Domestic demand, pickup in capital investment to aid growth in FY24, says Economic Survey

The financial system stress experienced in the second decade of the millennium, evidenced by rising non-performing assets, low credit growth and declining growth rates of capital formation, is now behind us, the survey said.

Strong domestic demand and a pickup in capital investment are expected to be the key drivers of growth in 2023-24, according to the Economic Survey.

The financial system stress experienced in the second decade of the millennium, evidenced by rising non-performing assets, low credit growth and declining growth rates of capital formation, caused by excessive lending witnessed in the first decade-plus, is now behind us, the survey said.

Improving financials

Aided by healthy financials, incipient signs of a new private sector capital formation cycle are visible, it said. More importantly, compensating for the private sector’s caution in capital expenditure, the government raised capital expenditure substantially.

According to the Survey, the resilience of the domestic financial system is reflected in the healthy balance sheets of banks, stronger capital levels of non-banking finance companies (NBFCs) and robust growth in the assets under management of domestic mutual funds.

Buoyant demand for bank credit and early signs of a revival in the investment cycle are benefiting from improving asset quality, a return to profitability and resilient capital and liquidity buffers, the survey showed.

Strong domestic demand and a pickup in capital investment are expected to be the key drivers of growth in 2023-24, according to the Economic Survey.

The financial system stress experienced in the second decade of the millennium, evidenced by rising non-performing assets, low credit growth and declining growth rates of capital formation, caused by excessive lending witnessed in the first decade-plus, is now behind us, the survey said.

Improving financials

Aided by healthy financials, incipient signs of a new private sector capital formation cycle are visible, it said. More importantly, compensating for the private sector’s caution in capital expenditure, the government raised capital expenditure substantially.

According to the Survey, the resilience of the domestic financial system is reflected in the healthy balance sheets of banks, stronger capital levels of non-banking finance companies (NBFCs) and robust growth in the assets under management of domestic mutual funds.

Buoyant demand for bank credit and early signs of a revival in the investment cycle are benefiting from improving asset quality, a return to profitability and resilient capital and liquidity buffers, the survey showed.