India, 7% plus annual growth, and the realities
Introduction:
- The National Statistical Office’s real GDP growth estimate of 13.5% for the first quarter of 2022-23 (Q1 of FY23) is 2.7% points lower than the Reserve Bank of India’s earlier assessment.
- Assuming that the central bank’s estimates of the remaining three quarters of the fiscal year at 6.2% in 2Q, 4.1% in 3Q, and 4% in 4Q are realised, the annual GDP growth using the NSO’s 1Q estimate works out to be 6.7%.
- Compared to the pre-COVID-19 GDP level of ₹35.5 lakh crore in 1Q of 2019-20, real GDP at ₹36.9 lakh crore shows an increase of only 3.8%. This indicates that the performance of the Indian economy is not fully normalised yet which would be consistent with a growth above 6.5%. In order at least to reach an annual growth of 7%, GDP may have to grow at about 5% in 3Q and 4Q of 2022-23.
| Gross domestic product (GDP) is the total monetary or market value of all the finished goods and services produced within a country’s borders in a specific time period.As a broad measure of overall domestic production, it functions as a comprehensive scorecard of a given country’s economic health.GDP Growth Rate (GR) shows the trend in economic growth of a country with respect to a base year.GDP per capita is calculated by dividing real GDP by population of a country. |
Composition of growth:
Q1 of FY23 estimates: across sectors:
Out of the eight Gross Value Added (GVA) sectors, the first quarter growth performance is higher than the average of 12.7% in public administration, defence and other services (26.3%), trade, hotels, transport et al. (25.7%), construction (16.8%), and electricity, gas, water supply et al. (14.7%).
Agriculture:
- Agricultural growth has remained robust, showing a growth of 4.5% in 1Q of 2022-23, which is the highest growth over nine consecutive quarters.
- Growth in manufacturing, at 4.8%, however, is much below the overall average. A more relevant comparison would be to look at the increase with respect to corresponding output levels in the pre-COVID-19 normal year, that is in 1Q of 2019-20.
Manufacturing:
- In this comparison, manufacturing seems to have done better with an increase of 7% in 1Q of 2022-23 while the trade, hotels, transport et al. sector has remained below its pre-COVID-19 level by a margin of minus 15.5%.
- This was the main contact-intensive sector which suffered the most during COVID-19 and which may show better recovery in succeeding quarters. Construction has also increased by a small margin of 1.2% when compared to its 1Q 2019-20 level.
Demand side:
- On this side, all major segments showed magnitudes in 1Q of 2022-23 that were higher than their corresponding levels in 1Q of 2019-20. Recovery in domestic demand has been reflected in the growth rates of private final consumption expenditure (PFCE), at 25.9%, and gross fixed capital formation (GFCF) at 20.1% over the corresponding quarter of the previous year.
- As compared to its 1Q 2019-20 level, the GFCF showed a growth of 6.7%. The ratio of gross fixed capital formation to GDP at current prices is 29.2% in 1Q of 2022-23 which is 1% point higher than the investment rate of 28.2% in the corresponding quarter of the previous year.
Exports:
- The contribution of net exports to real GDP growth is negative at -6.2% points in 1Q of 2022-23 since import growth continues to exceed export growth by a tangible margin. Such an adverse contribution of net exports to real GDP growth is an all-time high for the 2011-12 base series.
- It is likely that import growth will continue to exceed export growth in the next few quarters, both in real and nominal terms, considering prevailing high global prices of petroleum products and other intermediate inputs and India’s growing demand for importing intermediate goods with a view to boosting ‘Make in India’.
On the feasibility of achieving target growth levels:
- The Indian economy may still show a 7% plus growth in 2022-23 provided it performs better in the subsequent quarters, particularly in the last two.
- Two important areas of policy support for this purpose would be to further increase the investment rate and to reduce the magnitude of negative contribution of net exports. Available high frequency indicators for the first four to five months of 2022-23 indicate continuing growth momentum.
High frequency indicators:
- Headline manufacturing Purchasing Manager’s Index (PMI) was at an eight-month high of 56.4 in July 2022. PMI services were at 55.5 in July 2022, indicating 12 consecutive months of expansion.
| Purchasing Manager’s Index (PMI) is an economic indicator derived from the monthly survey of the private sector companies. PMI aims in providing information regarding the current and future conditions of a business to the decision-makers, analysts and investors of the company. |
- Gross Goods and Services Tax (GST) collections have remained high at ₹1.49 lakh crore and ₹1.43 lakh crore in July and August 2022, respectively, although a good part of this may be due to the higher inflation levels of both Wholesale Price Index (WPI) and Consumer Price Index (CPI).
- As seen in 1Q of 2022-23, GVA growth has been led by public administration, defence, and other services, with a growth of 26.3%. This has been driven by the central government’s frontloading of capital expenditure. The Centre’s capital expenditure grew by 62.5% during the first four months of 2022-23.
- This momentum needs to be maintained. This would be facilitated by a buoyant growth in the Centre’s gross tax revenues, which showed a growth of nearly 25% during the first four months of the current fiscal year.
