Economy Survey

Table of content
Economy Survey _______________________________________________________________________________ 1
1. Indian Economy: Past, Present and Future ________________________________________________________ 1
1. Introduction_______________________________________________________________________________ 1
2. The Indian Growth Story (1950 to 2014) _______________________________________________________ 1
Balance of Payment (BOP) ____________________________________________________________________ 1
3. Lessons From the Growth Experience Till 2014 _________________________________________________ 1
Challenges Persisted in 2014: __________________________________________________________________ 2
4. 2014-2024: Decade of Transformative Growth __________________________________________________ 2
5. Drivers Of India’s Growth in The Last Decade __________________________________________________ 2
6. Challenges Confronting the Indian Economy ___________________________________________________ 3
India's Success in Overcoming Challenges ________________________________________________________ 3
7. Looking Ahead: Journey of Amritkal __________________________________________________________ 3
Important terms: ____________________________________________________________________________ 3
2. What Made the Indian Economy Resilient? ________________________________________________________ 4
2.1. Domestic Economy________________________________________________________________________ 4
1. Resilience of Consumption Demand __________________________________________________________ 4
2. Enabling Investment-led Economic Growth _____________________________________________________ 5
3. Agricultural Sector Policies Ensuring Food Security ______________________________________________ 6
4. Reform Push to the Indian Industry ___________________________________________________________ 7
5. Digital Infrastructure and Delivery of Citizen-Centric Services ______________________________________ 7
6. Credit Creation is back _____________________________________________________________________ 8
7. Evolving Financial Markets to Support the Investment Needs of a Growing Economy ___________________ 9
2.2. Safeguarding Macroeconomic Stability ______________________________________________________ 10
2.3. Human Resources: Dovetailing Growth with Capacitating Welfare ______________________________ 11
1. A New Approach to Welfare _______________________________________________________________ 11
2. Women-led development: Tapping the Gender Dividend for India@100 _____________________________ 12
3. Eyes on the long-term _____________________________________________________________________ 13
4. Employment Situation in the Past Decade: _____________________________________________________ 13
5. Skill Development and Entrepreneurship ______________________________________________________ 14
2.4. India’s External Sector: Safely Navigating Through Uncertainties: ______________________________ 14
1. Merchandise Trade Depicted Resilience_______________________________________________________ 14
2. Comfortable Balance on Current Account _____________________________________________________ 14
3. Capital Account _________________________________________________________________________ 15
4. Way Ahead for External Sector _____________________________________________________________ 16
2.5. Climate Actions _________________________________________________________________________ 16
1. India's Climate Action towards Building Resilience _____________________________________________ 16
2. Building Resilience to Climate Change Impacts ________________________________________________ 17
3. Balancing Ambition with Pragmatism ________________________________________________________ 17
4. Development as a Prerequisite ______________________________________________________________ 17
2.6. Outlook ________________________________________________________________________________ 18
1. India's Economic Growth and Future Prospects: ________________________________________________ 18
2. Priority Areas for Reforms: ________________________________________________________________ 18
3. Future Economic Outlook: _________________________________________________________________ 18

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1. Indian Economy: Past, Present and Future

