As per the preliminary estimates of GDP announced on May 31, 2022, the Indian economy has returned to its pre-pandemic absolute GDP level of 2019-20. The projected real GDP growth for FY 2021-22 is 8.7%, 1.5% higher than the real GDP growth for FY 2019-20. Increased demand in the economy is reflected in these numbers.
In the last quarter, the investment rate reached its highest point in the preceding nine quarters. In addition, industrial capacity utilization increased in the fourth quarter compared to the third quarter, suggesting a buildup in demand that is in line with the expansion goals of the Indian economy.
How India Boosts Its Economy Through Trade?
India had a negative trade deficit of $20.4B in April 2022, after exporting $39.8B and importing $60.2B. India’s exports climbed by $9.09B (29.6%) from $30.7B to $39.8B between April 2021 and April 2022, while imports increased by $14.5B (31.6%) from $45.7B to $60.2B.
There is more faith in the Indian economy which is reflected in the trade successes. The export industry has benefited from the government’s proactive policy initiatives such as the merchandise exports scheme, the tariff exemption plan, the export promotion capital goods scheme and the transport and marketing aid scheme.
Shimla Agreement And Its Impact
Improvements to India’s Economic Infrastructure
Machinery, equipment, competent labor, capable management, enough funding, energy, financial institutions, marketing channels, transportation networks, communication channels, etc., are all essential to the success of any industrial or agricultural operation.
All of these things together make up an economy’s underlying structure. Irrigation, power, transportation, communications, banking, insurance, scientific research, and social services are all part of the necessary infrastructure.
Effects of Education System on Indian Economy
For a nation to prosper economically, education must be prioritized. India has been committed to raising the literacy rate in the nation ever since its early days of independence. To this day, India’s government continues to fund a plethora of initiatives meant to improve both the country’s primary and secondary educational systems.
Human Capital and Economic Growth are closely linked to monitoring a nation’s progress. Indians have known for a long time that their people are their most valuable asset. Human resource development “has unavoidably been given a vital role in any development strategy, especially in a nation with a big population,” as stated in the seventh five-year plan.
The following arguments show that economic development and investment in people are inextricably linked.
Unskilled labor cannot operate sophisticated equipment or methods, but trained professionals can. This infusion of human capital boosts the productivity of physical capital. This increases productivity, and because productivity improves output, economic growth results
The human capital that is open to new ideas and problem-solving approaches is a critical ingredient in the development of the economy and the expansion of the gross domestic product (GDP)
The employment rate rises when there is more equity in the distribution of human capital. Production will expand in tandem with the expansion of the labor force. A rise in income and the availability of new forms of work contribute to a higher quality of living and to diminishing economic disparities. Indicators of economic growth include an increasing employment rate and a narrowing income gap
Final Verdict
Extremely conservative assumptions lead us to anticipate a prolonged economic downturn. Under these conditions, stagnant inflation is likely.
Indeed, India would face severe headwinds due to the global economic ecosystem’s unpredictability. The inflation and supply chain disruptions plaguing the economy for some time now are not likely to go away anytime soon.
Despite these challenges, India will be able to weather them thanks to strong local demand and the fact that multinational corporations are always looking for safer and less expensive places to invest in and ship goods out of. The confidence in India’s economic recovery is still there, although with a few scratches.
