The Finance Ministry unveiled its Annual Economic Review report, revealing that India's GDP surged to 7.2% in FY23, propelled by a robust final quarter. This figure exceeds the estimated 7% projected in February.

According to the report, the post-pandemic trajectories of consumption and investment have surpassed the levels seen before the crisis. It stated, "Since then, domestic demand has made a remarkable recovery, propelling FY23's growth forward. Consequently, it has brought about a near convergence of the pre- and post-pandemic quarterly growth trajectories."

However, external demand did not fare well during the second half of FY23. The report highlighted that the convergence of the pre- and post-pandemic real GDP trajectories will materialize when external demand begins to perform. It also emphasized that the supply side effectively complemented the demand side in FY23.

Remarkably, the agriculture sector achieved an unprecedented growth rate, setting a record high for twelve consecutive quarters in the last quarter. Q4 witnessed a resurgence in the industrial sector, primarily driven by manufacturing. Additionally, the contact-intensive services sector fully recovered to its pre-pandemic scope and depth by the end of the year.

The report attributed the strengthening of domestic demand to the rising employment levels. It indicated that India's labor force participation rate (LFPR) steadily increased during the pandemic, following the pre-pandemic trend. Moreover, the overall unemployment rate dropped to a five-year low of 4.1% in FY22, consequently raising the worker-population ratio.

More recently, each quarter of FY23 witnessed a decline in the urban unemployment rate, indicating consistent growth in employment across the country.

The report acknowledged that the surge in employment levels was, in part, the result of various policy measures implemented in recent years. These measures aimed to bolster the corporate sector, support small enterprises, enhance the ease of doing business, and attract foreign capital to augment the economy's capacity for generating employment.

Furthermore, the report stated that the increase in repo rates had a positive impact on India, leading to a 40-45% transmission in lending and deposit rates by the end of FY23.

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