Economic Survey 2023-24 Highlights: GDP growth projected at 6.5-7%; RBI expects inflation to be 4.5% in FY25
Any escalation of geopolitical conflicts in 2024 may lead to supply dislocations, higher commodity prices, reviving inflationary pressures and stalling monetary policy easing, the Economic Survey states
Union Finance Minister Nirmala Sitharaman Monday tabled the Economic Survey 2023-24, which projects a real GDP growth of 6.5 to 7 per cent. It adds that the Reserve Bank of India expects inflation to be 4.5 per cent in FY 25 and 4.1 per cent in FY26.
“The Indian economy is on a strong wicket and stable footing, demonstrating resilience in the face of geopolitical challenges,” the survey states. It adds that the headline inflation rate is “largely under control”, however, the “inflation rate of some specific food items is elevated”.
India’s economy
The survey states that for recovery to be sustained, there has to be “heavy lifting on the domestic front” as the “environment has become extraordinarily difficult to reach agreements on key global issues such as trade, investment and climate”.
The survey also pointed out the RBI data on India’s balance of payments, which show slight decline in investment interest of external investors from FY23 to FY24.
It “conservatively projects a real GDP growth of 6.5–7 per cent”, adding that “escalation of geopolitical conflicts in 2024 may lead to supply dislocations, higher commodity prices, reviving inflationary pressures and stalling monetary policy easing.” The survey warned that this may influence the RBI’s monetary policy stance
Inflation
The survey highlights that the inflation rate was stable, reflecting effective monetary policy management.
The dynamics of core inflation in the post-pandemic world, indicating that while overall inflation is managed, certain sectors may still face upward pressures.
Food inflation remains a concern, with variations across states. The survey emphasizes the need for targeted interventions to manage food prices effectively, and makes a case for changing the inflation targeting framework of the central bank by excluding food inflation.
Employment and Skill Development
The Periodic Labour Force Survey indicates a surge in agricultural employment, attributed to reverse migration and increased female participation in the labor force.
The survey estimates that India will require significant job creation until 2036 to accommodate its growing workforce, emphasising the need for strategic planning in employment generation.
The survey suggests that collaboration between government, academia, and the private sector is essential for effective skill development.
India and World Trade
India’s trade has stood tall amidst global turmoil, with a favorable current account balance, according to the survey. It indicates a reduction in the trade deficit compared to previous years.
The survey discusses how geopolitical changes and global trade dynamics are affecting India’s trade strategies and emphasises the need for diversification of trade partners.
Indian exporters face challenges related to tariff and non-tariff barriers. The survey calls for enhancing competitiveness to navigate these challenges effectively.
Sustainability and Social Sector
The survey assesses India’s progress toward achieving SDGs, highlighting areas of improvement and ongoing challenges in social welfare and economic empowerment.
The survey emphasises the importance of social welfare programs aimed at empowering marginalised communities, particularly women and rural populations.
Despite progress, the survey identifies persistent challenges in ensuring inclusive growth and equitable access to resources.
Agriculture and MSMEs
The survey highlights the potential for growth in agriculture, emphasizing the need for crop diversification and improved productivity through technological adoption.
MSMEs are identified as crucial for economic growth, contributing significantly to employment and innovation. The survey points out the challenges they face, including access to finance and markets.
Various government initiatives aimed at supporting agriculture and MSMEs are discussed, including financial assistance and capacity-building programs.
Services and Infrustructure
The services sector continues to be a major driver of economic growth, contributing significantly to GDP. The survey notes the need for improving service quality and efficiency.
The survey discusses the critical role of infrastructure in facilitating economic growth and highlights ongoing public investment initiatives to enhance infrastructure.
Key challenges include financing, project execution, and addressing bottlenecks in infrastructure development that need strategic solutions.
Energy and Climate Change
The survey outlines India’s commitment to transitioning to renewable energy sources, with a focus on solar and wind energy. It emphasises the need for a balanced energy mix to ensure energy security.
India’s climate action strategies are discussed, highlighting adaptation measures and the importance of low-carbon development pathways.
