India’s Industrial Surge Powers Towards 9% Economic Growth

Manufacturing sector fuels job creation and wage increases as India surpasses pre-pandemic levels

India’s industrial sector is experiencing rapid growth, driving the nation toward ambitious economic targets exceeding 9% growth, according to B.V.R. Subrahmanyam, CEO of NITI Aayog. At a recent press conference following the release of the Annual Survey of Industries (ASI) by the Ministry of Statistics and Programme Implementation (MoSPI), Subrahmanyam emphasized the remarkable expansion of India’s manufacturing sector, which has become a significant engine for job creation.

The ASI data revealed a 7.5% increase in employment within the manufacturing sector during the 2022-23 fiscal year, with over 2.2 million more people employed than before the pandemic. Average salaries also saw a rise, reflecting the sector’s robust performance.

Despite previous criticisms of the industrial sector’s pace, Subrahmanyam highlighted the sector’s widespread growth across various industries and projected that India could now confidently target over 9% economic growth. This positive outlook is reflected in the Reserve Bank of India’s revised GDP forecast for the fiscal year, which was adjusted from 7% to 7.2%, driven by increased private consumption and revitalized rural demand.

The ASI data also showed that average wages in the manufacturing sector rose by 6.3% during 2022-23 compared to the previous year. Employment levels surged to 18.49 million, significantly higher than pre-pandemic figures, with 2020-21 levels at 16.09 million and 2019-20 at 16.62 million.

Gross Value Added (GVA) in the manufacturing sector grew by 7.3% at current prices, with input costs rising by 24.4% and output increasing by 21.5%. Key industries such as basic metals, petroleum products, food, chemicals, and motor vehicles drove the sector’s growth, accounting for around 58% of the total output.

Maharashtra led the country in GVA for 2022-23, followed by Gujarat, Tamil Nadu, Karnataka, and Uttar Pradesh. These states collectively contributed more than 54% of India’s total manufacturing GVA, while Tamil Nadu, Maharashtra, and Gujarat also led in employment, accounting for 55% of the workforce.

As India continues to bounce back from the impacts of COVID-19, Subrahmanyam predicted further upward revisions in growth forecasts from various rating and multilateral agencies, underlining the potential of the industrial sector to sustain India’s strong economic momentum.

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