Current Economic Conditions in India

There is no doubt that the current circumstances are full of possibilities for the Indian economy. During the COVID pandemic, the growth rate of India’s Gross Domestic Product (GDP) had slowed to 6.6% due to lockdowns, but since then, the economy has made a rapid recovery. In the two consecutive years following COVID, the economy has grown at rates of 9.1% and 7.2%.

However, in recent months, there has been a slight slowdown. Despite weaker results from Indian information technology companies and concerns about business, the services sector has remained strong, with consistent exports.

The continuous strengthening of the digital infrastructure in India has led to increased accessibility to affordable transactions across the entire country, and the government’s expanded direct benefit transfer programs have become easily accessible to the people. Increased capital expenditure has significantly improved the physical infrastructure, especially in the transportation sector, although fiscal consolidation is being carried out to some extent in the fiscal year 2021.

The Reserve Bank of India (RBI) has been working diligently on the determination of monetary policy for the past 15 months. This has not only helped in bringing down the prices of essentials but also kept the Consumer Price Index (CPI) below 6%. Over the past few years, there has been significant improvement in the bank and company balance sheets. In view of this, banks have been allowed to lend more, and companies are taking on more debt.

Our economy has now crossed the mark of 3.7 trillion dollars. However, with a global economy of over 100 trillion dollars, we should approach our achievements with great caution. But, just as in human relationships, circumstances can change on the chessboard of diplomacy and economics, and it cannot be said when that will happen.

According to the International Monetary Fund (IMF), India will need to achieve an economic growth rate of 9.1% to attain the status of a “high-income economy.” It cannot be definitively stated what the future holds for growth rates in production and employment during a medium to long-term period. It depends on external conditions and our own economic and social policies. External conditions are not under our control, but internally, there are many areas where we need to improve in order to ensure a sustained growth rate.