India's Economic Survey 2023-24: Growth Projections, Challenges, and Future Outlook

Economic Survey 2023-24: Sunny outlook with challenges ahead, AI impact on jobs

The Economic Survey 2023-24 forecasts 6.5-7% GDP growth, citing last year's 8.2%. It highlights manufacturing growth, inflation control, pre-Covid consumption, AI job threats, global economic fragmentation, geopolitical shocks, carbon emissions, and retail participation. MNREGS uptake impacts noted. Stock markets see benefits from T+1 settlements and record valuations. Privatization lags, Trump election possibility noted.The Economic Survey 2023-24 paints a sunny picture - 'On a strong wicket', 'Steady as it goes'- of a rising economic champion riding confidently through the world's storms. But it cautiously predicts GDP growth of no more than 6.5-7% for the current fiscal year, although market expectations are higher. It says the way ahead holds many challenges, especially those emanating from artificial intelligence (AI), which could decimate jobs. The Survey recounts with satisfaction India's feat of 8.2% GDP growth last year when many other emerging markets were in difficulties. Growth was led by manufacturing (9.9%), the sector the government most seeks to spur to create jobs for those moving out of agriculture. Macroeconomic management has been good with a steadily falling fiscal deficit, a shrinking current account deficit (0.7% of GDP), and inflation (5.5%) that is down, though not out. Consumption Back to Pre-Covid Trend The Survey disagrees with critics like Arvind Subramanian, former chief economic adviser, who say consumption is too weak to be reconciled with 8.2% GDP growth, and has a chart showing consumption back to its pre-Covid trend. But the way ahead has some dark clouds, says the Survey. Conditions are not remotely as favourable as in the decades when China burst through as a rising star. Fragmentation of the global economy, a reversal of globalisation, climate challenges, multiple military conflicts, and artificial intelligence (AI) are all threats. The Survey is too politically polite to highlight the greatest risk of all - the possible election of Donald Trump as US President. It is especially apprehensive of the consequences of AI. It fears this could lead to tremendous job destruction - of not just unskilled but semi-skilled and high-skilled workers too - at a time when employment is already one of India's top worries. It cites a study predicting the gradual demise of India's services exports in the next decade. That is surely too alarmist. It also declares that the rush into AI has led to a phenomenal use of electricity. This is raising carbon emissions hugely even as most countries swear by carbon reduction. Optimists believe AI will produce more solutions than problems. The Survey is not among them. Are employment problems structural? The Survey prefers the explanation that employment was hit by the twin shocks of the bad-debt banking problem plus Covid, and now geopolitical shocks. Without doubt employment remains a major problem, but the Survey cites data suggesting a significant improvement in recent times. It argues that the uptake of MNREGS (food for work) is not correlated with distress, as many analysts have presumed. The privatisation of public sector enterprises has not taken off. The government's emphasis has shifted to the National Monetisation Pipeline - selling or leasing government infrastructure already built to private parties. Last year, this yielded ₹1.56 lakh crore, less than the target of ₹1.8 lakh crore, but still the highest in four years. Sale of assets were highest for new coal mines, followed by highways. For the current year, an indicative list of 33 highway assets have been listed for monetisation, and the new mining policy has paved the way for increasing sales of mines, especially of coal. This has proved more productive and less controversial than privatisation. India's stock markets continue to soar to record heights. The Survey says that early digitalisation enabled India to move to T+1 settlement (settlement the day after a transaction) well before the US and other countries. Indian retail participation has brought steady, rising sums through systemic investment plans, taking assets under mutual funds to record levels. This in the last year was supplemented by an inflow of $15 billion from abroad, vastly surpassing inflows into Brazil ($2.9 b) or Indonesia ($ 0.9 b). Many emerging markets suffered an outflow. Indian stock markets today have record valuations. That is a compliment from global investors. But it also means an unexpected shock can result in a sharp fall. Cautious Optimism India's economy is on a stable footing and resilient in the face of geopolitical challenges, according to the Economic Survey. Over the longer term, it cited the need for heavy lifting on the domestic front as the external environment gets tougher, calling for a grand alliance of the Centre, states and the private sector to rise above these hurdles.

