What is the ‘The Indian Economy: A Review’ presented by the government all about?

What is the ‘The Indian Economy: A Review’ presented by the government all about?

Subject: Economy

Section: India Economy

The Indian Economy: A Review:

• “The Indian Economy: A Review,” the 74-page document written by V Anantha Nageswaran, Chief Economic Adviser to the government, and his team of economists, is “not the Economic Survey of India prepared by DEA” but rather a document that takes stock of the state of the Indian economy and its journey in the last ten years.

Details:

• The review offers a brief sketch of the economic outlook for the coming years. Divided into two chapters, the review’s first chapter provides an overview of the past, present, and future of the Indian economy. The second chapter takes a detailed look at the government’s policies and progress on various parameters in different sectors.
• The growth rate of the Indian economy is expected to be at or above 7% for FY24.

Important highlights of the document:

• The Chief Economic Adviser (CEA) predicts that the Indian economy will grow at or above 7% in FY24 and potentially maintain this growth rate in FY25, marking four years of robust growth post-COVID-19.
• This growth is notable given the struggling global economy, which is growing at about 2%.
• Challenges facing the Indian economy include reliance on global supply chains, which have been disrupted, and the difficulty of exporting due to slower global trade growth. Additionally, the rise of Artificial Intelligence poses challenges for services trade and employment, and the energy transition challenge is significant, with a focus on reducing carbon emissions.
• The CEA notes that the era of hyper-globalization in manufacturing is ending, but de-globalization is not imminent due to the deep integration of global supply chains.
• India is focusing on onshoring and friend-shoring of production, which will affect transportation, logistics costs, and product prices.
• As infrastructure improves and financial exclusion decreases, public expectations are rising.
• The CEA proposes lowering logistics costs and investing in product quality to maintain and expand market share where India has advantages.
• Regarding green initiatives, India faces international pressure to reduce fossil fuel dependence while balancing economic growth and energy transition.
• India’s non-fossil fuel-based power generation capacity exceeds targets, reflecting a commitment to economic growth and climate change adaptation.
• The government has significantly increased public sector capital investment, enhancing physical and digital infrastructure. The financial sector is healthy and lending actively.
• Indian households are financially robust, with substantial growth in bank accounts and deposits. Household financial assets and liabilities have increased since 2019, improving net financial assets.
• The unemployment rate has declined post-COVID, with rising labour force participation, especially among women and younger people.
• Since 2014, India has managed high fiscal and current account deficits, and double-digit inflation, and now maintains controlled inflation, a lower fiscal deficit, and a manageable current account deficit.
• Foreign exchange reserves cover nearly eleven months of imports, indicating a strong economic position.

Source: CNBC