On Monday, July 22nd, Finance Minister Nirmala Sitharaman presented the Economic Survey 2023-24 in the House of Parliament to share that the Indian economy stands robust and stable amid the ongoing geopolitical issues. The 476-page Economic Survey emphasises that India’s economy has consolidated following post-Covid recovery and that the policymakers have played an important role in guaranteeing economic and financial stability.
As per the survey, the Indian economy continues to grow despite global turbulence. Given the tough global climate, the study further emphasises the need for significant domestic measures to sustain recovery. “For the recovery to be sustained, there has to be heavy lifting on the domestic front because the environment has become extraordinarily difficult to reach agreements on key global issues such as trade, investment, and climate,” the Economic Survey read.
The survey highlights several issues like capital investment, inflation, expansion of the private sector investment, and also about foreign reserves. The survey reports explain that the investment from the government has been essential in supporting capital development, with the private sector starting to make investments considerably in the Financial Year 2022. According to the Survey, “Public investment has continued capital formation in recent years, even as the private sector shed its balance-sheet blues and began investing in FY22. It now needs to take over from the public sector and maintain the economy’s investment pace. The signs are encouraging.”
Economic Survey 2023-24 conservatively projects a real GDP growth of 6.5–7 per cent in FY25, with risks evenly balanced, cognizant of the fact that the market expectations are on the higher side. pic.twitter.com/Kvdn4jBdDP
— ANI (@ANI) July 22, 2024
The study discusses the headline inflation that is under control, however, certain categories of food remain high. The trade deficit in FY24 was lower than in FY23, and the current account deficit was approximately 0.7% of GDP. Foreign exchange reserves remain sufficient, the report broadly highlights.
National income figures show a strong increase in non-financial private-sector capital formation in FY22 and FY23, following a dip in FY21. Despite a drop in investment in machinery and equipment in FY20 and FY21, there was a substantial comeback. Early corporate sector figures for FY24 indicate that capital formation in the private sector has continued to grow.
Notably, the entire survey has been divided into 13 chapters discussing Agriculture, Infrastructure, Investment, Employment, Climate, Inflation and overall Monetary Management. The survey indicates that the growth of the Indian economy is steady as the contribution of the private sector is increasing along with the public sector. The study also states that the Indian economy has recovered and expanded in an orderly fashion post-pandemic.
“Inflationary pressures stoked by global troubles, supply chain disruptions, and vagaries of monsoons have been deftly managed by administrative and monetary policy responses. As a result, after averaging 6.7 percent in FY23, retail inflation declined to 5.4 percent in FY24. The real GDP in FY24 was 20 percent higher than its level in FY20, a feat that only a very few major economies achieved. Prospects for continued strong growth in FY25 beyond look good, subject to geopolitical, financial market, and climatic risks,” the report stated.
The Finance Minister, while presenting the Survey, also stated that the market capitalisation of the Indian stock market has seen a remarkable surge, with the market capitalisation to GDP ratio being the fifth largest in the world.
Regarding inflation and price hikes, the survey states that during FY22 and FY23, the COVID-19 pandemic, geopolitical tensions, and supply disruptions contributed to rising inflationary pressures globally.
“In India, consumer goods and services faced price hikes due to international conflicts and adverse weather conditions impacting food costs. However, in FY24, the Central Government’s timely policy interventions and the Reserve Bank of India’s price stability measures helped maintain retail inflation at 5.4 per cent – the lowest level since the pandemic,” the survey added.
Unfavourable weather conditions in FY24 limited food output. Tomato prices soared as a result of region-specific crop disease, early monsoon rains, and logistical issues. Onion prices rose due to rainfall during the previous harvest season, which affected rabi onion quality, delayed sowing of Kharif onion, prolonged dry periods that hampered Kharif production, and trade-related actions implemented by other nations.
However, the government implemented suitable administrative activities, such as dynamic stock management, open market operations, subsidised provision of critical food goods, and trade policy measures, which helped to reduce food inflation.
The major part which was highlighted by the Survey was about the infrastructural development of the country. The country introduced several schemes, increased investment in the Railway sector, and invested in clean energy projects, and digitisation leading to lifting the potential growth overall.
Infrastructure expansion in India witnesses significant growth in recent years: Economic Survey 2023-24
— PIB India (@PIB_India) July 22, 2024
💠Average pace of NH construction up by -3 times from 11.7 km per day in FY14 to -34 km per day by FY24
💠Capital expenditure on Railways has increased by 77% in the past 5… pic.twitter.com/KaZsuK3Lyj
The Economic Survey, published by the Economic Division of the Department of Economic Affairs under the Ministry of Finance, provides a thorough examination of the economic data for 2023-24. It also provides estimates and direction for the current fiscal year. Historically, the Survey provides insight into the tone and direction of the Budget, which will be presented the next day.
On July 23, 2024, the Finance Minister will submit the Union Budget to the Lok Sabha at 11 AM. The budget speech will address fiscal policy, revenue and expenditure proposals, and major announcements. The budget will then be thoroughly debated in both houses of Parliament before being approved and implemented.