1. Introduction
• Decisive policy actions have improved infrastructure and financial sector. Fiscal stability and inflation control
have improved. India may sustain a growth rate of 7% or above for FY24 and FY25. Achieving notable growth
post-pandemic.
2. The Indian Growth Story (1950 to 2014)
Till 1980s:
• 1950s: India's economic share decreased significantly from 22.6% in 1700 to 3.8% in 1952. India focused on
industrialization through state-owned enterprises, resulting in a 3.9% growth rate.
• 1960s: Economic growth was hindered by conflicts, drought, high taxation, and government control. Despite
challenges, India saw a growth rate of 4.1%.
• 1970s: Rupee devaluation, political instability, and global economic slowdown impacted India's growth, leading
to a decrease in the growth rate to 2.9%.
• 1980s: India implemented reforms to enhance domestic competitiveness, such as removing price controls and
reducing import duties. These measures, along with government spending, boosted GDP growth to 5.7%.
1990s Economic Situation in India:
• External crisis and unsustainable government spending led to a balance of payment crisis in 1990-1991.
• India initiated reforms like deregulation and trade liberalization.
• Growth momentum affected by external and internal issues, with real GDP growth averaging 5.8% per annum.
2000s Economic Situation:
• Early 2000s saw sustained momentum in economic activity, better corporate performance, and a conducive
investment climate.
• India's decadal average growth rate was 6.3% per annum in the 2000s.
• The global financial crisis in 2008 exposed fragile growth foundations, leading to bad debts in banks
accumulating to a peak of 11.2% in 2018.
2009-2014 Economic Challenges:
• Government sustained high growth through high fiscal deficits and loose monetary policy.
• Annual double-digit inflation rates were experienced during 2009-2014.
• High twin deficits were faced fiscal deficit at 4.9% in FY13 and current account deficit at 4.8% in FY13.
• The Indian rupee depreciated annually by 5.9% from 2009-2014.
Balance of Payment (BOP)
• BOP includes transactions of imports, exports, goods, services, capital, and transfer payments.
• BOP consists of both Capital and Current Account.
Capital Account:
• Foreign Investment: Includes investments made by foreign entities in a country.
• External Assistance, Deposits, and Borrowing: Involves external financial support, deposits, and borrowing from
foreign sources.
Current Account:
• Trade in Goods and Services: Covers the exchange of goods and services between countries.
• Transfer Payments: Includes foreign aid, remittances, and other payments made between countries.
3. Lessons from the Growth Experience Till 2014
• Transition to an Open Economy: The Indian economy shifted from being closed to open due to the BoP crisis,
leading to liberalization, privatization, and globalization.
• Co-existence of Public and Private Investment: The dominance of public investment decreased, with the
private sector becoming a major driver of growth and employment.
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 • Technology as a Growth Driver: Technology was recognized as a key factor in driving economic growth, with
India steadily incorporating technology into its economy since the 1980s.
Challenges Persisted in 2014:
• Slowdown in growth: GDP growth below 5% for two consecutive years
• Inflation: WPI inflation in food articles averaged 12.2% annually
• Structural constraints: Difficulties in decision-making, low manufacturing base, ill-targeted subsidies,
presence of a large informal sector, low agricultural productivity etc.
4. 2014-2024: Decade of Transformative Growth
India's Economic Growth:
• India's economy jumped from 10th to 5th largest globally in the past decade.
• Reforms led to India emerging as the fastest-growing economy among G20 economies.
Economic Resilience:
• India's economy suffered in FY21 due to the global pandemic, with a 5.8% contraction in real GDP.
• Government responses supported economic recovery, with growth estimates of 7.3% in 2023-24.
• Urban unemployment rate declined to 6.6%.
• Service exports and lower oil import costs reduced India's current account deficit to 1% of GDP in the first half
of FY24.
Infrastructure and Education Growth:
• India doubled the number of airports in the last 9 years compared to the first 67 years after independence.
• The number of universities increased to 1,113 in 2023 from 723 in 2014.
• Total enrolment in higher education increased to 4.1 crore students in 2023 from 3.4 crore in 2014.
• Gross Enrolment Ratio for girls increased to 27.9% in 2020 from 12.7% in FY10.
5. Drivers of India’s Growth in The Last Decade
1. Reforms to Resolve Twin Balance Sheet Problem:
• Recapitalization and merger of Public Sector Banks (PSB).
• Amendment of the SARFAESI Act 2002.
• Insolvency and Bankruptcy Code 2016 (IBC).
• IBC has rescued 2,808 corporate debtors by September 2023.
2. Simplification of Regulatory Frameworks:
• Real Estate (Regulation and Development) Act 2016 promotes transparent transactions.
• Over 1 lakh real estate projects and 72,012 real estate agents registered under the Act.
3. Ease of Living & Ease of Doing Business:
• Implementation of Unified Goods and Services Tax (GST).
• Reduction of corporate and income tax rates.
• Exemption of sovereign wealth funds and pension funds from taxes.
• Removal of Dividend Distribution tax.
• Decriminalization of minor economic offences under the Companies Act of 2013.
• Elimination of 25,000 unnecessary compliances and repeal of 1,400 archaic laws.
4. Engagement of Government with Private Sector:
• New Public Sector Enterprise (PSE) Policy for Aatmanirbhar Bharat to minimize government presence in PSEs.
• Make in India programmes to enhance manufacturing capabilities and exports.
• Production Linked incentives (PLI) to attract investments and develop global champions in manufacturing.
• Opening up strategic sectors like defence, mining, and space for private sector business opportunities.
5. Micro, Small, and Medium Enterprises (MSME) Sector:
• Implementation of schemes like Emergency Credit Line Guarantee Scheme and TReDS to support MSMEs.