6.5 to 7% growth forecast in cautious eco survey

The Economic Survey on Monday projected India gross domestic product (GDP) growth at 6.5-7% for 2024-25, lower than 7.2% estimated by the Reserve Bank of India last month and significantly down from 8.2% achieved in FY24, in a cautious outlook that flagged a raft of concerns and potential roadblocks, even as it recognised the significant progress made over the past decade. The document called for a review of India's stance on investments from China so as to boost India's own competitiveness, a rethink of the Reserve Bank of India's inflation-targetting framework to exclude volatile food prices, more effort by the private sector to create jobs, and a need to reform agriculture and strengthen small enterprises. In his preface chief economic adviser (CEA) V Anantha Nageswaran also put forth a "tripartite compact" the country needs to become a developed nation, an articulated objective of the Narendra Modi government, with the deadline being 2047. The compact, he wrote, is for "... governments to trust and let go, ... private sector to reciprocate the trust with long-term thinking and fair conduct,... public to take responsibility for their finances and their physical and mental health." The conservative GDP estimate emanated mainly from challenges such as the polarised global order, growing medium-term challenges, and the uneven spread of the monsoon. Domestic growth drivers supported economic growth in FY24 despite global uncertainties, but private capital formation may turn "slightly more cautious" because of fears of cheaper imports, the survey said. "Considering these factors, the Survey conservatively projects a real GDP growth of 6.5-7%, with risks evenly balanced, cognisant of the fact that the market expectations are on the higher side," said the Survey, the first major economic policy document put out in the third term of the National Democratic Alliance (NDA) government. Tabled by finance minister Nirmala Sitharaman in Parliament a day before she presented the Union Budget, the survey called for the creation of more jobs, agricultural and labour code reforms, and tackling the looming threat that artificial intelligence (AI) poses to workers across skill levels. It sounded caution on soaring stock markets, saying ballooning retail investor participation was propelling the possibility of speculative trading due to overconfidence and expectations of greater returns. It called for tapping into foreign direct investment from China, a bold suggestion that came against the backdrop of a crackdown on Chinese products and firms in the aftermath of a deadly border clash in 2020. And it underlined potential concerns of childhood obesity, employability of young people and the population's mental health. "The Indian economy is on a strong wicket and stable footing, demonstrating resilience in the face of geopolitical challenges," Nageswaran wrote in the preface to the annual report card on the economy. The survey praised the government's handling of the economy over the last decade, and the strides made by structural reforms. "The Economic Survey highlights the prevailing strengths of our economy and also showcases the outcomes of the various reforms our government has brought. It also identifies areas for further growth and progress as we move towards building a Viksit Bharat," Prime Minister Narendra Modi said on X. The Opposition criticised the document. "Today's Economic Survey is like a shiny hollow envelope highlighting the failures of the Modi government," Congress chief Mallikarjun Kharge said. The National Statistical Office's (NSO) on May 31 projected that India's GDP grew at 8.2% in 2023-24, which was higher than the 7% growth in 2022-23. The Reserve Bank of India on June 7 revised upwards the GDP growth estimate for 2024-25 to 7.2% from 7%. The International Monetary Fund (IMF) on July 16 raised India's growth forecast for FY25 to 7% from 6.8% on the back of improving private consumption. And most of the projections indicated that India would post the fourth consecutive year with growth at or above 7%. The Economic Survey, however, appeared cautious. "We are not pessimistic. We are actually very optimistic about growth, but we are also mindful of the challenges which I listed to you," Nageswaran said at a press conference. The CEA said he was more confident about 7% growth for FY25 when he presented the interim Economic Survey in January this year. Since then "the global environment has become even more polarised. And financial market valuations are much more elevated. So, given that we feel 7% is doable, but yet we want to be, not necessarily cautious, but somewhat prudent in projecting [that] we would rather be very pleasantly surprised than being forced to face disappointments," he said. Pointing to the headwinds, the survey said any escalation of geopolitical conflicts in 2024 could lead to supply dislocations and higher commodity prices that may stoke inflation and stall monetary policy easing, which would in turn have repercussions for capital flows, which could also influence the Reserve Bank of India's monetary policy stance. Despite the core inflation rate being around 3%, RBI, with one eye on the withdrawal of accommodation and another on the US Federal Reserve, has kept interest rates unchanged for quite some time, and the anticipated easing has been delayed. The Survey noted this, and called for a review of India's inflation targeting framework. "It is worth exploring whether India's inflation targeting framework should target the inflation rate excluding food. Hardships caused by higher food prices for poor and low-income consumers can be handled through direct benefit transfers or coupons for specified purchases valid for appropriate durations", it said. On China - a thorny topic politically with deep implications for national security - the document said India had two choices to benefit from the "China plus one strategy" -- integrating into China's supply chain or promoting FDI from China. "Among these choices, focusing on FDI from China seems more promising for boosting India's exports to the US, similar to how East Asian economies did in the past." When asked later, Nageswaran said he was urging the Centre to review its stance on FDI from China. "I am asking for re-examination...I'm saying that there is a balance that's required between importing goods versus importing capital. I gave the example of what Brazil and Turkey did. They banned the import of vehicles but then they incentivised them to invest in their own country," he said. The document invested substantial efforts in sketching the contours of the employment scenario, saying the economy needed to generate an average of nearly 7.85 million jobs annually until 2030 in the non-farm sector to cater to the rising workforce. But it also flagged potential concerns around the impact of AI on skilled and non-skilled jobs, and called for more investment in healthy diets and sound mental health services. "In the context of inflation management, the Survey calls for a review of the present inflation targeting regime, broadly arguing in favour of recasting the target focused on non-food CPI inflation. Since recent pressure on CPI inflation was largely driven by food inflation, this modification in inflation management might facilitate easing of interest rates and thereby make monetary policy more growth oriented," DK Srivastava, chief policy advisor of EY India said. Commenting on the overall Survey, he said the document highlighted six features: An emphasis on employment-oriented private sector investment; focus on greening of growth; supporting MSME growth especially through improved access to credit, enhanced physical and digital connectivity, and a better regulatory environment; continuing to rely on agricultural growth supported by better technology and climate friendly policies; continued emphasis on education and skill building; and increased productivity of the state sector.

