Editorial 1: What are India’s immediate growth prospects?


  • National Statistical Office (NSO), in February 2023, released a set of new numbers pertaining to annual and quarterly national income for 2020-21, 2021-22, and 2022-23. This new dataset provides an opportunity to make a final assessment of COVID-19’s adverse impact on India’s GDP growth.

Recovery since pre-COVID year

  • As per NSO’s second advance estimate (SAE), India suffered a contraction of (-) 5.7% in 2020-21 which is much lower than its first advance estimate (FAE) at (-) 7.7%. In this revision, the three sectors which benefited the most were manufacturing, construction, and financial, real estate et al.
  • Real GDP during this COVID-19 year amounted to ₹136.9 lakh crore, higher than the ₹134.4 lakh crore assessed earlier. Since then, GDP grew by 9.1% in 2021-22 and 7% in 2022-23.
  • Comparing the current real GDP level at ₹159.7 lakh crore, the compound annual average growth rate (CAGR) between 2019-20 and 2022-23 was 3.2%. It may be noted that some countries including China, Bangladesh and Vietnam had a positive growth even in the COVID-19-affected year of 2020.

Sector-wise changes:

  • Sector-wise, while overall GVA in 2022-23 is higher by 11.3% as compared to 2019-20, one sector — mining and quarrying — still shows a contraction at (-) 0.3%. Trade, hotels, transport et al also show a weak growth of 4.3%.
  • Sectors showing a higher-than-average increase include construction at 18.6%, manufacturing at 14.8%, financial, real estate et al at 14.3% and agriculture at 12%.

Gross fixed capital formation (GFCF)

  • From the viewpoint of aggregate expenditure, overall increase in real GDP is 10% with government final consumption expenditure (GFCE) growing at 7.4%. and private final consumption expenditure (PFCE) show an increase of 17.7% and 13.1%, respectively.
  • The GFCF to GDP ratio in nominal terms is 29.2% in 2022-23 as compared to 28.6% in 2019-20. The corresponding real investment rates are 34% and 31.8%, respectively. The difference in real and nominal rates is due to the differential inflation rates of capital goods vis-à-vis overall GDP.

Incremental capital output ratio (ICOR) and capacity utilisation

  • Thus, in real terms, there is more improvement in the investment rate. Accordingly, the estimated ICOR was at 8.5 in 2019-20 as compared to 4.9 in 2022-23. This is because the 2019-20 GDP growth rate was rather low at 3.7% reflecting considerable unutilised capacity.
  • The average capacity utilisation ratio in the manufacturing sector was only 70.3% in 2019-20, having fallen from 75.2% in 2018-19. In the first half of 2022-23, the capacity utilisation ratio is higher at 73.5%. While the gross fixed capital formation rate has picked up whether measured in real or nominal terms, the subdued growth implies a lower capacity utilisation and a higher ICOR.

Future growth projections

  • In Q3 of 2022-23, real GDP growth was at 4.4%, falling from 6.3% in Q2 and 13.2% in Q1. However, this decline in growth rate is in line with the projections made by the Reserve Bank of India earlier. It would now require a growth of 5.1% in Q4 to enable reaching an annual growth of 7% in 2022-23.

Purchasing Managers’ Index (PMI)

  • This appears feasible as most high frequency indicators point towards an improved economic activity. PMI manufacturing in January and February 2023 at 55.4 and 55.3, respectively, remained above its long-term average at 53.7. PMI services increased from 57.2 in January 2023 to a near 12-year high of 59.4 in February 2023.

Index of industrial production (IIP) and credit growth

  • Core IIP showed a growth of 7.8% in January 2023, increasing from 7% in December 2022. Credit growth was also high at 16.1% in the week ending February 10, 2023. Monthly credit data, however, indicate a high credit growth only with respect to personal loans. Industrial credit growth was at a seven-month low. A higher quarterly growth in Q4 appears feasible because of a favourable base effect since growth was subdued in the corresponding quarter of the previous year at 4%.