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 • Increase in the number of recognized start-ups from 452 in 2016 to over 98,000 in 2023.
6. Logistics & Infrastructure:
• Dedicated programs for road connectivity, port infrastructure, electrification, railways upgradation, new
airports/air routes, and National Logistics Policy 2022.
• Rise in effective Capital Expenditure by the Union government to 4.5% in 2023-24 from 2.8% of GDP in March
2014.
7. Digitalisation Reforms: Digital infrastructure enabling digital identities, improved access to finance, markets, reduced
transaction costs, and improved tax collection.
8. Inclusive Welfare Policies:
• Providing over 10.11 crore women with free gas connections.
• Building 11.72 crore toilets and 2.6 crore pucca houses for the poor.
• 6.27 crore hospital admissions under the Ayushman Bharat Scheme.
9. Impact of GST:
• GST has expanded the tax base, reduced compliance burden, facilitated interstate trade, and formalized the
economy.
• Average monthly gross GST collections have increased from ₹0.9 lakh crore in FY18 to ₹1.5 lakh crore in FY23.
• The number of GST taxpayers has grown from 66 lakhs at inception to 1.4 crore in 2022.
6. Challenges Confronting the Indian Economy
• Increased geo-economic fragmentation and the slowdown of hyper-globalization are impacting India's
integration with the global economy.
• Artificial Intelligence (AI) poses a threat to job security, with 40% of global employment exposed to AI.
• Ensuring a skilled workforce remains a challenge for the industry.
India's Success in Overcoming Challenges
• Pradhan Mantri Kaushal Vikas Yojana (PMKVY) has trained 1.3 crore candidates in relevant industry skills.
• India is promoting renewable energy and moving away from coal, with a combined installed capacity of 179.57
GW from RE sources.
• Harnessing Technology for Inclusive Growth:
o Internet penetration in India has crossed 50% and grown three-fold since 2014.
o Aadhar has facilitated the transfer of over 34 lakh crores to more than 1167 crore beneficiaries under
DBT.
o Financial Inclusion has seen significant growth under PM Jan Dhan Yojana, with 51.5 crore
beneficiaries.
o Covid Vaccination efforts have seen 221 crore doses administered to the population.
o India has launched 431 foreign satellites in the space sector.
7. Looking Ahead: Journey of Amritkal
Reforms and foundation of governance ecosystem:
• Reforms in the last decade have laid the groundwork for a strong partnership-based governance system.
• India is now embarking on the 'Amrit Kaal' journey with confidence and stability.
Important terms:
Twin Balance Sheet Problem:
• A situation where banks are struggling, and companies are heavily in debt and unable to repay loans.
Techno-nationalism
• It is a concept that ties technology and technological innovation to national identity, security, economic
prosperity and social stability.
• It describes the way different countries approach technology governance and how the countries use technology
to influence power in the global market.
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2. What Made the Indian Economy Resilient?
Six factors are considered which added to reselience to the Indian Economy.
1. Domestic Economy
2. Safeguarding Macroeconomic Stability
3. Human Resources: Dovetailing Growth with Capacitating Welfare
4. India’s External Sector: Safely Navigating Through Uncertainties
5. Climate Action
6. Outlook
These topics are discussed in next six chapters.
2.1. Domestic Economy
Resilience of the Indian Economy:
• India has shown consistent post-Covid recovery compared to other economies.
• After a contraction in FY21, India recorded two years of above 7% growth, with an estimated 7.3% growth in
FY24.
• Manufacturing's share in GVA increased to 17.7% in FY24 from 17.2% in FY14, while services' share rose from
51.1% to 54.6% in the same period.
• Unemployment rate is declining, and indicators like rail freight traffic and port cargo traffic are growing steadily.
1. Resilience of Consumption Demand
Growth in Private Final Consumption Expenditure (PFCE):
• Private Final Consumption Expenditure (PFCE) has been a key growth driver post-pandemic, sustaining the
economy amid external challenges.
• PFCE's share in GDP at current prices increased to an average of 60.8% in the last three years, up from 58.4%
in the 8 years before the pandemic.
• Growth in PFCE is balanced across all components, including durables, semi durables, and services, with a
rebound in demand for services as restrictions eased.
Share of Private Final Consumption Expenditure in GDP:

Contributing Factors:
• Secured Consumption Base: Robust increase in Per Capita Real GNI in the 9 years before the pandemic.
• Astute Management of Covid-19: Positive economic outlook and belief in higher future incomes led to
increased spending.
• Investors’ Confidence: The Securities and Exchange Board of India (SEBI) enhanced market transparency led
to increased retail participation in the stock market.
• Emphasis on Digital Infrastructure: Digitalisation increased private consumption preand post-pandemic.
Accelerated virtual healthcare, digital payments, and e-grocery shopping. UPI aided growth of e-commerce.
• Social and Economic Inclusiveness of Rural India: Government welfare approach narrowed urban-rural
divide, leading to higher spending on aspirational goods. Middle class in India increased from 432 million in
2021 to 715 million in 2031.

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 • Other Factors: Reduced compliance burden, simplified laws, opening up sectors, strategic disinvestment, and
pragmatic monetary policy.

2. Enabling Investment-led Economic Growth

Introduction:
• Investment rate has consistently increased over the last three years compared to FY16. Driven by public sector,
private sector, and households.
First Two Decades of the Millennium:
• First Decade: High investment rate based on excessive borrowing and over optimism.
• Second Decade: Investment share of GDP decreased. Banks reluctant to lend to corporates, leading to balance
sheet trimming. Indian economy faced high fiscal deficit, current account deficit, and double-digit inflation.
• Indian was included in infamous 'fragile-five' emerging economies.

‘Investment’ as a crucial driver of economic growth

In recent years ‘investment’ emerged as a crucial driver of economic growth.
• Investment-Boosting Reforms and Healthier Balance Sheets: Private corporate investment and banks are
increasing credit disbursement.
• The Capital Expenditure of the Public sector:
o Union government capex increased by 5.1 times, state grants for capital assets rose by 2.8 times, and
Central PSEs' investment resources grew by 2.1 times from FY15 to FY24.
o Government increased capital spending from 12% to 22% of total expenditure from FY18 to FY24.
• Emphasis on Infrastructure-Addressed Supply-Side Deficiencies:
o Government expedited stalled infrastructure projects construction through the Pragati/Project
Monitoring Group (PMG) portal.
o 2,169 projects worth ₹49.4 lakh crore have been on-boarded on the portal since June 2014, with 676
projects worth ₹12.2 lakh crore commissioned.
• Indicators of Private Capex Upcycle in the Post-Pandemic Years:
o Capital goods index and infrastructure/construction goods index increased by 7.5% and 11.1%
respectively in FY24.