Economic Survey calls for tripartite agreement to make India developed by 2047

The government presented the Economic Survey for 2023-24 in the parliament today, estimating that India's real GDP could grow between 6.5% and 7% in 2024-25. The Economic Survey, which is prepared by the Chief Economic Advisor's Office in the Ministry of Finance has, over the years, evolved from being a commentary on the (fiscal) year that was to a peek into the government's, or rather the CEA's economic thinking, on the desired road ahead for the economy. Here is a quick summary of what the 2023-24 Economic Survey says about the desired economic roadmap of the current government. Redefining the responsibilities of the government, capital and citizens... "The tripartite compact that this country needs to become a developed nation amidst emerging unprecedented global challenges is for governments to trust and let go, for the private sector to reciprocate the trust with long-term thinking and fair conduct and for the public to take responsibility for their finances and their physical and mental health", the Survey says, hinting that India's economic rejuvenation is not something which can be achieved by a kneejerk shift towards complete or no regulation or markets. The Survey flags areas for both the government and private capital including some which have been deemed as extremely successful by the current government. For example, ease of doing business continues to be a problem area. "...notwithstanding the impressive strides made in the last decade, uncertainties and interpretations related to transfer pricing, taxes, import duties and non-tax policies remain to be addressed", the Survey says while underlining the already difficult problem of attracting FDI on account of higher interest rates in advanced economies and growing geopolitical tensions. To be sure, not all blame lies at the doorstep of the government. The Survey does make a criticism of the private sector as well, for not responding on intended lines to the government's decision to reduce corporation tax rates to facilitate capital formation in the Indian economy. "Private sector Gross Fixed Capital Formation (GFCF) in machinery and equipment and intellectual property products has grown cumulatively by only 35% in the four years to FY23. Meanwhile, its GFCF in 'Dwellings, other buildings and structures' has increased by 105%. This is not a healthy mix. Second, the slow pace of investment in M&E and IP Products will delay India's quest to raise the manufacturing share of GDP, delay the improvement in India's manufacturing competitiveness, and create only a smaller number of higher-quality formal jobs than otherwise", it says. It also warns about a turbulent future ripe with geopolitical and technological shocks. This warning comes at time when white collar service job generation might have peaked already. "While the boom in telecommunications and the rise of the internet facilitated business process outsourcing, the next wave of technological evolution might bring the curtains down on it. In this milieu, the corporate sector has a responsibility, as much to itself as it is to society, to think harder about ways AI will augment labour rather than displace workers", the Survey notes. Even if we were to handle the services challenges, things are still going to be difficult, because the world has changed fundamentally, the Survey argues. Its tone is pretty unambiguous on the gravity of the challenge. "The global backdrop for India's march towards Viksit Bharat in 2047 could not be more different from what it was during the rise of China between 1980 and 2015. Then, globalisation was at the cusp of its long expansion. Geopolitics was largely calm with the end of the Cold War, and Western powers welcomed and even encouraged the rise of China and its integration into the world economy. Concerns over climate change and global warming were not so pervasive or grave then as they are now. Fourth, the advent of Artificial Intelligence casts a huge pall of uncertainty as to its impact on workers across all skill levels - low, semi and high. These will create barriers and hurdles to sustained high growth rates for India in the coming years and decades. Overcoming these requires a grand alliance of union and state governments and the private sector", the Survey says. And these things have to be achieved without sacrificing macro-economic stability or thinking in binaries "The Indian economy is on a strong wicket and stable footing, demonstrating resilience in the face of geopolitical challenges. The Indian economy has consolidated its post-Covid recovery with policymakers - fiscal and monetary - ensuring economic and financial stability", the Survey notes while underlining the importance of factors such as "possibility of overconfidence leading to speculation (in financial markets) and the expectation of even greater returns, which might not align with the real market conditions" along with usual emphasis on fiscal and monetary stability. The Survey also calls for guarding against "sterile" binaries such as "urban vs. rural, growth vs. equity or development, and manufacturing vs. services" and calls upon both the political class and the civil service to realise that "India needs multiple development pathways".