- The relatively high tax revenue growth is in turn linked to the excess of nominal GDP growth at 26.7% in 1Q of 2022-23 over the real GDP growth of 13.5%. Such a large gap between these two growth measures reflects a high implicit price deflator (IPD)-based inflation which is estimated at 11.6% in 1Q of 2022-23.
- This in turn is because of the ongoing WPI and CPI inflation trends where the former continues to exceed the latter. With buoyant tax revenue growth, fiscal policy may strongly support GDP growth without making any significant sacrifice on the budgeted fiscal deficit target.
India now world’s 5th largest economy:
- Recently, India became the world’s fifth largest economy in 2022 by overtaking the United Kingdom. Now, the United States, China, Japan, and Germany are the only nations with economies larger than India’s
- This was measured in terms of nominal GDP by Bloomberg using IMF database and historical exchange rates. India’s nominal GDP in 2022 was $854 billion. The real Gross Domestic product (GDP) growth of 6-6.5% in a post- COVID scenario is impressive.
- India is also set to be the third largest economy by 2029.
Comparison with United Kingdom:
- Population Size: As of 2022, India has a population of 1.41 billion while the UK’s population is 68.5 million. India’s population is 20 times that of the UK’sIndia’s population is 20 times that of the UK’s
- GDP Per capita: India is ranked 122 out of 190 countries in terms of per capita income in 2021. Per capita GDP of India is less than $2,500 against UK’s $47,000- which is 20 times more than India’s.
Way forward: Raise investment rate:
- In the light of likely development in 2022-23, how confident are we of achieving the growth rate of 6% to 7% over a normal base? Given our desire to achieve developed country status in the next 25 years, the required growth rate is in the range of 8% to 9%. In 2023-24, we must try to achieve a growth rate of 6% to 7%.
- The key to growth lies in raising the investment rate. Public capital expenditure has shown a rise. In crisis years, it is particularly good. It can crowd in private capital expenditure. But this cannot be the normal.
- Private capital expenditures, both corporate and non-corporate, must rise. It is pointed out that capacity utilisation in industry has touched 75% in 4Q 2021-22. This should help to attract private investment if demand for goods continues to increase.
- The output loss because of COVID-19 and the consequent lockdown is greater if we measure it from the trend line rather than the base of 2019-20. Had we maintained growth of 7% since 2019-20 in successive years, the real GDP would have been ₹183.4 lakh crore in 2022-23. Even if we achieve a 7% growth in 2022-23 over 2021-22, there is a shortfall of ₹25.7 lakh crore at 2011-12 prices.
Conclusion:
The international environment for growth is bleak. Developed countries even fear a recession. India’s growth path in the next few years must depend on domestic investment picking up. Sector-wise growth in investment must be the focus of policymakers in removing bottlenecks and creating a favourable climate.
The burden that women bear
Introduction:
75% of women across India undertake time-consuming efforts every day to ensure their families have water (NFHS-5). But drudgery does not end here. The remaining hours are spent securing fuel and caregiving — gendered responsibilities that shackle them further to their homes. For these women, freedom is relief from domestic drudgery, from doing repetitive tasks out of no choice owing to socio-cultural norms and limited access to resources like water, fuel and household appliances.
About NFHS:
- The National Family Health Survey (NFHS) is a large-scale, multi-round survey conducted in a representative sample of households throughout India.
- It provides information on important indicators which are helpful in tracking the progress of Sustainable Development Goals (SDGs) in the country.
- The national report also provides data by socio-economic and other background characteristics; useful for policy formulation and effective programme implementation.
- The NFHS-5 National Report lists progress from NFHS-4 (2015-16) to NFHS-5 (2019-21).
- Ministry of Health and Family Welfare (MoHFW) has designated the International Institute for Population Sciences(IIPS) Mumbai, as the nodal agency for providing coordination and technical guidance for the survey. The funding for different rounds of NFHS has been provided by USAID, the Bill and Melinda Gates Foundation, UNICEF, UNFPA, and MoHFW (Government of India).
Highlights of the NFHS-5 Report: findings related to issues that impact women:
1. Total Fertility Rate (TFR):
- TFR is the average number of children born per woman
- Overall TFR of India has further declined from 2.2 to 2.0 at the national level between NFHS- 4 and NFHS- 5.
- There are only five states in India which are above replacement level of fertility (RLF) of 2.1. These states are Bihar, Meghalaya, Uttar Pradesh, Jharkhand and Manipur.
Replacement level fertility is the total fertility rate at which a population exactly replaces itself from one generation to the next, without migration. Usually when TFR reaches 2.1, it’s considered as RLF.
2. Underage Marriages:
- Overall: National average of underage marriages has come down. According to NFHS-5, 23.3% women surveyed got married before attaining the legal age of 18 years, down from 26.8% reported in NFHS-4.
- The figure for underage marriage among men is 17.7% (NFHS-5) and 20.3% (NFHS-4).
