Economic Survey: Economy robust, GDP to grow at 6.5-7%
Vijay C Roy
New Delhi, July 22
The Economic Survey 2023-24, tabled by Union Finance Minister Nirmala Sitharaman in Parliament on Monday, projected the economy to grow between 6.5 per cent and 7 per cent in 2024-25, depending on global factors. This is lower than 8.2 per cent growth seen in the previous 2023-24 financial year and below the RBI’s 7.2 per cent estimate for the current fiscal. It, however, aligns with the 7 per cent forecast by the International Monetary Fund (IMF) and the Asian Development Bank (ADB).
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“The Indian economy is on a strong wicket and stable footing, demonstrating resilience in the face of geopolitical challenges,” Chief Economic Adviser V Anantha Nageswaran said. The survey identifies boosting private investment, strengthening small businesses and agriculture, raising financial resources for climate change adaptation, easing red tape for small businesses and tacking income inequality as focus areas.
Major takeaways of report
Positive outlook
Economy recovered swiftly from pandemic | Global trade outlook remained positive
| Uptick in agriculture sector and rural demand | Domestic growth high despite
global challenges
Areas of concern
Escalation of geopolitical conflicts poses challenges | Higher commodity prices | Slow hiring in IT sector | Correction in financial markets to hit household finances, corporate valuations | Cheaper imports to stall private investment
On firm wicket despite global challenges
Indian economy is on a strong wicket, demonstrating resilience in the face of geopolitical challenges. VA Nageswaran, Chief economic adviser
Priorities should also include bridging the gap between education and employment, it says, calling for expediting implementation of labour reforms to create a more conducive environment for job creation.
The survey indicates the economy recovered swiftly from the pandemic, with the real GDP in FY24 being 20 per cent higher than the pre-Covid (FY20) levels. High economic growth in FY24 came on the heels of growth rates of 9.7 per cent and 7 per cent in the previous two financial years.
Nageswaran said the domestic growth drivers supported economic growth in FY24 despite uncertain global economic performance. “We are optimistic about India’s economic growth, but mindful of the challenges.”
The survey states the inflation rate is largely under control, although it is elevated in case of some specific food items. Also, the trade deficit was lower in FY24 than in FY23, and the current account deficit for the year is around 0.7 per cent of the GDP. The survey points out foreign exchange reserves are ample.
It states improved balance sheets will help the private sector cater to strong investment demand. It, however, adds, “Private capital formation after good growth in the last three years may turn slightly more cautious because of the fear of cheaper imports from countries that have excess capacity.”
While merchandise exports are likely to increase with improving growth prospects in advanced economies, services exports are also likely to witness a further uptick. A normal rainfall forecast by the IMD and the satisfactory spread of the monsoon thus far are likely to improve agriculture sector performance and support the revival of rural demand.
The survey has sounded a bell of caution on the soaring stock markets, saying retail investor participation has increased significantly and there are chances of speculations due to overconfidence and expectations of greater returns.
Attacking the ruling party, senior Congress leader Jairam Ramesh, in a post on X, said, “India is in its most precarious and difficult economic situation in many years. The Economic Survey 2023-24 presents a cherry-picked view of the economy, but we hope that tomorrow’s Budget faces up to the country’s realities.”