Economic Survey 2024: Jobs key to unlocking demographic dividend

Focus on jobs is a key takeaway from the Economic Survey; another highlight is the conservative approach to growth expectations. A Measured Advice from the Survey Dharmakirti Joshi, Chief Economist, CRISIL The Economic Survey's expectation of GDP growth decelerating to 6.5-7% in fiscal 2025 is based on the right reasons. The forecast is in alignment with CRISIL's own projection of 6.8% growth and acknowledges the resilience of the economy in the first quarter, as reflected in the strong print of the PMI and solid tax collections. We, however, maintain our forecast because of anticipated pressures from high interest rates and reducing pent-up demand. Then there are heightened global risks that create a downward bias to the forecasts. Given the uncertain environment, we consider it prudent for the Budget to sustain ongoing support to infrastructure buildout, while creating an enabling environment and spurring private investment in strategic and employment generating sectors. Food inflation has been another major challenge. How much will the Budget reflect the measured advice of the survey? We are about to find out. GDP Growth Expectations are Realistic Aditi Nayar, Chief Economist, ICRA While the Economic Survey has pegged GDP growth for FY25 at 6.5-7%, which is conservative per market estimates, we believe these projections are quite realistic (ICRA est: 6.8%) given the global and agroclimatic uncertainties. Moreover, the expected narrowing of the wedge between the growth in GDP and GVA, which had benefitted from a contraction in subsidies in FY24, portends a slower economic growth in FY25. Further, the impact of the elections on activity in some sectors will temporarily stem the pace of growth in H1, followed by a back-ended pick up in H2. We are circumspect whether a sustained growth of over 7% can be achieved in the medium term, largely owing to concerns around the outlook for exports. India's growth would therefore increasingly rely on domestic demand, necessitating sustained job creation. Highlighting Challenges and Potential Sunil Kumar Sinha, Senior Director, Ind-Ra Economic Survey is an annual report card of the country's economic performance. However, often in the past, it had also contained analysis of the challenges and suggestions to address short to medium term growth prospects. A good way to assess this Survey therefore is to see if it has done so. Let me pick up three such issues - (i) employment and skill creation, (ii) growth and expansion of MSME and (iii) energy transition. In a way all three issues are interlinked, and the survey elaborates on the challenges being faced in each of these areas. It calls for a tripartite pact - between the government, the private sector and academia - to facilitate requisite skill development. The survey acknowledges that compliance burden coupled with slow/poor access to finance is robbing MSMEs of growth. On energy transition, it acknowledges India's mission-mode approach but also highlights the trade-offs. Skilling in Age of AI and Other Tests for India Rajani Sinha, Chief Economist, CareEdge The survey has very aptly highlighted key focus areas like employment generation, labour skilling, agriculture sector reforms, supporting MSMEs and managing green transition to ensure that India's economic growth momentum is sustained. India is in an enviable position of having a large working age population at the time when the developed economies are ageing. The survey talks in detail about the urgent need to tap into India's demographic dividend through adequate productive job creation. The role of AI in labour market and the opportunity for India to position itself as a leader in this area are also highlighted. The survey talks about the global trend of rising fragmentation along geopolitical lines and the need for economies to adjust to the new landscape. It also suggests India's inflation targeting framework should target inflation excluding food. This suggestion has its merit as food inflation is mainly because of supply-side factors.

