[Editorial Analysis] A limited window

Mains Paper 3: Economy
Prelims level: GDP growth
Mains level: Issues related to the Indian Economy


• Recently, released April-June quarter GDP numbers fell below the estimates with growth at 20.1%.

• While GVA grew by 18.8%. The higher GDP growth was driven by high indirect tax collections mainly GST.

Digging Deep:

In sectoral activity arena:

• Manufacturing GVA revival was the most robust.

• While Mining and Electricity growth was moderate.

• Due to all-time highs in outputs of cereals, pluses and oilseeds, Agriculture grew at 4.5%.

• As forecasted, the service sector remained vulnerable.

• Among them, trade, hotels and communication are the worst performers.

• At the same time, even though construction revival is lower than excepted, it has strong residential demand.

Demand and Expenditure Side:

• Private consumption was contracted from 26.2% to 19.3%.

• The private investment stands at 55.3%.

• While Govt consumption was lower by 4.8%, the net exports are still in deficit with a gap much lower than in the 1st quarter.

• This is due to high exports and subdued imports which were aided by weak domestic demand.

Overall and Sector-Specific activity:

• The deepest gaps persist in the services segment most starkly in the construction and trade+ groups that are below threshold levels.

• Despite the rising recovery, the aggregate GVA still remains below 8%.

• The set of high-frequency economic signals suggest a strong recovery in July and August.


• It is expected that India’s 2021-22 GDP growth will be 9.5-10%.

• The vaccination pace increases significantly.

• The three potential growth drivers consumption, investment and exports will be effectively sustained by policy initiatives over the next couple of years.

What needs to be done?

• The govt spending needs to be higher because the April-July data suggests that the Centre has significant room to increase spending.

• Along with it, govt needs speedy and effective implementation of the National Monetization Plan which will open up further fiscal space to increase spending.

• Though the corporate balance sheets have improved significantly and operations have become more efficient.

• The mid-andsmall-sized entities need time to restore now.

• The need is to increase the flow of credit to these stressed segments to supplement state spending.

• India needs to fill the gaps in global inventories which are low currently and needs to scale up its exports and embed markets shares.

• Due to Global central banks speculated loose monetary policy, the RBI needs to shift to a neutral monetary policy stance with a gradual increase in interest rates.

• To keep intact, the need of the hour for India is to raise its potential growth whereby economic recovery does not rapidly close the output gap and preventing a inflationary pressure surge.


• India has a limited window of opportunity to leverage the ongoing realignment of global supply chains and progressively onboard all sectors.

• The need of the hour is for effective coordination with states and data-driven policy mechanisms to enable a stable and steady environment and high growth in the near future.


Prelims Questions:

Q.1) With reference to Partners for Law in Development (PLD) report on Child Marriage Prosecutions in India, consider the following statements:

1. Legal prosecution of child marriages was twice as much against elopement or self-arranged marriages by girls with such cases accounting for 65% (54 out of a total 83 cases) of the total cases studied.

2. Only 30% of the cases were those of arranged child marriages, and a mere 5% were forced child marriages.

Which of the statements given above is/are correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2

Answer: C

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