The latest upward GDP growth revision for fiscal 2023 is good news. According to latest official data, the Indian economy grew at a rate of 7.2 percent in the last financial year ending March 2023. This growth is higher than the previously estimated 7 percent. GDP expanded at 6.1 percent in the fourth quarter, pushed by robust manufacturing activities, against the previous estimate of 5.1 percent.

While the better-than-expected fourth quarter growth led to upward revision in the overall GDP growth in FY 23, it is, in turn, manufacturing at 4.5 percent, which pushed the fourth quarter growth. During the previous two quarters, manufacturing activity had contracted consecutively, dragged by high commodity prices and sustained input costs, but the scenario changed significantly in the fourth quarter.

Robust growth of the labour-intensive construction sector is another welcome development. The sector grew by a whopping 10.4 percent during the same quarter and it happened despite aggressive interest rate hikes by banks. Similarly, the agriculture sector clocked a healthy 5.5 percent growth despite climate challenges. These developments are crucial, indicating that economic revival is on the right track.

There are some clear concerns, however. Consumption is a big worry. Share of consumption in GDP stands at 58.5 percent and for the overall fiscal its 7.5 percent growth is higher than the GDP figures, but it grew at an anaemic pace of 2.8 percent in the fourth quarter. Experts point out that higher interest rate and uneven monsoon further pose a drag on it. This need to be taken care of.