Sunny, with a Chance of Dark Clouds

The Economic Survey 2023-24 paints a sunny picture -- 'On a strong wicket', 'Steady as it goes' -- of a rising economic champion riding confidently through the world's storms. But it cautiously predicts GDP growth of no more than 6.5-7% for the current fiscal year, although market expectations are higher. It says the way ahead holds many challenges, especially those emanating from artificial intelligence (AI), which could decimate jobs. The Survey recounts with satisfaction India's feat of 8.2% GDP growth last year when many other emerging markets were in difficulties. Growth was led by manufacturing (9.9%), the sector the government most seeks to spur to create jobs for those moving out of agriculture. Macroeconomic management has been good with a steadily falling fiscal deficit, a shrinking current account deficit (0.7% of GDP), and inflation (5.5%) that is down, though not out. The Survey disagrees with critics like Arvind Subramanian, former chief economic adviser, who say consumption is too weak to be reconciled with 8.2% GDP growth, and has a chart showing consumption back to its pre-Covid trend. But the way ahead has some dark clouds, says the Survey. Conditions are not remotely as favourable as in the decades when China burst through as a rising star. Fragmentation of the global economy, a reversal of globalisation, climate challenges, multiple military conflicts, and artificial intelligence (AI) are all threats. The Survey is too politically polite to highlight the greatest risk of all -- the possible election of Donald Trump as US President. It is especially apprehensive of the consequences of AI. It fears this could lead to tremendous job destruction -- of not just unskilled but semi-skilled and high-skilled workers too -- at a time when employment is already one of India's top worries. It cites a study predicting the gradual demise of India's services exports in the next decade. That is surely too alarmist. It also declares that the rush into AI has led to a phenomenal use of electricity. This is raising carbon emissions hugely even as most countries swear by carbon reduction. Optimists believe AI will produce more solutions than problems. The Survey is not among them. Are employment problems structural? The Survey prefers the explanation that employment was hit by the twin shocks of the bad-debt banking problem plus Covid, and now geopolitical shocks. Without doubt employment remains a major problem, but the Survey cites data suggesting a significant improvement in recent times. It argues that the uptake of MNREGS (food for work) is not correlated with distress, as many analysts have presumed. The privatisation of public sector enterprises has not taken off. The government's emphasis has shifted to the National Monetisation Pipeline -- selling or leasing government infrastructure already built to private parties. Last year, this yielded ₹1.56 lakh crore, less than the target of ₹1.8 lakh crore, but still the highest in four years. Sale of assets were highest for new coal mines, followed by highways. For the current year, an indicative list of 33 highway assets have been listed for monetisation, and the new mining policy has paved the way for increasing sales of mines, especially of coal. This has proved more productive and less controversial than privatisation. India's stock markets continue to soar to record heights. The Survey says that early digitalisation enabled India to move to T+1 settlement (settlement the day after a transaction) well before the US and other countries. Indian retail participation has brought steady, rising sums through systemic investment plans, taking assets under mutual funds to record levels. This in the last year was supplemented by an inflow of $15 billion from abroad, vastly surpassing inflows into Brazil ($2.9 b) or Indonesia ($ 0.9 b). Many emerging markets suffered an outflow. Indian stock markets today have record valuations. That is a compliment from global investors. But it also means an unexpected shock can result in a sharp fall.

