Every year, Indians anticipate the Union Budget, outlining government plans for economic growth. The Union Budget is a crucial policy document that sets the tone for economic activities in the country, outlining the government's estimated receipts and expenditures. However, it is essential to assess the previous year's results before moving on to the next. This is where the Economic Survey comes into the picture. This assesses the prior year's performance, similar to a 'report card'.
What is an Economic Survey?
The Economic Survey is an annual document that examines the state of the Indian economy of the previous year and provides an outlook for the next fiscal year. It provides an overview of the Indian economy, including its performance, current status, and growth prospects, as well as the challenges faced by the economy and policy recommendations for addressing these challenges. One can use this information to understand how well the country's economy did last year and to make smart choices about what to do next. The Economic Survey is prepared by the Chief Economic Advisor of India, V. Anantha Nageswaran, along with his team and is presented one day prior to the Union Budget.
Here's the video of Press conference by Chief Economic Advisor
Highlights of the Economic Survey 2024
- India’s real GDP grew by 8.2% in FY 2023-24, exceeding the 8% mark in three out of four quarters of FY 2023-24. FY 2024-25 GDP growth is seen at 6.5% to 7% with the risks to FY 2024-25 GDP growth evenly balanced.
- Gross Fixed Capital Formation increased by 9% in real terms in FY 2023-24. This is due to the Government’s investment in Capital Expenditure and a steady pace of Private Investment.
- Retail inflation declined to 5.4% in FY 2023-24. This is because the Inflationary pressures caused by global issues, supply chain disruptions and monsoons have been cleverly contained through administrative and monetary policy initiatives.
- India is resilient amid geopolitical challenges, with the Indian economy having a stable footing.
- Subdued global demand for goods has pressured the external balance, but strong services exports largely counterbalanced this. As a result, CAD stood at 0.7 % of the GDP during FY 2023-24, an improvement from the deficit of 2.0% of GDP in FY 2022-23.
Summary of Economic Survey 2024
The Economic Survey is positive about the economy but with a word of caution. It notes that the Indian economy has consolidated its post-COVID recovery as policymakers ensured economic and financial stability. It also demonstrated how resilient the Indian economy is to external challenges.
GDP Growth
- One of the key insights from the economic survey that makes headlines is the GDP growth prediction. India’s real GDP grew by 8.2% in FY 2023-24, exceeding the 8% mark in three out of four quarters of FY 2023-24, stated Economic Survey 2024. India’s real GDP growth in FY 2024-25 is predicted to be between 6.5% and 7%. However, this outcome will depend on global economic and political factors.
- India's economy has recovered and expanded in a controlled manner since the pandemic. Real GDP in 2024 was 20% higher than the 2020 level, a feat achieved only by a few major economies. The outlook for continued strong growth beyond FY 2024-25 looks good amid geopolitical, financial markets, and climate risks.
- Apart from GDP estimates, other indicators tracking the performance of the economy also point towards growth resilience. Leading indicators suggest an upturn in global economic activity.
Employment Landscape
- The Economic Survey shows that 51.25% of the youth is deemed not eligible for employment. In other words, one out of two graduates, straight from college do not possess the skills to be employed.
- India’s per capita income has grown more than 7 times since 1990. Economic Survey has projected India’s Per Capita Income to reach Rs.14.9 Lakh by 2047.
- To accommodate the rising workforce, the Indian economy needs to generate an average of nearly 78.5 lakh jobs annually in the non-farm sector until 2030.
- In terms of employment status, 57.3% of the total workforce is self-employed, and 18.3% work as unpaid workers in household enterprises.
- State-wise, the top six states in terms of the number of factories were also the greatest creators of factory employment. More than 40 % of factory employment was in Tamil Nadu, Gujarat, and Maharashtra.
- In 2021-22, factories employing less than 100 people constituted 79.2% of all factories while contributing only 22.1% of total persons employed and 20.9% of workers. This has been improving over time as there is a visible trend towards a rise.
- The yearly net payroll additions to the EPFO more than doubled from 61.1 lakh in FY19 to 131.5 lakh in FY 2023-24.
- The CEA has said that PLI Schemes have gained momentum in the past years and have garnered an investment of Rs.1.28 Cr. As a result, 8.5 Lakh employment opportunities are generated.
- The 10 most populous states collectively impose 139 prohibitions on women from participating in factory processes such as electroplating, petroleum generation, and manufacturing of products such as pesticides, glass, rechargeable batteries etc.
- In FY 2023-24, rural wages rose above 5% every month, YoY. On average, nominal wage rates in agriculture grew by 7.4% for men and 7.7% for women, benefitting from robust agriculture growth during the period.
Monetary Management
- Bank credit growth has sustained momentum during FY 2023-24, with broad-based growth across sectors. Credit disbursal stood at ₹164.3 lakh crore, growing by 20.2 % at the end of March 2024, compared to 15% growth at the end of March 2023.
- During the current tightening cycle, from May 2022 to May 2024, the external benchmark-based lending rate and the one-year median marginal cost-of-funds-based lending rate increased by 250 bps and 175 bps, respectively.
- The gross non-performing assets (GNPA) ratio continued its downward trend, reaching a 12-year low of 2.8% at the end of March 2024 from its peak of 11.2% in FY 2017-18.
- The GNPA ratio of the agriculture sector remains high at 6.5% at the end of March 2024, but it has recorded persistent improvement during H2 of FY 2023-24.
- Lending by non-banking financial companies (NBFCs) accelerated, led by personal loans and loans to the industry, and their asset quality has improved.
