Another K pattern
- The divergence between India’s primary and secondary sectors resembles the income-wise ‘K-shaped’ recovery
New Delhi: At first glance, a 6.3% expansion in gross domestic product that India reported on Wednesday for the July-September quarter would seem healthy against the backdrop of all the problems other economies are beset with. But scratch the surface and some unexpected data points show up. Agricultural output, for one, grew 4.6% from a year earlier in the second quarter of 2022-23. This is notably strong for a sector that is used to lower trend growth. At the same time, manufacturing output declined by 4.3%. This is a bigger negative surprise than the positive one on agriculture, especially given the high priority awarded to the sector by policymakers. The divergence between India’s primary and secondary sectors resembles the income-wise ‘K-shaped’ recovery that our economy has seen after the covid shock. So long as such uneven outcomes persist, our policymakers will have a lot to worry about. Be that as it may, the headline growth figure is in line with the Reserve Bank of India’s projection. There is little evidence so far that its monetary tightening is hurting overall economic growth. Still, with inflation under 7% in October, Mint Street might soon ease the pace of its rate hikes.