Progress made, but skills gap, agri big hurdles on road to 2047: Economic Survey

The Economic Survey has struck a realistic note while listing the challenges involved in India becoming a developed country by 2047, a stated objective of the current government, even as it acknowledges the progress made over the past decade. In chapter five, which talks about medium term outlook on the Indian economy, the survey is unambiguous about India having to navigate the most critical part in its economic transformation trajectory at a time when global conditions are anything but conducive. It also highlights the internal challenges -- from a skills gap to the need to make agriculture competitive and strengthen small enterprises. Budget 2024 Live Updates: Nirmala Sitharaman to present Modi 3.0's first Budget The period marked till 2047 will be marked by "significant growth limiting impact" of "increasing geoeconomic fragmentation" in an "environment of global trust deficit" and "limited policy space" for countries, it says. India will have to make sure that it does all it can to generate productive employment before its working age population peaks in 2044. This will require correcting the skill-education mismatch which has created a situation where almost half of India's youth is deemed unemployable. To be sure, education is not the only challenge when it comes to ensuring that India's demographic dividend is exploited fully. The survey flags the growing challenge of adult and child obesity in India; the rise in latter, it says is among the steepest in the world, and argues that for India to "reap the gains of its demographic dividend, it is critical that its population's health parameters transition towards a balanced diet". India's economic rise, the survey argues will not come from big ticket manufacturing projects alone. It will have to pay more attention to growth and income generation potential of the agriculture sector as well as creating a robust and dynamic MSME sector. Also Read | High-value produce key to bolstering farm incomes: Economic Survey The former will require not just factor market reforms but also giving up the urge to worsen the terms of trade of agriculture in the name of controlling inflation. In what will amount to setting the cat among the (monetary policy) pigeons, the survey has also called for revisiting India's inflation targeting framework. "It is worth exploring whether India's inflation targeting framework should target the inflation rate excluding food. Hardships caused by higher food prices for poor and low-income consumers can be handled through direct benefit transfers or coupons for specified purchases valid for appropriate durations", it says. In case of the MSME sector, the survey makes a case for deregulation and sector-wise targeted and tailored interventions. To be sure, India's growth challenge is not just about fixing the problems in India's small farms and enterprises. The survey also talks about the need for deepening the corporate bond market to provide a multitude of financing options beyond banking to finance India's investment needs. Similarly, the survey also calls for a strategic reevaluation of India's engagement with China. "Striking the right balance between the trilemma of trade with China, investment by China, and India's territorial and non-territorial integrity and security" is key to ensuring a robust growth for Indian economy, the survey argues. Also Read | 'AI could slow BPO sector growth': Chief Economic Advisor V Anantha Nageswaran To be sure, the survey does acknowledge the progress the economy has made in over the three decades of economic reforms and especially the past ten years under the current government and calls for a change of gears and direction going forward. "The structural reforms of the last decade, focused on the supply side of the economy, have to give way to nextgen reforms that are bottom-up in nature to yield strong, sustainable, balanced, and inclusive growth", it says. While it does suggest various things the government needs to do to meet its medium-term objectives, it has also introduced a note of caution about the both the political and intellectual enormity of the challenge. "Satisfaction with past progress fades away from memory quickly, and newer expectations take their place. The measurement of achievements in the present against rising aspirations leaves society appear restless and discontented. But, this is creative and not destructive. The latent energy of such aspirations needs to be harnessed even as they have to be met. This has to be carried out in a country of India's size and within a democratic framework. There are no historical precedents and templates to follow for the complexity it entails. What has brought the economy to its present state from where it was three decades ago may not take us to the next destination", it says.

