India has been the engine of global growth in the past decade. 2022 specifically was a year of many achievements. India became the world’s fifth largest economy by overtaking the United Kingdom. A 2022 report by Morgan Stanley has predicted the Indian economy is poised to become third largest in the world by 2027.
Here are few hits and misses of Indian economy in 2022 and the way head:
Growth and Global Opportunity
Average GDP growth of 5.5 percent in the last decade makes India one of the fastest growing economies in the world. GDP growth rate which was 8.7 percent in 2022. The major sectors contributing to the growth were manufacturing which grew by 9.9 percent, construction with growth of 11.5 percent, and trade, hotels, and transport sectors which grew by 11.1 percent. Sunrise sectors such as defence, fintech, agri-tech and biotech follow closely.
In 2022, India has already surpassed Britain and is expected to leave behind Japan and Germany to become the world’s third-largest economy by 2027 and will have the third-largest stock market by the end of this decade as per Morgan Stanley. India’s share in global trade is projected to double by 2031. The year 2022 will be a memorable one for India as its remittance flows soar to $100 billion from $89.4 billion in 2021, growing at the rate of 12 percent as per World Bank. Interestingly, these projections are made when S&P Global is forecasting world GDP growth to slip to 2.2 per cent in 2023 from 3.4 percent in 2022.
This growth of the Indian economy is attributable to two key factors: limited economic activity in China and Europe, and rise in domestic demand in selected sectors. Our exports grew by about 23 percent year-on-year in Apr-Jul 2022.
Once business in China and Europe regains traction, we shall be facing tough competition and keeping up the growth momentum can be challenging. Secondly, our growth has been concentrated in the organized sector.
Make in India, Make for the World
The world is eyeing India as the rising leader in the manufacturing sector. China is still struggling with a raging pandemic, real estate bubble and geopolitical issues. Russia is spending considerable time and resources in establishing its presence in Europe and the World. The United States is also struggling with inflation and a poor growth outlook. Resultantly, the ‘China-Plus-One’ approach is bringing more manufacturers to India. Government policies such as Make in India and Production Linked Incentive Scheme (PLI) have supported this growth.
Many global companies including Apple have commenced manufacturing in India, shifting from China. Google also plans to commence making Pixel handsets here. Major Defence companies like Lockheed Martin & Saab are increasing manufacturing here. The corporate sector has built large capacities owing to corporate tax cuts, investment incentives and rising infrastructure spending by the government.
The Indian growth story isn’t just about essentials or basic commodities. The ultra-luxury cars segment, priced above $250 million, also saw a whopping growth of 50 percent in 2022.
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