India’s Economy Surpasses Predictions, Records Impressive 8.4%

India has once again secured its position as the fastest-growing major economy globally, reporting an impressive expansion of 8.4% in the final quarter of 2023. This significant growth coincides with the upcoming general election in the country, adding a notable economic backdrop to the political landscape.

Prime Minister Narendra Modi took to the social media platform X, formerly Twitter, to express his satisfaction with the economic performance, emphasizing that it reflects “the strength of the Indian economy and its potential.” The favorable economic outlook positions India to potentially surpass Japan and Germany, becoming the world’s third-largest economy in the coming years.

The robust growth was primarily driven by a stellar performance from the manufacturing sector, which saw an expansion of 11.6% during the period. Additionally, private consumption, a substantial contributor to the country’s gross domestic product (GDP), experienced a notable uptick of 3.5%. This increase in consumer spending follows a period of constrained purchasing power attributed to elevated prices of essential commodities like onions. In response, the government implemented measures to mitigate food price inflation and support citizens.

Over the past years, Prime Minister Modi has strategically increased government spending on infrastructure and introduced incentives to boost manufacturing critical technological products, including phones, electronics, drones, and semiconductors. These initiatives aim to enhance India’s competitiveness in the global market.

In a significant move, the government recently approved the construction of three semiconductor plants valued at 1.26 trillion rupees ($15.2 billion; £12 billion). The project involves prominent firms, including the Indian conglomerate Tata, signaling a commitment to advancing technological capabilities.

However, challenges persist, particularly in the agricultural sector, constituting approximately 15% of the $3.7 trillion (£2.93 trillion) Indian economy. Weak monsoon rains continue to plague the sector, leading to difficulties for farmers, some of whom have been protesting to demand minimum crop prices.

Looking ahead, the International Monetary Fund (IMF) projects a continued expansion of India’s economy, forecasting a growth rate of 6.5% in 2024. In comparison, China is expected to grow at a rate of 4.6%, and the economic challenges Beijing faces, including a property market crisis, high youth unemployment, and deflation, underscore India’s increasingly influential position on the global economic stage.