Is the Indian economy booming?

Numbers never tell the true story. They are just indicators. And there are ample chances of such indicators going wrong in both ways. Furthermore, numbers can be interpreted in multiple ways. At the same time, they can be painted in contrarian ways as well. For instance, someone earned Rs1 in July and Rs2 in August this year. If we are to compare the month-on-month growth of his income, we have to say that his income has doubled in a matter of a month. Wow! Doubling one's income in a matter of month is a stupendous achievement, isn't it? But what does this earner get for Rs 2? Not even peanuts these days. Even a beggar will look at us disdainfully and disrespectfully if he or she is offered Rs2.

Therefore, it's always better to take with a pinch of salt the numbers that are dished out at us. Then, what does the recent gross domestic product (GDP) numbers for the first quarter of FY22dished out by the central government, tell us? On the face of it, India's GDP skyrocketed by a record 20.1 per cent during April-June 2021 period. That was the highest quarterly growth our country notched up since Independence. And the stellar growth came during a period when the country went through a devastating second wave of the Chinese-originated Covid-19, which claimed over 2.75 lakh lives so far, much higher than the first wave death toll of 1.54 lakh. So, over 20 per cent economic growth amid a Covid mess is a not a small achievement.

But there lies the catch. As was said, this growth came on a low base. India went through a stifling lockdown during April-June 2020, leading to a steep contraction of 24.4 per cent in GDP in those three months. The actual GDP numbers will help us understand the ground reality better. As per the latest data, the GDP stood at Rs32.38 lakh crore in QFY22, clocking a steep rise from Rs26.95 lakh crore in the corresponding quarter last financial year. That way, the economy added a decent Rs5.43 lakh crore during the April-June period this year when compared to the same period a year ago. However, it's still a long way to go before the numbers reach the pre-Covid levels. In the first quarter of FY20 (April-June 2019), the GDP figure was at Rs35.67 lakh crore. This can be considered as the pre-pandemic level when it comes to the first quarter. To reach that level, the economy needed to add another Rs3.28 lakh crore. But the second avatar of the Covid-19 coincided with the first quarter during which period many States imposed curbs to contain the spread of the deadly virus. However, the impact of Covid 2.0 on the economy was not so severe. Sector-wise, the manufacturing segment did extremely well, registering an upswing of 49.6 per cent in the June quarter against a de-growth of 36 per cent a year ago. The construction sector also turned out to be a bright spot, registering a gross value added (GVA) growth of 68.3 per cent. This sector took the heaviest toll last year as it suffered a contraction of 49.5 per cent, among the highest. Nevertheless, an over 20 per cent upswing inQ1FY22 GDP doesn't mean that the Indian economy is booming. It's an exaggeration to say so. Of course, Indian stock markets are going through an unprecedented boom time with Sensex scaling 58,000 pts mark and Nifty going well past 17k. But stock markets always see the brighter side of an economy. It's no different this time too. The trillion-dollar question is whether India's economic growth will be as bright as markets seem to be anticipating now.

Anyway, there is a silver lining in the latest GDP numbers. Going by the current trend, the economy may grow at full steam once the Covid threat subsides and vaccination coverage increases considerably. But that can only happen if the central government plays the right cards and the global situation favours India.

But one thing is certain. The Modi government set a target to take the Indian economy beyond the $5 trillion mark by 2024 from $2.7 trillion now. The Covid crisis has obviously thrown a big spanner into this ambition. Former RBI governor Dr C Rangarajan recently said that India may achieve this milestone by 2030 if it clocks a consistent annual growth rate of nine per cent. But that's not going to be a reality. And it will be a miracle if the Indian economy reaches the $5 trillion mark even by 2035. India and its leadership need to do a lot more to achieve this coveted milestone. It also depends a lot on the Indian currency which is prone to go weak against the US dollar. But as feared, our economy is not in deep trouble even though it may not be booming. That's a good sign indeed.