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 o Household sector investment has the largest share in the total Gross Fixed Capital Formation (GFCF),
with an uptrend in housing sales and launches despite higher real estate prices and interest rates.

3. Agricultural Sector Policies Ensuring Food Security

Introduction:
• Despite global health crisis and climate variability, the sector has shown resilience. Higher growth rate in FY15-
FY23 compared to FY05-FY14. Sector grew at 4.0% in FY23 compared to the previous year.
Status of Agriculture Sector:
• Agriculture Sector contributes 18% of India's GVA in FY24.
• Total food grains production for FY23 was 329.7 MT, a rise of 14.1 MT compared to FY22.
• India is a leading producer of milk, pulses, spices, and various other agricultural products.
• Agriculture exports reached ₹4.2 lakh crore in FY23, surpassing previous records.
Key Initiatives:
• Remunerative Prices to Farmers: Government ensures a minimum of 50% margin over the cost of production
for crops under MSP.
o Highest increase in MSP for lentils and rapeseed/mustard in 2023-24.
o Pradhan Mantri Annadata Aay Sanrakshan Abhiyan (PM-AASHA) scheme launched in 2018 to support
price and reduce import dependence.
• Financial Support to Farmers: Pradhan Mantri Kisan Samman Nidhi (PM-KISAN) 2019 provides ₹6,000/year
to farmers, benefiting over 11 crore farmers.
o Pradhan Mantri Fasal Bima Yojana offers affordable crop insurance, with claims of ₹1.5 lakh crore
paid since 2016.
o Pradhan Mantri Kisan Maandhan Yojana provides pension benefits to small and marginal farmers.
• Digital Inclusion: e-NAM (National Agriculture Market) facilitates transparent price discovery and online
payments, with 8 crore farmers and 2.5 lakh traders registered. APMCs integrated with e-NAM increased to
1,389 in 2023, with trade value reaching over ₹3 lakh crore.
• Food Security: Pradhan Mantri Garib Kalyan Anna Yojana provides free food grains to 81.4 crore beneficiaries,
extended for 5 years from January 1, 2024.
• Other Initiatives: Agriculture Infrastructure Fund, PM Kisan Sampada Yojana, sustainable agriculture
practices, and promotion of Natural Farming are also being implemented.
Technology Adoption in Agriculture:
• Agristack: Federated architecture for planning and monitoring agricultural schemes.
• Computerization of Primary Agricultural Credit Societies (PACSs): 62,318 PACSs linked with NABARD
to improve credit delivery systems.
• Drone Usage: Government provides 100% financial assistance for drone demonstrations on farmers' field.

