Slowing Economic Growth

INDIA’S economic growth has slowed to 6.3 percent in the third quarter of 2022-23 compared to 13.5 per cent in the second quarter due to the contraction in output of manufacturing and mining sectors, government data revealed on Wednesday. But despite the slower GDP growth in the July-September period, India remains the fastest-growing major economy ahead of even China which recorded a growth of just 3.9 percent in the quarter. Last year, India’s economy had grown 8.4 percent in the third quarter.  As is apparent, India’s growth rate is now averaging pre-pandemic level, signalling a fast recovery from the contagion.

India’s steady growth rate over the last one year will go a long way to bring the lost jobs back. The last three years have seen global economy go from crisis to crisis which hit the global economy, including that of India very hard. Russia’s invasion of Ukraine which followed soon after the pandemic was receding made things worse. Its repercussions are still playing out across the global economy. One major fallout of the war has been that   the world’s three largest economies – the United States, Europe and China – are stalling. This has triggered worldwide inflation, fuelled by the pause in exports of food grains from Russia and Ukraine. The two countries are big food producers. Ukraine is the world’s biggest producer of sunflower oil, and  Russia is number two. Together they account for 60 percent of global production. They also account for 28.9 percent of global wheat exports. This temporarily caused the wheat prices to trade at their 15-year highs. But the prices have since retreated to levels last seen before the Russia’s invasion.

This has also impacted India’s economy. Inflation touched record levels this year pushing most essential items, including food products beyond the purchasing power of the common man. Those at the bottom of the pyramid  have been hit the hardest. Situation has been further exacerbated by the growing unemployment. It was 9.5 per cent in the second quarter. The unemployment rate in urban areas declined to 6.6 per cent in third quarter as against 9.3 per cent a year ago. The continuing war in Ukraine will not be good for the world economy.  If the war drags on in Ukraine, India’s economy is likely to come under severe stress. Skyrocketing oil prices will also wreck the European economy. Therefore, it is incumbent on the world to come together to resolve the crisis in Ukraine and find a solution that addresses the concerns of all the parties involved. And if the war lingers, the global economy could very well plunge into recession. And India’s economy won’t be immune to it.

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