IS THE WORLD'S BEST-PERFORMING ECONOMY LOSING ITS SHINE?

India, often lauded as the world's fastest-growing major economy, has recently witnessed a slowdown in its GDP growth.

- RAKESH K CHITKARA

In March 2024, CNN termed India as the world's fastest-growing major economy. However, India's GDP growth for the quarter ending June 2024 came in at 6.7%, slightly below expectations and 1.5 percentage points lower than the growth rate during the same quarter last year. This dip has raised eyebrows both domestically and internationally. While some may view this as a troubling sign, it's crucial to recognize that this is not an indication of long-term decline but rather a momentary pause in India's otherwise upward trajectory. The current challenges are significant, but they are not insurmountable. A deeper look reveals that India has both the strength and the strategies to bounce back robustly.

DOMESTIC FACTORS IMPACTING GROWTH

Weather Challenges and Agricultural Impact: India's agricultural sector remains a bedrock of the economy, employing a significant portion of the workforce and supporting rural livelihoods. This year, erratic monsoon patterns and an unusually harsh summer have disrupted this sector. Unpredictable weather has led to a decline in agricultural output to 2.7%, affecting rural incomes and stoking inflation, particularly stoking inflation, particularly in food prices. These inflationary pressures, in turn, dampen overall consumer demand, slowing down economic activity. Investments in sustainable agricultural practices and improved irrigation systems could mitigate the adverse effects of such climatic irregularities, stabilizing rural incomes and enhancing overall economic resilience.