Recent growth projections of the global economy suggest weaker outlook for 2023 and 2024 despite the easing of food and energy inflation. Private investment remains subdued even when newer opportunities have opened up in the renewable energy and digitilisation spheres. In this uncertain global environment, India, official sources assert, “has experienced macroeconomic and financial stability   with a steady pick up in the momentum of growth” (RBI, 2023: pp.1-2). They congratulate themselves taking credit for it in the sound macroeconomic policy and resilience of the economy. See the recent speech of the Chief Economic Adviser: “Both the ministry of finance and the RBI are on the same page with the growth forecast for the current fiscal which is 6.5% with risks evenly balanced. The domestic economic growth momentum is strong enough to overcome external risk factors”. Continuing on the same theme he said, “We also benefit from lower oil prices and overall domestic macroeconomic stability” (The Hindu, 11 June 2023). A critical look at the claim of growth momentum is in order as the GDP growth numbers for the year 2022-23 are just out.

We adopt a simple method to assess the claims of growth recovery. It is worth recalling that in a number of economic sectors growth had begun decelerating since 2016-17; it was not a phenomenon that occurred during the COVID 19 year. If recovery is taking place, then the growth rate over the period 2011-12 to 2022-23 should be equal to or higher than the growth rate achieved during 2011-12 to 2016-17. This can be illustrated by comparing the value added in constant prices of Indian manufacturing sector with electricity, gas and water supply or construction sectors. If growth had not decelerated since 2016-17, then the path of the manufacturing sector would have been as shown by the red line in Figure 1. The deceleration in growth, the COVID 19 effect and the low growth post COVID 19 has pulled the trend line below the red line suggesting that the sector has a long way to go for recovery. Taking the slopes of the lines, that are the growth rates, it may be seen that the compound annual growth rate was 8.02 per cent during 2011-12 to 2016-17 and it has fallen to 6.02 per cent during 2011-12 to 2022-23 owing to the deceleration despite the so-called recovery from COVID 19 (Table 1). It has to remain above 8 per cent for a few years to surpass the growth of the first half of 2010s. These are confirmed by the growth numbers shown in Table 1.

Figure 1. Manufacturing Value Added (Rs crore)

Source:  MOSPI, Second Advance Estimates of National Income and Expenditure Components of GDP, 2022-23      (at 2011-12 prices); Provisional Estimates, 2022-23.

Let us contrast the growth paths of electricity, gas, water supply and other utilities, and construction (Figures 2 and 3) with that of manufacturing (Figure 1). The fall in growth during COVID 19 (2020-21) in these two sectors were higher than that in manufacturing. Despite the higher negative effect of COVID, in both these sectors the long term growth rates have surpassed the growth till 2016-17. It may be said that the utility and construction sectors have fully recovered but not manufacturing. The growth rates shown in Table 1 further confirm it. In electricity, gas and utilities the long term growth at 5.91 per cent is higher than that till 2016-17 at 5.67 per cent and in construction, the long term growth is 4.14 per cent and that till 2016-17 only 3.42 per cent.

Figure 2. Electricity, Gas, Water Supply and Other Utilities Value Added (Rs crore)

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