Stagnant wages, inflation slowing down Indian economy
Unless the perverse conditions in the labour market are remedied, India will find it difficult to sustain high GDP growth.
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India’s growth momentum seems to be losing steam.
After registering an 8.2% growth in 2023-’24, the Indian economy grew by 5.4% in the second quarter of the current fiscal year (July-September 2024). This was the slowest growth in six quarters, almost three percentage points slower than the corresponding period of the previous fiscal year.
The slowdown of the Indian economy was confirmed by the National Statistics Office when its recently unveiled advance estimates of the GDP for the 2024-’25 fiscal showed that the economy could grow by 6.4%, nearly 2% slower than the previous year.
International institutions saw a slowing of the Indian economy early last year. In its assessment of global economic developments in April 2024, the International Monetary Fund had predicted a drop in India’s growth rate from 7.8% in 2023 to 6.8% in 2024, and a tad down to 6.5% in 2025.
Though most economies would consider a growth rate above 6% “aspirational”, in India’s case this level of economic expansion must be considered inadequate given the present government has set the target of making the country a developed nation by 2047.
Less than 7% growth can cast a shadow over the realisation of this target.
The expected slowdown should, therefore, be considered as a wake-up call for the government to take remedial action in...
