According to the provisional estimate of GDP released on 31 May 2022, the Indian economy has fully recovered to the pre-pandemic real GDP level of 2019-20. Real GDP growth of 8.7% in 2021-22 is 1.5% higher than real GDP in 2019-20. These figures correlate with stronger growth momentum, pointing to increased demand in the economy. The investment rate in the fourth quarter increased to the highest level in the previous nine quarters. In addition, manufacturing capacity utilization rose in the fourth quarter compared to the third quarter, implying higher demand and in line with the growth target of the Indian economy.
Future capital expenditures in the Indian economy are expected to be supported by tax hikes, simplification of the tax regime, comprehensive review and rationalization of tariff structures, and digitization of tax filings. In the medium term, increasing capex for infrastructure and asset building projects will increase the growth multiple. Also, the revival of the monsoon and Kharif plantings helped the agriculture sector gain momentum. As of July 11, 2022, the southwest monsoon will cover the whole country, and the rainfall will be 7% more than normal.
India has become the fastest growing major economy in the world and is on track to become one of the top three global economic powers within the next 10 to 15 years, thanks to its strong democracy and strong partnerships.