The year 2022 has been challenging for India from various economic perspectives. While, on one hand the soaring inflation in India posed severe challenges to the masses, on the other hand, the Reserve Bank of India (RBI) left no stone unturned to address issues like falling foreign exchange (forex) reserves of the country and depreciating value of Rupee against US dollar.

Here are the top eight parameters that defined and shaped the Indian economy this year.

GDP growth rate

The latest GDP growth numbers for the September quarter raised eyebrows again as growth for Q2 stood at 6.3 per cent. Although, the RBI in the latest monetary policy announcement predicted GDP growth to be 6.8 per cent, yet the concern over the GDP continued. Although the year started with low GDP growth (4.1 per cent) but the quarter ending in June brought some respite as it surged to more than 13 per cent.

Forex Reserves

The RBI took several measures to cope up with the sky rocketing value of US Dollar against the Indian Rupee. One of the major measures included selling dollars, which led to the fall in the forex reserves. Then, the RBI tried to maximize foreign inflows to augment the forex reserves. After witnessing a downtrend since August, the forex reserves have surged by $6.56 billion (for the week ending October 28) and recorded the highest jump in the past one year. India’s forex reserves hit several lows in the past few months, including dropping to their lowest levels since July 2020.

Soaring Inflation

Inflation was one of the major factors that affected the Indian economy this year. The country’s retail inflation measured by the Consumer Price Index (CPI), dropped to an 11-month low of 5.88% in November 2022 after RBI raised the repo rates several times since April.

Concern grew as the RBI failed to bring down the inflation rate for a few months despite repeated rate hikes. The accepted rate of inflation is supposed to be at 6 per cent, but the limit was breached in January and spiked to 7.79 per cent in April.

USD-INR exchange rate

The rupee breached the 80 level versus the dollar for the first time on July 19, 2022, as crude oil prices rose in the international market on July 18. The average exchange value has mostly been around Rs 80.74 this year, although, it touched an all-time high of Rs 83.002 on October 22.

Import-Export

India’s exports witnessed a massive fall this year, and the total export fell by more than 25 per cent between June and October 2022. However, there was a slight rise in the numbers in November. Similarly, imports in India also faced a downtrend.

Monetary Policy rate

The central bank raised the repo rate by 225 basis points between April and December to cope up with the soaring inflation. While the repo rate hike brought some relief to those with investments in fixed deposits and other forms of deposits, it became a growing concern for loan borrowers.

Per capita income

This is one of the very few economic indicators that showed a positive trend this year. The per capita net national income, both in terms of constant price and current prices (calculated with the effect of price inflation), went up by more than 8 per cent and 16 per cent respectively. Although, it is yet to reach the pre-Covid level.

Unemployment

The unemployment rate rose by more than 1.4 per cent for India between January and November 2022. At nearly 10 per cent, the unemployment rate touched its highest in August this year.

Indian Rises to Become 5th

Largest Economy

India became the fifth largest economy, leaving the UK behind in September this year. The size of the Indian economy with regards to ‘nominal’ cash was $854.7 billion compared to UK’s $814 billion, claimed a Bloomberg report. According to the National Statistical Office (NSO), during April-June 2022, India’s gross value added (GVA), which is GDP minus net product taxes and reflects growth in supply, climbed 12.7 per cent. While India saw stable growth, the UK has been battling its highest inflation rate in several decades. According to a Bank of England prediction, the UK is already in a recession period that may last up to 2024.

Economic Growth

At a time when many major economies around the globe struggled due to the aftereffects of the COVID-19 pandemic, India showed signs of stability. The country’s economy grew by an impressive 13.5 per cent in the June quarter of 2022 (Q4 of FY 22) even as the world’s major economies US and UK witnessed contractions. In the September quarter, the country’s economy registered a growth rate of 6.3 per cent.

Increased Purchasing Power

The impressive performance of the Indian economy was also indicated by a rising in purchasing power. As markets opened up and economic activities returned to full swing, the country saw a spike in the private consumption forecast by World Consumption. The country’s private consumption is expected to make up 9.4 per cent of the GDP compared to 7.9 per cent. The imports are also predicted to drop to 15.4 per cent from 35.5 in FY 2022

The World Bank, in a report titled Navigating the Storm, appreciated the country’s policy measures and said that India was well positioned to weather global spillovers compared to most other emerging markets.

Central bank digital currency launch

The Reserve Bank of India on  December 1 launched the first pilot for retail digital Rupee (e-R). The pilot would cover select locations in closed user group (CUG) comprising participating customers and merchants. The e-R is a virtual token that can be used as a legal tender, according to the RBI.  It would be issued in the same denominations that paper currency and coins are currently issued. It would be distributed through intermediaries, i.e., banks.

5G launch in India

Prime Minister Narendra Modi on October 1, inaugurated the sixth edition of the India Mobile Congress (IMC). PM Modi also launched 5G services in India on that day. Soon many telecom companies including Airtel and JIO have brought their 5G plans. At the end of year, Airtel 5G service is available in over 50 cities across the country.