Price and Inflation
- India successfully managed to keep retail inflation at 5.4% in FY 2023-24, the lowest level since the COVID-19 pandemic.
- In FY 2022-23 and FY 2023-24, the agriculture sector was affected by extreme weather events, lower reservoir levels, and damaged crops that adversely affected farm output and food prices. So, food inflation based on the Consumer Food Price Index (CFPI) increased from 3.8% in FY 2021-22 to 6.6% in FY 2022-23 and further to 7.5% in FY 2023-24.
- RBI increased the repo rate gradually by 250 basis points since May 2022 to reign in inflationary pressures.
External Sector
- The trade openness indicator, which rose from 37.5 in FY 2004-05 to 45.9 in FY 2023-24, has contributed significantly to economic growth as it facilitated an efficient allocation of resources through comparative advantage.
- India’s share of global goods exports was 1.8% in FY 2023-24, against an average of 1.7% during 2016 to 2020.
- Similarly, its share in global services exports rose to 4% in FY 2022-23 from an average of 3.3% during 2016 to 2020.
- Accordingly, the share of India’s services exports in world services exports has risen remarkably from 0.5% in 1993 to 4.3% in 2022.
- India is now the seventh-largest services exporting country globally, with a phenomenal rise from its 24th position in 2001.
- India ranks second in the world in telecommunication, computer, and information services exports, sixth in personal, cultural, and recreational services exports, eighth in other business services exports, 10th in transport services exports, and 14th in travel services exports.
- India’s Current Account Deficit narrowed to USD 23.2 billion (0.7% of GDP) in FY 2023-24 from USD 67 billion (2% of GDP) during the previous year.
Climate Change and Energy Transition
- India has made significant progress on climate action. The installed solar power capacity increased by 15.03 GW in 2023-24, reaching a cumulative total of 82.64 GW on 30 April 2024.
- The Ministry of Power notified the regulations on the Carbon Credit Trading Scheme (CCTS), also called the Indian Carbon Market, on 28 June 2023.
- India has achieved the target of 40% of India's installed energy generation through non-fossil fuel sources, nine years ahead of its target for 2030.
Social Sector
- CSR compliance has seen a growing adherence over the years, with more than half the companies even going beyond their obligation. For the last three years, yearly CSR spending has been more than ₹25,000 crore, with yearly CSR spending increasing by 1.5 times in eight years.
- National Health Accounts show rising role of public healthcare.
- Total enrolment in higher education has increased to nearly 4.33 crore in FY 2021-22 from 4.14 crore in FY 2020-21 and 3.42 crore in FY 2014-15.
- Female enrolment in higher education increased to 2.07 crore in FY 2021-22 from 1.57 crore in FY 2014-15, i.e., a 31.6% increase since FY 2014-15.
- The growing equity in higher education implies better employment opportunities for the hitherto backward sections.
- India is making rapid progress in R&D, with nearly one lakh patents granted in FY 2023-24, compared to less than 25,000 patent grants in FY 2019-20.
- In recognition of the rising obesity rate in India, the National Institute of Nutrition is promoting healthy eating through dietary guidelines.
Agriculture and Food Management
- The performance of the agriculture sector remains critical for the economy’s growth, which has been at an average rate of 4.18% over the last five years.
- The Indian agriculture sector provides livelihood support to about 42.3% of the population and has a share of 18.2% in the country’s GDP at current prices.
- As of 31 January 2024, the total credit disbursed to agriculture amounted to ₹ 22.84 lakh Crore, with ₹13.67 lakh Crore allocated to crop loans (short term) and ₹ 9.17 lakh Crore to term loans.
- The Kisan Credit Card (KCC) has streamlined agricultural credit accessibility. As of January 31, 2024, banks issued 7.5 crores KCC with a limit of ₹9.4 lakh crores.
Industry: Small and Medium Enterprises
- As per the latest reports, the share of MSMEs in all-India manufacturing output during the year FY 2021-22 was 35.4%.
- The Udyam Registration portal, launched in July 2020, has been instrumental in formalising MSMEs by providing a simple, online, and free registration process based on self-declaration.
- As of 5th July 2024, 4.69 Crore MSMEs are registered on the Udyam Registration portal, including Informal micro enterprises registered on the Udyam Assist Platform.
Service Sector
- The services sector continues to be a significant contributor to India's growth, accounting for about 55% of the total size of the economy in FY 2023-24.
- The services sector witnessed a real growth rate of more than 6% in all the years in the last decade except in the pandemic-affected FY 2020-21.
- Post-pandemic, services exports have maintained a steady momentum and accounted for 44% of India’s total exports in FY 2023-24.
- During FY 2023-24, services imports stood at USD 178.3 billion, a 2.1% decrease on a YoY basis, dragged down by a reduction of global freight rates.
- FY 2023-24 witnessed a decline in the FDI equity inflows to the services sector, as in the case of the overall FDI equity inflows to India.
- The number of technology start-ups in India rose remarkably from around 2,000 in 2014 to approximately 31,000 in 2023, with EdTech being the top sector.
Infrastructure Sector
- The consistent focus on road, rail, and air connectivity, sanitation, and digital infrastructure has led to considerable growth in assets in these sectors.
- Between fiscal year 2019 and 2023, the Central and State Governments contributed 49% and 29% of the total investments, respectively, while the private sector contributed 22%.
Economic Survey 2024 PDF Download
Download the Economic Survey 2023-24 PDF from the government's official website - https://www.indiabudget.gov.in/economicsurvey/index.php
Related Articles