The survey reviews India’s international commitments related to climate finance and the need for collaborative efforts to address climate change challenges effectively.
Union Finance Minister Nirmala Sitharaman Monday tabled the Economic Survey 2023-24, which projects a real GDP growth of 6.5 to 7 per cent. It adds that the Reserve Bank of India expects inflation to be 4.5 per cent in FY 25 and 4.1 per cent in FY26.
“The Indian economy is on a strong wicket and stable footing, demonstrating resilience in the face of geopolitical challenges,” the survey states. It adds that the headline inflation rate is “largely under control”, however, the “inflation rate of some specific food items is elevated”.
India’s economy
The survey states that for recovery to be sustained, there has to be “heavy lifting on the domestic front” as the “environment has become extraordinarily difficult to reach agreements on key global issues such as trade, investment and climate”.
The survey also pointed out the RBI data on India’s balance of payments, which show slight decline in investment interest of external investors from FY23 to FY24.
It “conservatively projects a real GDP growth of 6.5–7 per cent”, adding that “escalation of geopolitical conflicts in 2024 may lead to supply dislocations, higher commodity prices, reviving inflationary pressures and stalling monetary policy easing.” The survey warned that this may influence the RBI’s monetary policy stance
Inflation
The survey highlights that the inflation rate was stable, reflecting effective monetary policy management.
The dynamics of core inflation in the post-pandemic world, indicating that while overall inflation is managed, certain sectors may still face upward pressures.
Food inflation remains a concern, with variations across states. The survey emphasizes the need for targeted interventions to manage food prices effectively, and makes a case for changing the inflation targeting framework of the central bank by excluding food inflation.
Employment and Skill Development
The Periodic Labour Force Survey indicates a surge in agricultural employment, attributed to reverse migration and increased female participation in the labor force.
The survey estimates that India will require significant job creation until 2036 to accommodate its growing workforce, emphasising the need for strategic planning in employment generation.
The survey suggests that collaboration between government, academia, and the private sector is essential for effective skill development.
India and World Trade
India’s trade has stood tall amidst global turmoil, with a favorable current account balance, according to the survey. It indicates a reduction in the trade deficit compared to previous years.
The survey discusses how geopolitical changes and global trade dynamics are affecting India’s trade strategies and emphasises the need for diversification of trade partners.
Indian exporters face challenges related to tariff and non-tariff barriers. The survey calls for enhancing competitiveness to navigate these challenges effectively.
Sustainability and Social Sector
The survey assesses India’s progress toward achieving SDGs, highlighting areas of improvement and ongoing challenges in social welfare and economic empowerment.
The survey emphasises the importance of social welfare programs aimed at empowering marginalised communities, particularly women and rural populations.
Despite progress, the survey identifies persistent challenges in ensuring inclusive growth and equitable access to resources.
Agriculture and MSMEs
The survey highlights the potential for growth in agriculture, emphasizing the need for crop diversification and improved productivity through technological adoption.
MSMEs are identified as crucial for economic growth, contributing significantly to employment and innovation. The survey points out the challenges they face, including access to finance and markets.
Various government initiatives aimed at supporting agriculture and MSMEs are discussed, including financial assistance and capacity-building programs.
Services and Infrustructure
The services sector continues to be a major driver of economic growth, contributing significantly to GDP. The survey notes the need for improving service quality and efficiency.
The survey discusses the critical role of infrastructure in facilitating economic growth and highlights ongoing public investment initiatives to enhance infrastructure.
Key challenges include financing, project execution, and addressing bottlenecks in infrastructure development that need strategic solutions.
Energy and Climate Change
The survey outlines India’s commitment to transitioning to renewable energy sources, with a focus on solar and wind energy. It emphasises the need for a balanced energy mix to ensure energy security.
India’s climate action strategies are discussed, highlighting adaptation measures and the importance of low-carbon development pathways.
The survey reviews India’s international commitments related to climate finance and the need for collaborative efforts to address climate change challenges effectively.