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4. Reform Push to the Indian Industry
Introduction:
• Accelerated to 7.1% per annum from FY2015 to FY19, compared to 5.5% in FY10 to FY14. Covid-19 pandemic
caused industrial contraction. Expected robust 8% growth per annum during FY2021-2024 due to recent reforms.
Key Initiatives Driving Growth:
• Production Linked Incentive (PLI) scheme: Incentivizes manufacturers in specified sectors to increase
production and exports.
o Generated over ₹1.07 lakh crore investments, ₹8.7 lakh crore in production/sales, and created over 7
lakh jobs.
o Exports surpassed ₹3.4 lakh crore, driven by sectors like electronics, pharmaceuticals, food processing,
and telecom & networking products.
• Startup India: Recognized 1.14 lakh startups (Oct 2023) creating more than 12 lakh jobs.
• Open Network for Digital Commerce (ONDC) recorded over 6.3 M transactions in November 2023.
• Regulatory Reforms: Decriminalized 3,600 compliances and Jan Vishwas Amendment Act 2023 improved
ease of doing business.
• Reforms in the Logistics Sector: Unified Logistics Interface Platform (ULIP) integrated with 35 systems of 8
different Ministries and 699 industry players registered.
o Logistics cost declined by 0.8 to 0.9 % points of GDP between FY14 and FY22.
o Average turnaround time at major ports decreased from 4.2 days to 2.9 days during FY14-FY22.
Reforms for MSMEs:
• Timely Payment Facilitation: The Union Budget-FY24 allows tax deduction for payments made to MSMEs
only when payment is actually made.
• Interest on Delayed Payments: The MSMEs Development Act, 2006 mandates interest payment by buyers for
delayed payments to MSMEs, but no deduction is allowed under the Income Tax Act, 1961.
• Udyam Portal & Udyam Assist Platform: These platforms have helped consolidate information on MSMEs,
with 2.24 crore MSMEs registered on the Udyam portal and 1.2 crore units on the UAP.
• PM Vishwakarma: Providing support to artisans and craftspeople, with 48.8 lakh enrolments as of December
2023.
• Pradhan Mantri Mudra Yojana: Disbursed loans amounting to ₹25.98 lakh crore to non-corporate, non-farm
small and micro enterprises.
• Credit Guarantee Fund Trust: Increased credit limit from ₹2 crore to ₹5 crore in April 2023, with an increased
corpus.
• Emergency Credit Line Guarantee Scheme: Provided guarantees worth ₹2.4 lakh crore under the
Aatmanirbhar Bharat package.
• Credit Growth for MSMEs: Scheduled Commercial Banks saw 16.8% average annual growth in credit to
MSMEs in the last two years, with a decline in GNPA ratio from 7.7% to 4.7% in Sep 2023.
5. Digital Infrastructure and Delivery of Citizen-Centric Services
Introduction:
• The post-Covid economic recovery highlighted India's robust digital infrastructure and its ability to deliver
citizen-centric services effectively.
India's Digital Public Infrastructure (India Stack):
The India Stack consists of three interconnected layers:
• Identity Layer: Before Aadhaar, only 1 in 25 citizens had formal identification and 1 in 4 had bank accounts.
• Payments Layer: The Payments Layer, including Unified Payments Interface (UPI), has led to a surge in
cashless payments, with UPI transactions increasing from ₹0.07 lakh crore in FY17 to ₹143.4 lakh crore in FY24.
India was a global leader in real-time payment transactions in 2022.
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 • Data Layer: Reduced e-KYC cost from ₹1000 to ₹5. 4.5 million individuals & companies benefited from
Account Aggregator since its 2021 launch.
Impact
• India stack played a crucial role in the successful rollout of GST in 2017, with GSTN serving a growing number
of active taxpayers.
• The country's robust Digital Public Infrastructure (DPI) has enabled transparent and citizen-centric
governance services.
Technologies used in India Stack
• Identity Layer: Providing individuals with a unique identification and the ability to verify their identity through
tools like Aadhaar, eKYC, and eSign.
• Payments Layer: Facilitating seamless and affordable payments between individuals through platforms like
Unified Payments Interface, Aadhaar Payments Bridge, and Aadhaar Enabled Payment Service.
• Data Empowerment: Empowering individuals to securely share their data through tools like Consent Artefact,
DigiLocker, and Account Aggregator.
Enabling Factors for Growth of India Stack:
• Demonetisation led to increased non-cash payments, boosting digital transactions.
• 100% FDI in telecom and prohibition of discriminatory data tariffs increased competition and lowered data costs.
• Average monthly data consumption per subscriber has significantly increased, with India having one of the
lowest data tariffs per GB.
• India has one of the lowest average data tariffs per GB, with significant declines in mobile data tariffs over the
years.
Key Initiatives Driving Digital Transformation:
• Pradhan Mantri Jan-Dhan Yojana has brought a large portion of the population into the formal banking system.
• Direct Benefit Transfer has saved the government significant funds by removing duplicate beneficiaries.
• Apps like Aarogya Setu and CoWin have helped in managing the pandemic and vaccination drives.
• PM eVIDYA was launched to bridge learning gaps during the pandemic using digital technology.
Impact of the Country’s Robust Digital System:
• Improved financial inclusion and formalization of the economy, expanding the tax base.
• India achieved what took other countries an average of 47 years in financial inclusion in the last eight to ten
years.
• During the pandemic, about 87% of poor households received at least one benefit using the digital infrastructure.
• India is now the third-largest growing fintech economy after the USA and the UK.
• Services exports in GDP have increased, particularly in business services exports between FY20 and FY23.
• The demand for digitization and online service delivery post-pandemic has led to the growth of Global Capability
Centres (GCC) and increased business services exports.
• GCCs in India account for over 1% of India's GDP, providing resilience to the country's services exports.
Note: E-commerce Market in India:
• E-commerce in India has seen a 23.5% rise in annual GMV compared to FY22.
• Order volume has grown by 26.2% in FY23 according to a report by UNICOMMERCE.
• Factors driving growth include increased internet and smartphone usage, urbanization, and a growing middle
class.
6. Credit Creation is back
Status of the Banking Sector:
• Bank Credit Growth: Recent years have seen significant growth in bank credit, with non-food bank credit
growing at 15% in FY23, the highest in the last decade.
• Bank Credit to MSMEs: Bank credit to MSMEs has grown at a CAGR of 14.2% from FY19 to FY24.
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 • Bank Credit to Infrastructure: Bank credit to the infrastructure sector has grown at a CAGR of 4.2% between
FY19 and FY24.
• Public Sector Banks: Profit margins of PSBs have improved with government measures and recapitalization.
Financial resilience expected to increase with PSB mergers.
• NBFCs: NBFCs showing strong credit expansion with improved asset quality, capital levels, and liquidity.
• Measures taken to strengthen NBFCs include revised regulatory framework and extension of PCA framework.

