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India has become the world’s fastest-growing major economy and a bright spot for the Asia-Pacific in 2023 amid strong household consumption and public investment in infrastructure, the United Nations said.
“India registered an economic growth rate of 6.8% in FY 2023 while its formal unemployment was at a 12-year low of 4.1% supported by government spending on infrastructure and strong growth in manufacturing, mining and construction, which offset lower agricultural output,” it said in the Economic and Social Survey of Asia and the Pacific 2024, released on Thursday.
According to the Survey, India’s performance in 2023 has been helped by its lack of external exposure, both to the developed world and to China.
“Instead, the growth drivers for the country are primarily domestic. Gross fixed capital formation increased by 9% in the final quarter of FY23 to reach a share of 34% of GDP, the highest since 2012-2013,” it said.
As per the Survey, India and the Asia-Pacific region, with its favourable demographics has the potential to boost domestic demand.
“The Asia-Pacific region is home to 600 million youth aged 15-24 years, with some countries, such as India and several South-East Asian countries, benefiting from growing numbers of young people, a phenomenon which is expected to continue up to 2050 ,” it said, adding this contrasts with some regional economies that are witnessing rapidly ageing populations, notably China, Japan and the Republic of Korea.
Pointing toward the need to improve gender equality, the UN said deep opportunities are available to leverage women’s economic and social talents in countries like India where the dependency ratio is projected to be among the lowest among large economies for the next two decades.
“Women’s roles in different sectors, such as manufacturing and tourism, should also be integrated into macroeconomic analysis to inform appropriate policies that initiate change,” it said.
“A critical step for this is to engage national statistical machinery to collect, analyse and distribute gender data so that more rigorous investigations can be conducted to improve the available evidence base for best practice macroeconomic management for gender equality,” the UN suggested in the Survey.
Hailing the goods and services tax (GST) reform of India in 2017 as a significant transformation in India’s indirect tax system, the UN said that the digitalized GST platform for tax registration, filing and payment also played an essential role in reducing the compliance and transition costs.
As per the Survey, India’s temporary ban on some categories of rice exports in July 2023 added to the pressures on food prices in the region which were already high in double-digits due to El Nino related weather disruptions.
Listing out the impact of climate change, the Survey cautioned that India is expected to lose about 5.8% of daily working hours due to heat stress in 2030 with the problem most severe for outdoor workers, particularly those employed in agriculture and construction.
“Globally, about 2.2% of working hours are estimated to be lost due to rising temperatures while in developing countries the total output losses due to heat stress are estimated at 1.5–4.0% of GDP annually,” it added.
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