Big-bang reforms now need to give way to grunt work

Economic Surveys, being documents authored by advisors appointed by the Centre, often struggle to find the right balance between celebrating the achievements of the government and flagging areas where more work needs to be done. The Economic Survey for 2023-24 manages this tightrope walk quite well. While noting that India's real GDP in FY24 is 20 per cent higher than pre-pandemic levels, the Survey projects growth for FY25 at 6.5 to 7 per cent, lower than estimates from Reserve Bank of India (7.2 per cent) and most private forecasters (7 per cent plus). The Survey stands some popular narratives on their head. It says a private capex surge is already underway citing 19.8 per cent growth in fixed investments by private corporations in FY23. It dismisses the notion that households are in distress, pointing to their savings flooding into housing and capital markets. It glosses over sluggish private consumption, terming it as steady. In a later chapter, it subtly points out that India Inc has not expanded its worker compensation at the same pace as its manifold growth in profits since Covid. Rising trade protectionism and de-globalisation, geopolitical tensions, climate transition and Artificial Intelligence are all challenges that India will need to contend with. It advises, sanely, that policy choices for India need to be driven more by pragmatism than ideology and warns that a blind aping of the West will not serve. On energy transition, it makes the sensible point that chasing the Western idea of net-zero may be unwise, as it raises resource dependence on hostile nations (read China), ties up land in unproductive uses and saddles the fisc with subsidies. It offers workable ideas to overcome these challenges too. Agriculture and allied sectors can be a potent engine for growth and employment, if only we can consolidate fragmented land holdings, improve market intelligence and have a vibrant derivatives market. It shows that repealing draconian laws on land use can double the space available to Indian factories, boosting manufacturing and employment. That bridging the skill gap is key to boosting industry is well-known, but the idea of deregulating State-level laws that bar women workers from several industries, is novel. Perhaps with an eye on the election outcome, a chapter is devoted to inflation. After patting the Centre for administrative measures and fuel price cuts that have lowered non-core inflation, the Surveycalls for a relook at the inflation-targeting framework. A recurring theme is that the big-bang reforms that were propelling India's growth story are now done, and that it is now time for grunt work on the individual factors of production. There's also sub-text that the Centre cannot achieve this alone, but will need participation from States, local governments and the private sector. However, excellent ideas from Economic Surveys seldom make it to implementation. One hopes that this ideas-rich Survey turns out to be an exception. SHARE Copy linkEmailFacebookTwitterTelegramLinkedInWhatsAppRedditPublished on July 22, 2024

Urging stability and pragmatism

The 2023-24 Economic Survey comes in a very different political backdrop for the current government. After all, the BJP couldn't win a majority in the Lok Sabha on its own -- despite the Indian economy continuing to be a rare sweet spot of high growth, moderate inflation and macroeconomic stability among major economies. The survey has left the task of preserving and replenishing the political capital of the government to the Budget. It has rightly assumed the role of being the voice of caution on the medium-term challenge of boosting India's economic prospects. The survey specifically raises three issues. It correctly flags the fact that the world will be very different going forward with both technological and geopolitical risks adding to headwinds for India's goal of achieving a just and sustainable economic transformation. The former will predominantly be in the realm of constrains from developments such as Artificial Intelligence (AI) squeezing service sector jobs. The latter are likely to emerge from the world, especially developed countries, becoming more and more inward looking and protectionist. Difficult as these challenges are, they will become even more crippling if macroeconomic stability were to come under strain, is the survey's clear message. This underlines the importance of paying attention to the opportunities in the domestic market while doing all it takes to exploit opportunities abroad. It is here that the survey is critical of the government's policies on the question of exploiting the China-plus-One moment in global value chains. India must encourage FDI from China rather than relying on the trade route to boost export-oriented domestic manufacturing, the survey argues in the backdrop of multiple Chinese companies facing punitive actions from the government's many enforcement agencies over the past few years. This is a call for pragmatism, separating the geopolitical from the geo-economic. To be fair, this is easier said than done. The most important caution from the survey is on the growing risk from what could be a vicious cycle of speculation and asset bubble creation in the financial markets. It flags India's elevated market capitalisation to GDP ratio, growing retail participation in riskier forms of equity market activity such as derivative trading, and financial sector players indulging in mis-selling and speculative gains. Can the Centre and the regulators undertake a pre-emptive strike on this potentially hazardous exuberance without extracting a cost on market sentiment? It remains to be seen whether the Budget and subsequent government policy do justice to these rightful concerns.

