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What is contributing to India’s strong economic growth

What is contributing to India’s strong economic growth

Introduction

India’s strong economic growth is being driven by several key factors:

Robust GDP Growth

India achieved 8.15% year-over-year growth in fiscal year 2023-2024, surpassing market expectations.

The country has averaged 8.3% annual growth over the past three years.

Domestic Demand and Consumption

Strong domestic demand is a major driver of growth, with consumer spending accounting for about 60% of GDP.

Increasing disposable incomes and a growing middle class are supporting expansion of domestic consumption.

Demographic Advantage

India has one of the youngest and fastest-growing populations in the world, providing a large workforce and consumer base.

The working-age population is expected to peak at 68.9% by 2030, offering a significant demographic dividend.

Government Initiatives and Reforms

Implementation of structural reforms like the Goods and Services Tax (GST) has streamlined the tax system.

Programs such as “Make in India” and “Digital India” have boosted manufacturing and technology sectors.

Massive infrastructure development programs are improving connectivity and efficiency.

Sectoral Strengths

Strong growth in manufacturing and services sectors.

Robust performance in IT, business services, and pharmaceuticals.

Improvements in the rural economy and agricultural output.

Investment and Financial Sector

Public infrastructure investment and increased household investments in real estate.

Robust bank balance sheets and credit growth supporting economic expansion.

Policy Measures

Continuous government efforts toward reforms and capital expenditure.

Prudent fiscal management, with efforts to reduce the fiscal deficit.

Global Position

India has emerged as a key growth engine for the world, contributing 16% to global growth in 2023.

Conclusion

These factors collectively contribute to India’s economic resilience and strong growth trajectory, positioning it to potentially become the world’s third-largest economy in the coming years.

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