India enjoys economic rebound amid challenges

India has become one of the fastest-growing major economies in the post-pandemic world, although it faces multiple hurdles including a lack of infrastructure in some sectors, analysts say.

The country's GDP could grow by 7 percent in the 2022-23 financial year, according to figures released on Tuesday by the federal statistical office of India's Ministry of Statistics and Programme Implementation.

However, the data also show that India's economic growth rate slowed in the fourth quarter of last year to 4.4 percent, down from 6.3 percent in the third quarter.

"The Indian economy rebounded strongly in 2021 and 2022 from the severe economic disruptions during the first year of the global COVID-19 outbreak," said Rajiv Biswas, chief Asia economist at S&P Global Market Intelligence.

The medium-term economic outlook from 2023 to 2027 is for average annual real GDP growth of between 5.5 and 6.5 percent, he said. "This will continue to place India among the ranks of the world's fastest-growing emerging-market economies."

Kristalina Georgieva, managing director of the International Monetary Fund, said India is expected to contribute 15 percent of the world's growth in 2023, with the nation remaining a relative "bright spot "in the global economy.

There are multiple projections on India's economic growth, but almost all of them point to India being the fastest-growing among the large economies in 2023, said Swaran Singh, professor of diplomacy and disarmament at Jawaharlal Nehru University, New Delhi.

Biswas said India's service sector, which includes key sectors such as retail sales, financial services, and information technology, has been an important driver of economic growth.

"The information technology business process outsourcing sector has been one of the fastest-growing industry sectors in the past decade, as multinationals have rapidly increased their back office functions in India," he said.

Singh, who is also a visiting professor at Canada's University of British Columbia, told China Daily that India has put an enormous premium on improving its manufacturing sector and making it competitive by "inviting nations to come and 'Make in India', which has already picked up momentum".

Growth constraints

However, the Indian economy faces many growth constraints, including inadequate infrastructure in key areas, according to Biswas.

"A key challenge … will be to further reduce urban and rural poverty rates," he said.

Lekha S. Chakraborty, an economist and professor at the National Institute of Public Finance and Policy in New Delhi, highlighted the need for fiscal prudence. She told China Daily that policy coordination between monetary and fiscal policy is important for India's sustained economic growth recovery.

"This is the last year before India heads for major elections. Continued rises in interest rates by India's central bank (to tackle inflation) could lead to a hard landing," she warned.

Arunava Das is a freelance journalist for China Daily.