Key Initiatives:
• Twin balance sheet advantage: Reforms by the government and RBI have transformed the twin balance sheet
problem into an advantage, with GNPAs (gross non performing assets) and Net NPAs at multi-year lows in Sep
2023.
• RBI Reforms: Initiatives like the Asset Quality Review (AQR) and Prompt Corrective Action (PCA) framework
have increased transparency in the financial sector.
• Government introduced IBC in 2016, amending Banking Regulation Act of 1949 for quicker resolution of bad
debt.
• IBC rescued 808 corporate debtors with realizations of 168.5% against liquidation value.
• Improved corporate governance, global ranking in resolving insolvency parameters improved from 136 to 52 in
first three years of IBC implementation.
7. Evolving Financial Markets to Support the Investment Needs of a Growing Economy
Resilient Indian Financial Markets:
• Increasing Market Size: India has the fourth-largest stock market in terms of market capitalization, with an
improving market capitalization to GDP ratio.
• Robust growth: Indian benchmark equity indices have shown strong growth, with India having a significant
weightage in the MSCI Emerging Markets index.
• Resilient structure: Indian financial markets have remained resilient due to ongoing reforms and regulatory
policies, supported by strong corporate fundamentals.
Performance of Indian Financial Markets:
• Retail Investors: Increased digital technology adoption has made financial markets more accessible to retail
investors.
• IPO Listing Growth: Since FY15, 1,050 companies have raised ₹3.9 lakh crore, compared to 441 companies
raising ₹1.5 lakh crore in the previous 9 years.
• Bond Market Stability: The spread between US and India 10-year bond yields has remained stable, reflecting
India's strong macroeconomic fundamentals.
• Indian corporate bond market: Companies are increasingly raising funds through bond issuances instead of
bank loans.
• Corporate bond issues in FY23 were 2.9 times those in FY 2014, while outstanding corporate bonds grew a
CAGR of 12.8 % between FY 2014 and FY23.
• Corporate bond market has seen significant growth, with issues and outstanding bonds increasing over the years.

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Impetus to the Bond Market:
• RBI's Retail Direct scheme allows individual investors to subscribe to government securities.
• Sovereign Green Bonds introduced by the government through RBI to fund green projects.
• SEBI introduced regulations for new instruments like InvITs and Municipal Bonds for more efficient
infrastructure financing.
• SEBI mandated listed large corporates to meet 25% of their financing needs through debt securities and reduced
the minimum ticket size for corporate bond investments to encourage greater investor participation.
2.2. Safeguarding Macroeconomic Stability
Reigning in Inflation with Flexible Targeting:
• FY09-FY14: High inflation and macro vulnerability from FY09 to FY14.
• FY16-FY20: Adoption of flexible inflation targeting with a band of 4 +/2%. Retail inflation averaged 4.2% from
FY16 to FY20. Price Stabilization Fund in 2014-15 tackled price volatility in agrihorticultural commodities.
• Challenges during Covid-19 Pandemic FY21: Dislocations in production, supply chain, and trade affected
fiscal balance. Supply disruptions led to elevated food prices. Global financial markets experienced extreme
volatility. International crude oil prices tumbled.
• Post-pandemic in FY22, India's economy saw growth and lower inflation. Global economic conditions worsened
with geopolitical conflicts and sanctions.
o Rising global commodity and crude oil prices impacted India's external account and prices.
o Disruptions in global supply chains led to high edible oil prices and uneven weather affected vegetable
prices, causing food inflation.

• India's retail inflation in FY23-24 remained lower than many other countries. Government diversified oil and
gas supply sources to protect the economy.
o Average retail inflation in FY24 was 5.5%, driven by a decrease in core inflation.
o Measures like strengthening food item buffers and trade policies helped control inflation.
o RBI's monetary policy supported inflation targets and growth.