Implications for growth

  • Given the anticipated global economic slowdown, India’s 2023-24 growth is likely to remain lower than the growth rate of its preceding year of 7%. The RBI has projected a growth of 6.4% for 2023-24. The International Monetary Fund (IMF), on the other hand, has projected a lower growth of 6.1%.
  • If fiscal stimulus is continued, injected largely through capital expenditures as envisaged in the 2023-24 Union budget, we may come closer to the RBI’s growth estimate. However, with elections round the corner, there may be pressure to increase revenue expenditures. This might lead to a growth rate closer to 6%.


  • Any stimulus for growth should be undertaken while adhering to the fiscal consolidation road map so as to keep India’s medium-term story intact. A steady growth of 6% to 7% can be ensured over the medium term, only if the fixed capital formation rate is raised by another 2 percentage points. This is notwithstanding the global factors that are not encouraging.

Editorial 2: Inaction and intervention: On the handling of social issues


  • The Supreme Court’s decision to refer to a Constitution Bench the issue of granting legal recognition to same-sex marriages can be seen as an important step towards ensuring gender equality, despite apprehension that it is encroaching on the legislative domain.

Decriminalisation of homosexuality :

  • In November 2018, the Supreme Court (SC)  decriminalised homosexuality by striking off parts of Section 377 of the Indian Penal Code (IPC) which were held violative of Fundamental Rights of LGBTQ Community.
  • In the Navtej Singh Johar vs. Union Of India (2018) case, supreme court (SC) made it clear that Article 14 of the Constitution guarantees equality before law and this applies to all classes of citizens therby restoring ‘inclusiveness’ of LGBTQ Community.
  • SC upheld the pre-eminence of Constitutional morality in India by observing that equality before law cannot be denied by giving precedence to public or religious morality.
  • Earlier, in the Naz Foundation vs. Govt. of NCT of Delhi (2009), Delhi High Court (HC) held Section 377 of the IPC as unconstitutional, as it discriminated against the LGBTQ community of the country and violated their privacy as individuals.
  • In Suresh Kumar Koushal Case (2013), SC overturned the previous judgment by Delhi High Court (2009) that decriminalised homosexual acts. Thus in 2013, SC criminalised homosexuality once again. This stand was again overturned by the apex court in 2018.

Recent developments :

  • Petitioners before the Court view the idea of giving of legal status for marriages between people belonging to the same sex as a natural consequence of the 2018 judgment decriminalising homosexuality.
  • The government, however, contends that there is no need to depart from the heteronormative understanding of marriage. And even if there ought to be such a change, it must come from the legislature.
  • The question before the Court is whether it should interpret provisions of marriage laws in India, especially the Special Marriage Act, 1954, as permitting marital unions between same-sex couples.
  • The Act allows the solemnisation of a marriage between any two persons and is used by those who are unable to register their marriages under their respective personal laws.

Government’s stand:

  • The Union government has argued that the decriminalisation of consensual relations between adults of the same sex has removed the stigma attached to homosexuality, but has not conferred the right of marriage.
  • And that the state is entitled to limit its recognition to marriages involving heterosexual couples. There is no discrimination, it claims, in keeping same-sex couples out of the definition of marriage.


  • In terms of the equality norm, the central question is not very complicated. It can be recognised that no civil right available to married heterosexual couples ought to be denied to those who belong to the same gender.
  • The incidental consequences on issues of property and succession may not pose insurmountable difficulties.
  • The Centre’s other argument, invoking religious norms and cultural values, against recognising same-sex marriages is weak and inadequate. It is futile to argue that it will undermine faith or rock societal values. The mere fact that many people consider marriage to be a sacrament or a holy union is not enough to deny equal status to the union of people of the same sex or to undermine its essential character as a social and economic contract.
  • Whether the remedy ought to take the form of recognition of same-sex marriages, and, if so, whether it should be through judicial intervention or legislative action, is the question.


  • That the legislature should be involved in bringing about far-reaching changes that may impact the personal laws of all religions is indeed an acceptable proposition. A responsive government that wants to treat this as a matter of policy and not cede space to the courts would act on its own to consider the right of any two people, regardless of gender, to marry or found a family. Legislative inaction on burning social issues will legitimise and invite judicial intervention.


No comments yet. Why don’t you start the discussion?

Leave a Reply

Your email address will not be published. Required fields are marked *