The Economic Survey for 2023-24, presented by the Union Minister for Finance in Parliament, provides an in-depth analysis of India’s economic performance over the past year and outlines future prospects. It highlights key developments, challenges, and strategies across various sectors of the economy.
State of the Economy – Steady as She Goes
Diverging Global Growth Patterns:
Global economic growth was 3.2% in 2023, but growth patterns have varied significantly among countries due to domestic structural issues, geopolitical conflicts, and monetary policy tightening.
India’s Economic Resilience:
India maintained economic growth momentum into FY24 despite external challenges. The real GDP in FY24 was 20% higher than its FY20 level, a feat achieved by few major economies. India’s focus on macroeconomic stability minimized the impact of external challenges.
Real GDP Growth:
India’s real GDP grew by 8.2% in FY24, with the Economic Survey projecting a conservative growth of 6.5–7% for FY25, considering balanced risks.
Improved Inflation and CAD:
Retail inflation decreased to 5.4% in FY24 from 6.7% in FY23. The Current Account Deficit (CAD) also improved, standing at 0.7% of GDP in FY24, down from 2.0% in FY23.
Tax Collection:
Direct taxes contributed 55% of the total tax revenue, with indirect taxes making up the remaining 45%.
Monetary Management and Financial Intermediation – Stability is the Watchword
Steady Inflation Rate:
The RBI maintained a steady policy repo rate at 6.5% throughout FY24, aligning inflation with its target while supporting growth.
Banking Sector Performance:
India’s banking sector saw robust growth, with credit disbursal by Scheduled Commercial Banks (SCBs) growing by 20.2% to ₹164.3 lakh crore by March 2024. Gross and net non-performing assets reached multi-year lows, reflecting improved asset quality.
Financial Sector Performance:
The market capitalization of the Indian stock market surged, with primary capital markets facilitating capital formation of ₹10.9 lakh crore in FY24.
Financial Inclusion:
India continues to advance in financial inclusion, with digital financial inclusion being the next major challenge. The insurance and microfinance sectors are poised for rapid growth, with India’s microfinance sector being the second largest globally.
Prices and Inflation – Under Control
Inflation Trends:
Central Government and RBI measures helped maintain retail inflation at 5.4% in FY24, the lowest since the pandemic. However, food inflation rose to 7.5% in FY24 due to adverse weather conditions impacting farm output.
Projected Inflation:
The RBI projects inflation to fall to 4.5% in FY25 and 4.1% in FY26, assuming normal monsoon and no external shocks.
External Sector – Stability Amid Plenty
India’s Global Trade Performance:
India’s share in global goods exports was 1.8% in FY24, with services exports growing by 4.9% to USD 341.1 billion, driven by IT/software services.
Remittances and External Debt:
India remained the top global remittance recipient, with USD 120 billion in 2023. The external debt to GDP ratio stood at 18.7% at the end of March 2024.
Medium-Term Outlook – A Growth Strategy for New India
Growth Strategy:
To sustain a 7%+ growth rate, a tripartite compact between the Union Government, State Governments, and the private sector is essential. The strategy focuses on boosting private investment, expanding MSMEs, driving agricultural growth, financing the green transition, bridging the education-employment gap, and building state capacity.
Climate Change and Energy Transition – Dealing with Trade-Offs
India’s Climate Actions:
India is recognized as the only G20 nation aligned with the 2°C global warming target. The country has significantly increased its renewable energy capacity, with non-fossil sources now accounting for 45.4% of installed electricity generation capacity.
Emission Reduction:
India reduced the emission intensity of its GDP by 33% from 2005 levels by 2019, showcasing its commitment to climate action.
Social Sector – Benefits that Empower
Welfare Expenditure:
Welfare expenditure grew at a CAGR of 12.8% between FY18 and FY24, outpacing the nominal GDP growth of 9.5%. The digitization of healthcare, education, and governance has amplified the impact of welfare programs.
Healthcare and Nutrition:
Over 34.7 crore Ayushman Bharat cards have been issued, covering 7.37 crore hospital admissions. Mental health services and early childhood education are also emphasized under new programs.
Employment and Skill Development – Towards Quality
Decline in Unemployment Rates:
Unemployment decreased to 3.2% in 2022-23, with youth unemployment falling from 17.8% in 2017-18 to 10% in 2022-23. Female labor force participation has been rising for six consecutive years.
Future Job Needs:
India needs to generate nearly 78.5 lakh non-farm sector jobs annually until 2030 to accommodate the growing workforce.
Agriculture and Food Management – Plenty of Upside Left If We Get It Right
Agricultural Growth:
The agriculture and allied sectors registered an average annual growth rate of 4.18% over the last five years. Credit disbursed to agriculture reached ₹22.84 lakh crore, with 7.5 crore Kisan Credit Cards issued.
Importance of R&D:
Investment in agricultural research has a high payoff, with every rupee invested yielding ₹13.85 in returns.
Industry – Small and Medium Matters
Industrial Growth:
Industry growth of 9.5% supported the overall economic growth of 8.2% in FY24. Key sectors driving growth include chemicals, pharmaceuticals, and electronics manufacturing.
PLI Scheme:
The Production Linked Incentive (PLI) scheme attracted over ₹1.28 lakh crore in investments, leading to significant production, sales, and employment generation.
Services – Fuelling Growth Opportunities
Services Sector Contribution:
The services sector contributed 55% to the Gross Value Added (GVA) in FY24, with significant growth in tourism, real estate, and e-commerce. India’s services exports accounted for 4.4% of the world’s commercial services exports in 2022.
E-commerce and Start-ups:
The Indian e-commerce industry is expected to cross USD 350 billion by 2030, with a surge in start-ups, growing from 2,000 in 2014 to 31,000 in 2023.
Infrastructure – Lifting Potential Growth
Infrastructure Development:
Public sector investment has driven large-scale infrastructure projects, with the pace of National Highways construction increasing to 34 km per day by FY24. Capital expenditure on Railways and airport infrastructure has also seen significant growth.
Climate Change and India – A Unique Perspective
India’s Approach to Climate Change:
India emphasizes a harmonious relationship with nature, contrasting with the overconsumption culture in developed nations. The country advocates for a tailored approach to climate action, focusing on sustainable practices like multi-generational households and mindful consumption through initiatives like ‘Mission LiFE’.
The Economic Survey 2023-24 underscores India’s resilience in the face of global challenges, highlighting robust growth across various sectors. The survey outlines a comprehensive strategy to sustain economic momentum while addressing critical issues such as climate change, employment, and financial inclusion.
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