The Role of the Service Sector in the Growth of the Economy

The government of India has always claimed that India is the fastest growing economy in the world. The latest GDP numbers would seem to buttress that claim. On the back of a fourth quarter growth of 6.1%, the GDP growth for the financial year 2022-23 has been recorded at 7.2%, which is much higher than the earlier RBI projection of 6.8%.

On the one hand, this is good news, and of course, good optics. On the other hand, critics have expressed scepticism about the methodology used to arrive at the estimate of 7.2%. They also point out that if we take an average of the three years from the last pre-pandemic year, the economy has only grown at an average of 3.2%, the infamous ‘Hindu rate of growth’.

So, what do we really make of the GDP numbers in terms of the health of the economy? What are the concerns about the methodology followed in its calculation? How do they tally with other indicators such as growth in employment and manufacturing output?

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