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 • Importance of Macroeconomic Stability: Strong output growth, price stability, and robust external accounts
are key goals. Government and RBI focus on achieving these goals.
• Improvements in Fiscal Balance and External Current Account Balance. Helps to moderate macro
vulnerabilities. India managed to keep retail inflation below levels of other countries in FY23-24
2.3. Human Resources: Dovetailing Growth with Capacitating Welfare
1. A New Approach to Welfare
Transformation of Welfare Approach:
• Indian welfare concept has evolved into a more long-term, efficient, and empowering model.
• Focus on building social infrastructure and improving individuals' standard of living.
• Expenditure on social services has grown at a CAGR of 5.9% and capital expenditure on social services at 8.1%
between FY12 and FY23.
Universalization of Basic Amenities:
• Shift towards universal access to basic amenities with a target-based budget allocation approach.
• Output-Outcome Monitoring Framework for major schemes since FY20 for transparency and accountability.
• Transparency and accountability through user-friendly dashboards and MIS.
• Major programs like DBT scheme, Jan Dhan Yojana-Aadhaar-Mobile (JAM) trinity, Ujjwala Yojana,
PMAWAS Yojana, One Nation One Ration Card for minimizing leakages.
Investment in Social Enablers:
• Investment in immunization and sanitation for positive externalities like reduced disease incidence and improved
health outcomes.
• 5.1 crore children and 1.3 crore pregnant women vaccinated under Mission Indradhanush since 2014.
• 90% of villages ODF plus and 100% ODF status in 2019 under Swachh Bharat Mission.
• Social support through Atal Pension Yojana, PM Jeevan Jyoti Yojana, and PM Suraksha Bima Yojana launched
in 2015.
Visible Impact: How new approach to welfare paid off?
• 13.5 crore Indians escaped multidimensional poverty between 2015-16 and 2019-21. Driven by rural India and
most backward areas, reflecting the principle of "Antyodaya".
• Consistent rise in access to basic amenities like electricity, drinking water, sanitation, clean fuel.
• Decline in out-of-pocket health expenditure from 62.6% to 47.1% from FY15 to FY20.
• Decline in Maternal Mortality Rate (MMR) from 130 to 97 per lakh live births.
• Female Gross Enrollment Ratio (GER) in higher education surpassed male GER in FY18.
Expansion of the Big Tent under the New Welfare Approach
Affordable and Ayushman Bharat cards created: 30.3 crore. Hospital admissions since launch: 6.2
Wholesome Health crore.
Primary healthcare facilities upgraded: 1.6 lakh.
Janaushadhi Kendras across the country: 10,000.
Decline in TB incidence: 16%.
Janani Suraksha Yojana beneficiaries in FY22: 1 crore.
Revamped Education National Education Policy introduced in 2020.
Learning Teaching Material (JaduiPitara) launched in 2023.
PARAKH launched in 2023.
NIPUN Bharat Mission launched for foundational literacy and numeracy.
Schools upgraded: 3,000.
New residential schools and hostels opened: 235.
Separate girls’ toilets constructed: 28,000.
Schools covered under ICT and digital initiatives: 1.2 lakh.
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 Largescale Skilling Candidates trained under PM Kaushal Vikas Yojana: 1.4 crore.
Skill India Digital platform launched in 2023.
Apprentices engaged under National Apprenticeship Promotion Scheme: 26.9 lakh.
Craftsmen Training Scheme beneficiaries: 1.1 crore.
Entrepreneurship Training beneficiaries: 2 lakh.
Entrepreneurship Loans sanctioned under MUDRA Yojana: ₹26.1 lakh crore.
Loans sanctioned under PM-SVANidhi: 82.3 lakh.
Loans sanctioned under Stand-Up India: 2.1 lakh (84% women entrepreneurs).
Basic Amenities Toilets constructed under Swachh Bharat Mission: 11 crore.
Tap water connections provided under Jal Jeevan Mission: 10.8 crore.
Houses constructed under PM-AWAS: 2.5 crore.
LPG connections provided under PM Ujjwala Yojana: 10 crore.
Rural households electrified under Saubhagya: 21.4 crore
Common service centres set up in rural areas: 4.5 lakh..
Social Security PM Jan Dhan Yojana accounts opened: 51.4 crore.
Enrolments under PM Jeevan Jyoti Yojana: 18.5 crore.
Enrolments under PM Suraksha Beema Yojana: 41 crore.
Atal Pension Yojana subscribers: 6.1 crore.
PM Shram Yogi Maandhan Yojana enrolments: 49.7 lakh.
Response to Covid-19 Crisis:
• Calibrated response addressing specific needs of at-risk populations. Ensuring food security, credit for street
vendors, employment for returnee migrants, etc.
2. Women-led development: Tapping the Gender Dividend for India@100
Introduction:
LFPR increased to 37% in 2022-23 from 23.3% in 2017. Sex ratio at birth improved from 918 in 2014-15 to 933 in 2022-
23. GER of girls in schools at secondary level increased to 79.4% in FY22 from 75.5% in FY15.
Political Reservations for Women:
• Women's reservation Bill passed in 2023 for greater participation in government. Associated with improved
institutions and greater probity.
• Female political representation linked to better child health and education outcomes.
• 1/3rd seats reserved for women in Panchayats since 1991. Currently, 46% of elected representatives in
Panchayats are women.
Economic Empowerment of Women:
• Access to financial services: PMJDY has significantly increased the number of women with bank accounts they
use.
• Women-led SHGs: DAY-NRLM has mobilized millions of women into SHGs, leading to empowerment and
access to government schemes.
• 9.5 crore women mobilised into 87.4 lakh SHGs under DAY-NRLM.
• Target of creating 'Lakhpati Didis' through skilling SHG members.
Key Initiatives & Performance:
• Beti Bachao, Beti Padhao (BBBP): Focuses on health and education of the girl child, raising awareness on
saving and educating girls.
• Sukanya Samriddhi Yojana has over 3.1 crore accounts.
• PM Mudra Yojana: 70% loans sanctioned to women entrepreneurs.
• Stand-Up India: 80% beneficiaries are women.
• Prime Minister’s Rural Digital Literacy Campaign (PMGDISHA): More than 53% beneficiaries are women.