3. Sexual and reproductive health (SRH):
- Teenage pregnancies are down from 7.9% to 6.8%.
- Use of Contraceptive Method: Contraceptive use increases in communities and regions that have seen more socioeconomic progress.
- Income Factor: The “unmet need for family planning methods” is highest among the lowest wealth quintile (11.4%) and lowest among the highest wealth quintile (8.6%).
4. Domestic Violence Against Women:
Overall levels of Domestic violence at national has come down marginally from 2015-16 to 29.3% in 2019-21.
5. Institutional Births:
- Overall it increased to 89% (growth of 10 percentage points from NFHS 4 levels) in India.
- Area Wise: In rural areas around 87% births being delivered in institutions and the same is 94% in urban areas.
6. Stunting:
- The level of stunting among children under five years has marginally declined from 38% to 36% in the country since the last four years.
- Stunting is higher among children in rural areas (37%) than urban areas (30%) in 2019-21.
7. Obesity:
Compared with NFHS-4, the prevalence of overweight or obesity has increased in most States/UTs in NFHS-5. At the national level, it increased from 21% to 24% among women and 19% to 23% among men.
8. Attainment of SDG Goals:
NFHS-5 shows an overall improvement in Sustainable Development Goals indicators in all States/Union Territories (UTs).
9. Women’s decision making powers:
- Household decisions include health care for herself, making major household purchases, visiting her family or relatives. Participation in decision making rises ranging from 80% in Ladakh to 99% in Nagaland and Mizoram.
- Rural and urban differences are found to be marginal.
10. Sex Ratio:
- NFHS-5 data shows that there were 1,020 women for 1000 men in the country in 2019-2021.
- This is the highest sex ratio for any NFHS survey as well as since the first modern synchronous census conducted in 1881.
- In the 2005-06 NFHS, women and men were equal in number (SR= 1000)
11. Sex Ratio at Birth:
- For the first time in India, between 2019-21, there were 1,020 adult women per 1,000 men.
- However, the data shall not undermine the fact that India still has a sex ratio at birth (SRB) more skewed towards boys than the natural SRB (which is 952 girls per 1000 boys).
- Uttar Pradesh, Haryana, Punjab are the major states with low SRB.
12. Children’s Nutrition:
- Only a slight improvement at all-India level as Stunting has declined from 38% to 36%, wasting from 21% to 19% and underweight from 36% to 32% at all India level.
- The share of overweight children has increased from 2.1% to 3.4%.
13. Anaemia:
- The incidence of anaemia in under-5 children (from 58.6 to 67%), women (53.1 to 57%) and men (22.7 to 25%) has worsened in all States of India (20%-40% incidence is considered moderate).
- Barring Kerala (at 39.4%), all States are in the “severe” category.
14. Family Planning:
- Overall Contraceptive Prevalence Rate (CPR) has increased substantially from 54% in NFHS 4 level to 67% at all-India level.
- Unmet needs of family Planning have witnessed a significant decline to 9% at all-India level.
15. Women Empowerment:
- Women’s empowerment indicators portray considerable improvement at all India level and across all the phase-II States/UTs.
- Significant progress has been recorded between NFHS-4 and NFHS-5 in regard to women operating bank accounts from 53% to 79% at all-India level.
- More than 70% of women in every state and UTs in the second phase have operational bank accounts.
| National Statistical Office (NSO), a wing of Ministry of Statistics and Programme Implementation (MoSPI), conducted the first Time Use Survey (TUS) in India for 2019.Findings of 1st TUS 2019:Average Indian woman spends 243 minutes, a little over four hours, on these , which is almost ten times the 25 minutes the average man does.An average Indian woman spends 19.5% of her time engaged in either unpaid domestic work or unpaid care-giving services.Men spend just 2.5% of a 24-hour period on these activities. In every other group of activities – from employment and learning to socializing, leisure, and self-care activities like sleeping and eating – men spend a higher share of their daily time than women. |
Impact of drudgery on women:
- Domestic drudgery (hard menial and dull work/ labour at home) has severe consequences: exhaustion, musculoskeletal disorders, lower immunity, and higher mental stress. It threatens women’s physical safety.
- Drudgery also affects women from an early age. Though universal education is promised, median years of schooling for girls is still 4.9 compared to 7.3 for boys.
- Drudgery also means less time devoted to childcare. This can impact cognitive development and education levels among children.
The broader issue:
Ashoka University’s Ashwini Deshpande and Jitendra Singh argue that the decline in the female labour force participation rate (FLFPR) to 17% from 35% in the mid-2000s is because of demand-side problems in the employment market. The broader issue is India’s economic growth and the sluggish growth in employment opportunities.
Way forward:
- India has come a long way in 75 years, now with its second woman President and accomplished women in every field. Yet, women are not yet truly empowered.
- Even their hard-won struggles against domestic work are usually because of other women supplementing their efforts. While restructuring household roles and responsibilities would be ideal such that men contribute equally at home, a more systematic investment, driven by sustained economic growth and better state capacity, in delivery of quasi-public goods is also essential.