India's Economic Survey 2023-24: Key Insights and Future Prospects

The Economic Survey is divided into three sections: Overview and CEA Perspective: This section offers insights into key economic issues and the government's stance on the financial state of the country. Sectoral Data and Figures: This section provides data on various sectors as supplied by respective departments and ministries. Macroeconomic Statistics: This section encompasses national income, production, employment, inflation, balance of trade, export-import trade, and other aspects of the economy. Highlights from the Mini Economic Survey. Earlier this year, the mini Economic Survey set ambitious targets and outlined challenges for India's growth. It forecasted that India could become a $7 trillion economy by 2030. CEA Nageswaran expressed optimism that FY25 could mark the fourth consecutive year of over 7% growth in the Indian economy following the COVID-19 pandemic. However, the mini Economic Survey also highlighted several challenges to this growth trajectory. It noted that India's economic performance is influenced not only by domestic factors but also by global developments. The report, authored by CEA Nageswaran, emphasized the significant impact of artificial intelligence (AI) on employment, particularly in the services sector. AI could potentially undermine the cost competitiveness of countries exporting digital services. Additionally, the report identified geopolitical tensions and the Red Sea crisis as significant challenges to India's export of goods and services. These factors are expected to slow down global trade growth in 2023. The mini Economic Survey stressed the importance of lowering logistics costs and investing in product quality to maintain and expand market share in areas where India has a competitive advantage.

Economic Survey 2024 - Public sector investment drives infrastructure growth but private investment needed | Business Insider India

Finance Minister Nirmala Sitharaman on Monday tabled the Economic Survey 2023-2024 in the Lok Sabha, a day ahead of the Budget being tabled. According to the report, India's real gross domestic product (GDP) grew by 8.2% in FY24. The report has revealed that large-scale infrastructure projects in the country have largely been funded by in recent years. The government has highlighted a need for private sector investment in infrastructure building. In the five years between 2019 and 2023, the central and state Governments contributed 49% and 29% of the total investments in infrastructure, while, the private sector's contribution was just 22%. "There is significant scope for boosting India's , especially in the context of investment requirements facing the Indian economy in the areas of infrastructure, green transition, etc," as per the Economic Survey 2024. In the last decade, the pace of construction of national highways has reportedly tripled. According to the Economic Survey 2024, the pace of construction of national highways has increased from 11.7 km per day in FY14 to around 34 km per day by FY24. The capital expenditure in railways has increased by 77% in the last five years, with significant investments directed at the construction of new lines, gauge conversion and doubling. The passenger handling capacity at airports in the country has increased by 62 million passengers per annum in FY24 with new terminal buildings being opened at 21 airports. There is now a need to add more airports and expand the existing airports. The clean energy sector in India saw new investment of ₹8.5 lakh crore between 2014 and 2023. At present, 945 km of metro rail or RRTS lines are operational, out of which 86 km was added in FY24. This is set to soon double as 993 km of metro and RRTS lines are under construction in 27 cities across the country. SEE ALSO: Economic Survey highlights: Top 10 things every Indian should know from the Economic Survey 2023-24 Economic Survey 2024 - industries grow by 9.5%, fueling economic growth to 8.2% Economic Survey 2023-2024 highlights emerging job trends in AI, Cybersecurity, 3D Printing and Web Development