Economy

Published: June 13, 2023
Updated: June 13, 2023

India's GDP Surges to $3.75 Trillion, Ranks Fifth in Global Economy

India's economy has witnessed significant growth, with its gross domestic product (GDP) reaching the $3.75 trillion milestone in 2023, a substantial increase from around $2 trillion in 2014. As a result, India has ascended from the tenth to the fifth-largest economy in the world. The country's remarkable progress has been attributed to nine years of reforms under the leadership of Prime Minister Narendra Modi, earning India the recognition of being a bright spot in the global economy.

Impressive Economic Growth and Rankings:

India's recent provisional estimates, released by the National Statistical Office (NSO), indicate a robust overall economic growth rate of 7.2% in FY23, primarily driven by higher- than-expected growth in the fourth quarter. This remarkable growth has propelled India to surpass several nations in terms of GDP, including the United Kingdom, France, Canada, Russia, and Australia. While China, the United States, Germany, and Japan remain ahead in terms of GDP, India's ascent to the fifth-largest economy showcases its remarkable progress.

Optimistic Outlook and Prudent Macroeconomic Management:

Chief Economic Advisor V Anantha Nageswaran, speaking at an Assocham event, expressed confidence that the final GDP growth figure could be even higher than the estimated 7.2%, given the strong underlying momentum in the Indian economy. He applauded India's prudent and sensible macroeconomic management, highlighting that the country avoided overstretching during the pandemic, unlike several advanced nations.

Addressing Challenges and Fostering Sustainable Growth:

Nageswaran emphasised the need for India to address the pre-pandemic economic slowdown and strive to achieve sustainable growth. While the country's export growth may face challenges due to external factors, he stated that sustaining a growth rate of 6.5% to 6.8% for the remainder of the decade would be a commendable achievement considering the global conditions. Nageswaran also stressed the importance of focusing on improving domestic economic fundamentals, ease of living, and ease of doing business.

Agricultural Sector Potential and Positive Outlook:

The Chief Economic Advisor highlighted the promising trajectory of India's agricultural sector, indicating higher tractor sales, record wheat procurement, seed availability, and adequate food stocks. He mentioned that private consumption reached a 16-year high at 58.5% of GDP, while capital formation investment by the industry is expected to pick up and gain momentum.

Adapting to Changing Global Dynamics:

Nageswaran discussed the structural changes occurring in the global economy after 35 years of emphasis on globalisation, including geopolitical tensions and supply chain reconfigurations. He emphasised the need for preparedness, recognizing that such changes occur cyclically. While India continues to improve its domestic economic fundamentals, the CEA suggested reducing dependence on global growth and viewing export goods as an additional benefit.

India's remarkable ascent to becoming the world's fifth-largest economy, accompanied by strong GDP growth and prudent macroeconomic management, highlights its economic resilience and potential. The country's focus on addressing challenges, fostering sustainable growth, and leveraging the agricultural sector's potential bodes well for future development. By emphasising domestic economic fundamentals and reducing reliance on global growth, India is poised to secure its position as a key player in the global economy.