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The Indian domestic economy requires strategic focus for sizeable and sustained long-term growth, according to a report by DSP NETRA.
"The domestic economy needs a resilient, sizable, and steady growth engine to drive higher growth rates," the report says. The domestic economy finds itself in critical position, after facing a significant setback from the pandemic. The biggest drag on growth has come from the services sector, where contact-intensive sectors such as trade, hotels, and travel were hit hard. Although it saw a sharp revival, the overhang of weak consumption growth and a premature slowdown in wages and salary growth threatens the momentum in this segment. According to the report, to achieve higher growth rates, India's domestic economy requires a resilient, sizable, and steady growth engine. At the current growth rate, maintaining India's long-term Gross Value Added (GVA) growth trajectory of 6.1 per cent CAGR will be challenging says the report. The report highlights the role of Information Technology and IT-enabled Services (IT&ES) sector in anchoring the post-pandemic recovery. However, over-reliance on one single sector could be dangerous, and for India to achieve a diversified and resilient domestic economic engine is essential.The report reflects a mixed picture, with the services sector, a key driver of the economy, showing a noticeable moderation in the post-pandemic period (2020-2025) compared to previous years. The services sector, which had been a consistent performer, has seen a dip in its growth rate in the 2020-2025 period. Specifically, the average annual GVA growth for the services sector, which stood at 7.7% during 2010-2020, has declined to 5.2% in the 2020-2025 period. Experts attribute this slowdown in services growth to the impact of the COVID-19 pandemic, which severely affected contact-intensive industries such as hospitality, tourism, and transportation. The sector of Agriculture, forestry, and fishing has consistently exhibited lower growth rates compared to the overall average. The period 1990-2000 saw an average growth of 3.1%, which dipped further to 2.0% between 2000 and 2010 before recovering somewhat to 4.4% in 2010-2020. This highlights the persistent need for agricultural reforms and investments to enhance productivity and growth in this crucial sector. However, within the Industry, manufacturing saw strong growth of 7.9% in 2000-2010, while construction experienced significant volatility of 9.4% in 2000-2010, then 4.9% in 2010-2020. (ANI)
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