Advertisement
Now, as the world moves towards the end of 2022 and jumps to 2023, BW Businessworld looks at the top trends that defined and shaped the Indian economy
Photo Credit :
India— a developing nation— in 2022 surprised many global superpowers as amid all the economic setbacks in the middle of the Ukrainian war and the Covid-19 pandemic, the country’s economy kept pushing the boundary and moved on the path of recovery.
However, the year 2022 was not smooth for Prime Minister Narendra Modi-led government as it witnessed major challenges from several perspectives. While, on one hand, the high inflation kept the public and government on their toes, on the other hand, the Reserve Bank of India’s continuous rate hikes made headlines.
RBI also took steps to address issues like falling foreign exchange (forex) reserves and the depreciating value of the Rupee against the US dollar.
“In 2022, despite global headwinds, India became the fastest-growing economy in the world. It was a great year of economic consolidation as the economy witnessed extreme lows in 2020 and extreme highs in 2021. We are happy that the Indian economy consolidates at a significantly higher than the pre covid economic scenario,” said Saket Dalmia, President, PHD Chamber.
Interestingly, when the Indian economy registered growth, several global agencies like the World Bank and International Monetary Fund among others slashed the economic growth of the country due to high inflation and record rate hikes.
The World Bank has revised its gross domestic product (GDP) growth estimate for India to 6.9 per cent for 2022-23 from 6.5 per cent earlier. India is affected by spillovers from the United States (US), the Euro area and China, according to the World Bank’s India Development Update.
Now, as the world moves towards the end of 2022 and jumps to 2023 with a fear of global recession, BW Businessworld looks at the top trends that defined and shaped the Indian economy.
GDP growth rate—
India’s gross domestic product (GDP) for the July-September quarter of this financial year (FY) grew at 6.3 per cent against 8.4 per cent in a year-ago quarter.
The Ministry of Statistics and Programme Implementation in a statement said, “Real GDP or GDP at constant (2011-12) prices in Q2 2022-23 is estimated at Rs 38.17 lakh crore, as against Rs 35.89 lakh crore in Q2 2021-22, showing a growth of 6.3 per cent as compared to 8.4 per cent in Q2 2021-22.”
The data revealed that the nominal GDP or GDP at current prices in Q2 2022-23 is estimated at Rs 65.31 lakh crore as against Rs 56.20 lakh crore in Q2 2021-22, showing a growth of 16.2 per cent as compared to 19.0 per cent in Q2 2021-22.
Forex Reserves—
India’s forex reserves grew by USD 2.53 billion to USD 547.25 billion for the week ended 18 November. During the week, India’s Foreign Currency Assets (FCA), a major component of overall reserves, grew by USD 1.76 billion to USD 484.28 billion, according to the Reserve Bank of India (RBI).
Soaring Inflation—
War in Ukraine caused major economic damage all across the globe and India was no different. India’s annual wholesale price-based inflation (WPI) accelerated to a record 14.55 per cent in March from the previous month’s 13.11 per cent. The retail inflation figure for March 2022 came in at 6.95 per cent, a 17-year high.
India’s WPI inflation declined to a 21-month low of 5.85 per cent in November and retail inflation eased to 6.77 per cent in October from 7.41 per cent last month.
USD-INR exchange rate—
The Indian rupee had its worst trading session in more than two months as the dollar saw its greatest surge in two weeks after strong US November services data which suggested that the Federal Reserve may continue with its aggressive rate hike stance. The rupee fell to 82.60 compared to its previous close of 81.79 on December 5.
In a controversial statement, Finance Minister Nirmala Sitharaman has said that the rupee has not weakened, however, it is the dollar that has strengthened. During the media interaction after attending the annual meetings of the International Monetary Fund (IMF) and the World Bank, Sitharaman said that the fundamentals of the Indian economy were strong.
Sitharaman said, “First of all I would look at it as not rupee sliding, I would look at it as dollar strengthening, dollar strengthening incessantly.”
Import and export—
After registering a sharp contraction in October, India’s merchandise exports recorded modest growth in November 2022, according to the data released by the Ministry of Commerce and Industry.
After contracting 16.7 per cent year on year (YoY) to USD 29.8 billion in October, merchandise exports last month were USD 31.99 billion as compared to USD 31.80 billion in November 2021.
“Merchandise imports in November 2022 were USD 55.88 billion, as compared to USD 53.03 billion in November 2021,” as per the data. India’s overall export (merchandise and services combined) stood at USD 58.22 billion in November 2022, a growth of 10.97 per cent over the same period last year.
Overall imports in November 2022 stood at USD 69.33 billion, a growth of 5.60 per cent over the same period last year. The trade deficit stood at USD 23.89 billion, down from USD 26.91 billion in October.
RBI’s rate hikes—
India’s central bank raised the key repo rate by 35 basis points (bps) on December 07 as widely expected, the fifth straight increase as RBI vowed that there will be no let up in its fight to tame high inflation. It raised the key lending rate or the repo rate to 6.25 per cent.
“Indian equity markets are ending the year with negative returns. All major indices in the year 2022 have fallen by five to ten per cent. Though the interest rates have been hiked by about 2 per cent by RBI to control inflation it has had no major impact on economic growth. Estimates for growth still are being maintained at 6 per cent plus,” said Sharad Chandra Shukla, Director, Mehta Equities.
Unemployment—
From January to November 2022, India’s unemployment rate increased by over 1.4 per cent. In August, the unemployment rate touched its highest at nearly 10 per cent. As per the Centre for Monitoring Indian Economy (CMIE), unemployment in India rose to 8.0 per cent in November, the highest level in three months, from 7.77 per cent in the previous month.
Meanwhile, in a positive development, India has become the fifth largest economy in the world, overtaking the United Kingdom behind only America, China, Japan and Germany.
According to a report by the State Bank of India (SBI), India is set to become the third-largest economy in the world by 2029. The share of India’s GDP is now at 3.5 per cent, as against 2.6 per cent in 2014 and is likely to cross 4 per cent in 2027, the current share of Germany in global GDP.
Advertisement
Advertisement
BW Communities is an array of business news websites targeted towards niche communities and readers across various industries
Read More »
Read More »
Read More »
Read More »
Read More »
Read More »
Read More »
Read More »
© Copyright BW BUSINESSWORLD 2018. All Rights Reserved.
