Strong last quarter pushed India’s GDP to 7.2% in FY23: Annual Economic Review Report

According to the report, the agricultural sector registered an impressive twelve-quarter record high growth in the last quarter.

New Delhi: The Ministry of Finance today released its Annual Economic Review report for May 2023 and said a strong last quarter pushed India’s GDP to 7.2 percent in FY 23. This is higher than the 7 percent estimated in February. The report also adds that post-pandemic quarterly trajectories of consumption and investment have exceeded pre-pandemic levels.

“However, domestic demand has since recovered and only strengthened in FY23. In the process, it enabled a near convergence of pre-pandemic and post-pandemic quarterly growth trajectories,” the Treasury Department said in its report.

It said external demand did not work for the economy in the second half of FY23 either.

“When external demand kicks in, the pre- and post-pandemic trajectories of real GDP will also converge. The supply side served the demand side well in FY23,” it stated.

According to the report, the agricultural sector registered an impressive twelve-quarter record high growth in the last quarter. Driven by production, the industrial sector recovered in the fourth quarter. At the end of the year, the contact-intensive services sector fully recovered to its pre-pandemic expanse and depth.

Domestic demand has also been strengthened by rising employment. The report added that India’s labor force participation rate (LFPR) rose during the pandemic in line with the pre-pandemic trend.

The overall unemployment rate fell to a five-year low of 4.1 percent in FY22, increasing the ratio of the labor force to labor force.

More recently, in FY23, the urban unemployment rate fell each quarter, reflecting steady employment growth in the country.

“The increase in employment is partly the result of various policy measures that have been implemented in recent years. These measures strengthened business, supported small businesses, improved the ease of doing business and attracted foreign capital to increase the economy’s job-generating capacity.

An increase in repo rates has worked for India, allowing a 40-45 percent transmission in interest rates on loans and deposits by the end of FY23, it said.