided with the urban sector continuing to flourish, while the rural sector suffers due to poor purchasing ability.