Economic Survey 2023-24 key takeaways

Economic Survey 2023-24 key takeaways

Sub: Eco

Sec: National Income

The key takeaways of Economic Survey 2023-24

Economic Growth

• The survey projects a real GDP growth rate for the current financial year (FY 2024-25) between 6.5% and 7%, slightly lower than the 8.2 per cent growth estimated for the previous financial year.
• Domestic growth drivers supported economic growth in FY24 despite uncertain global economic performance.
• To sustain post-pandemic recovery, there has to be heavy lifting on the domestic front.

Inflation

• While the overall headline inflation rate is largely under control, specific food items have seen elevated prices.
• The survey projects the inflation rate to be 4.5 per cent in FY25 and 4.1 per cent in FY26.

Government Policy

• India’s policy adeptly steered through challenges, ensuring price stability despite global uncertainties.
• Tax compliance gains, expenditure restraint, and digitisation helped India achieve fine balance in govt’s fiscal management.
• Reaching agreements on key global issues like trade, investment, and climate has become extraordinarily difficult.

Agriculture

• The survey describes agriculture as “one area ripe for and in need of a pan-India dialogue”.
• Smallholder farmers need to shift from traditional crops to high-value agriculture, including fruits, vegetables, fisheries, poultry, dairy, and meat.
• This shift is seen as essential for increasing farmers’ incomes and spurring a manufacturing revolution, similar to what China experienced between 1978 and 1984 when the real incomes of farmers doubled in just six years.
• The survey also highlights the growing significance of allied sectors such as animal husbandry, dairying, and fisheries in enhancing farmers’ incomes.
• The performance of the agriculture sector has been growing at an average rate of 4.18% over the last five years

Financial Sector

• Outlook for India’s financial sector appears bright.
• Improved balance sheets in the private sector will strengthen private investment.
• However, Private capital formation may turn more cautious due to fears of cheaper imports from countries that have excess capacity.
• Capital markets becoming prominent in India’s growth story; market resilient to global geopolitical, economic shocks.

Private sector

• The survey advocates for a tripartite compact involving the central government, state governments, and the private sector to achieve the higher aspirations of Indians and complete the journey to a developed India by 2047.
• “Job creation happens mainly in the private sector. Many issues influencing economic growth, job creation, and productivity are in the domain of state governments,”
• As much as 54 per cent of disease burden due to unhealthy diets; need transition towards balanced, diverse diet. The survey suggests that embracing traditional practices can help the private sector lead in the global market.

Retail investment

• The Economic Survey highlights the significant increase in retail investors in the stock market, calling for careful consideration to avoid overconfidence and speculation.
• It warns against the over-financialization of the economy, which has historically led to crises in developing countries.

Remittances

• Remittances to India to grow at 3.7 per cent to $124 billion in 2024, 4 per cent in 2025 to reach $129 billion.

China Challenge

• India continues to be overly dependent on China for imports, especially for renewable energy.
• China has not let go of the low-skills manufacturing space that India wanted to occupy.

AI threat

• The Survey notes that while there has been a boom in telecommunications and Internet facilitated business process outsourcing (BPO), the next wave of technological evolution might bring the curtains down on it.

Employment:

• The Indian economy needs to generate an average of nearly 78.5 lakh jobs annually until 2030 in the non-farm sector to cater to the rising workforce.

Regulatory bottlenecks

• The Licensing, Inspection and Compliance requirements that all levels of the government continue to impose on businesses is an onerous burden.
• MSME is one sector that needs to be relieved of regulatory burden the most.

Building state capacity

• What is needed in the economy now is not big reforms but the grunt work.
• To this end it advocated building up state capacity for sustaining and accelerating India’s progress.

China Plus One strategy

• The Economic Survey suggests that India can benefit from the China Plus One strategy by integrating into China’s supply chain or promoting Chinese foreign direct investment (FDI).
• This strategy would help India reduce its trade deficit with China and boost its exports to advanced economies.

Need for sustainable reforms

• Focus on sustainable and inclusive growth is essential for addressing the challenges of job creation, productivity improvement, and economic growth.
• “Big-ticket reforms have been initiated and done. The Government’s focus must turn to bottom-up reform and the strengthening of the plumbing of governance.”