The Finance Ministry on Thursday released the Annual Economic Review report for the month of May 2023 and said that a strong final quarter pushed India’s GDP to 7.2 per cent in FY 23. This is higher than the 7 per cent estimated in February.

The report added that the post-pandemic quarterly trajectories of consumption and investment have crossed the pre-pandemic levels.

“The domestic demand has, however, recovered since then and moved from strength to strength in FY23. In the process, it enabled a near convergence of the pre- and post-pandemic quarterly growth trajectories," said Finance Ministry in its report.

The report said that external demand did not works for the economy in the second half as well of FY23.

“When external demand starts to work, the pre-and post-pandemic trajectories of real GDP will also converge. The supply side served well the demand side in FY23," it stated.

The agriculture sector registered a twelve-quarter record high growth rate in the last quarter. The industrial sector rebounded in Q4, driven by manufacturing. The year-end saw the contact-intensive services sector fully recovering to its pre-pandemic expanse and depth.

The rising employment levels strengthened domestic demand, said the report.

The labour force participation rate (LFPR) in India rose through the pandemic in line with the pre-pandemic trend. The overall unemployment rate declined to a five-year low of 4.1 per cent in FY22, raising with it the worker-population ratio.

More recently, in FY23, the urban unemployment rate declined in each quarter, reflecting steady growth in employment levels in the country.

“Growing employment levels, in part, have been an outcome of several policy measures implemented over the last few years. These measures strengthened the corporate sector, supported small enterprises, improved the ease of doing business, and attracted foreign capital to increase the employment generation capacity of the economy," it stated.

An increase in repo rates has worked for India, enabling a 40-45 per cent of transmission in lending and deposit rates by the end of FY23, it stated.