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 • PM AWAS Yojana (Gramin): 26.6% completed houses solely in women's name.
• PM Kaushal Vikas Yojana: Over 59 lakh women certified as of June 2022.
• These initiatives have a positive impact on women, addressing safety, dignity, and productivity concerns.
3. Eyes on the long-term
• Holistic approach to nutrition: India is working towards a Kuposhan Mukt Bharat by addressing malnutrition
through a whole-of-society approach that includes sanitation, clean drinking water, basic medicines, housing,
and a life cycle approach.
• Mission Saksham Anganwadi and Poshan 2.0 aim to improve health, wellness, and immunity through
micronutrient sufficiency, leading to reductions in stunting, wasting, and underweight prevalence.
• Transforming Education: The National Education Policy focuses on teacher training, community involvement,
and innovative teaching methods to revolutionize education and address pandemic learning losses.
4. Employment Situation in the Past Decade:
• Positive transformation in India's employment situation with achievements in formalisation, skill development,
entrepreneurship, industry diversification, and inclusive growth.
• Unemployment rate declined to 3.2% in 2022-23 from 6% in 2017-18, while LFPR increased to 57.9% in 2022-
23 from 49.8% in 2017-18, driven by a surge in rural female LFPR.
• EPFO membership numbers grew by 11.3% CAGR between FY14 and FY22, indicating increased salaried jobs.
• Share of regular-wage jobs declined, but the total number of jobs with a regular salary increased by almost 15
million between FY18 to FY23.
• Gig economy employed 77 lakh workers in FY21, boosting entry-level job creation in tier-2 and tier-3 cities.
Challenges in Workforce Formalization and Job Creation:
• Formalizing a growing workforce.
• Creating jobs in sectors that can absorb workers transitioning from agriculture.
• Ensuring social security benefits for regular wage/salaried employees
• Ensuring social security benefits for regular wage/salaried employees is crucial, as 53% of salaried employees
are not eligible for any social security benefit.
Rising Youth Employment:
• Youth employment has been increasing alongside the youth population.
• Youth unemployment rate has decreased from 17.8% in 2017-18 to 10% in 2022-23. Youth LFPR has expanded
from 38.2% to 44.5%.
• The youth workforce participation rate has grown significantly, indicating more youth finding work despite a
smaller increase in the youth population.
• States with a youth bulge like Uttar Pradesh, Bihar, and Madhya Pradesh are leading the rise in youth
employment, with significant declines in youth unemployment rates.
Rising Female Labour Force Participation Rate:
• Female education levels have been rising, leading to a more rewarding workforce participation in the future.
• Female GER in higher education quadrupled from 6.7% in FY2001 to 27.9% in FY21. Female GER in senior
secondary education increased from 24.5% in 2004-05 to 58.2% in 2021-22.
• Female Labor Force Participation Rate (FLFPR) has risen from 23.3% in 2017-18 to 37% in 2022-23, with
significant growth in both urban and rural areas, driven by self-employment and agriculture.
• Rural FLFPR has increased in both employed and unpaid helper categories, showing a greater female
contribution to rural production.
• Female workforce composition tilting towards agriculture while male workforce tilting away.
• Share of agriculture in rural female workforce increased from 73.2% in 2017-18 to 76.2%. Share of agriculture
in rural male workforce declined from 55% in 2017-18 to 49.1% in 2022-23.

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 • The feminization of agriculture suggests a necessary shift in the sector, with more efficient utilization of female
labor.
• Women's monetary contribution to rural family incomes impacts intra-household dynamics and decision-
making, leading to significant changes in societal gender roles.

5. Skill Development and Entrepreneurship

• Proactive measures by the government to enhance skill acquisition and employability. NEP 2020 focuses on
vocational education and skill development.
• 72.6% of workers aged 15-59 years did not receive any formal/informal vocational/technical training.
• Establishment of Ministry of Skill Development and Entrepreneurship in 2014. Launch of National Skill
Development Mission and Skill India Mission in 2015.
• Recent launch of Skill India Digital platform for skilling, education, employment, and entrepreneurship.
• Positive outcomes of government efforts: India's ranking in WorldSkills Competitions improved from 39 in
2011 to 11 in 2022.
• Nearly 1.4 crore candidates trained under PM Kaushal Vikas Yojana since 2015.
2.4. India’s External Sector: Safely Navigating Through Uncertainties:
1. Merchandise Trade Depicted Resilience
• Exports' share of GDP: With increasing export basket diversification starting in FY04, the share of net exports
to GDP increased from -4.1 to -2.6 from FY04 to FY13 to FY14 to FY24.
o In FY23, merchandise exports reached a record-breaking USD 451.1 billion.
• Service exports: Almost half of all service exports are reliably composed of software services.
o Since FY22, exports of business and financial services have grown by double digits, in accordance with the
more than 20% increase in exports of software and other services.
Measures for Export Promotion
• Government's goal of achieving total exports of USD 2 trillion by 2030. Implementing policy and trade
facilitation measures.
• Setting export targets, providing export credit insurance services, export credit. Helps MSME exporters to enter
new markets and diversify products.
• Department of Telecommunications guidelines for Other Service Providers. Allows Work-From Anywhere in
India, sharing of infrastructure, use of Electronic Private Automatic Branch Exchange (EPABX).
• Enables BPOs and ITeS firms to reduce input costs.
2. Comfortable Balance on Current Account
• Service exports and remittances have been growing steadily, with a Compound Annual Growth Rate (CAGR)
of 7.1% and 4.5% respectively from FY12 to FY23, helping India maintain a healthy current account balance.
• India is the largest recipient of remittances in the world, receiving USD 125 billion in 2023.
• There has been a shift in Indian migrants' destinations from low-skilled jobs to high-skilled jobs in high-income
countries, with 36% of remittances coming from high-skilled Indian migrants in top high-income destinations.

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 • Private transfer receipts reached a record level of USD 112.5 billion in FY23, growing at 26.2% due to a healthy
growth of 11.2% in FY22.
3. Capital Account
Current Account and Capital Account Balances:
• Negative current account balance in H1 of FY24 offset by positive capital account balance.
• Capital account saw an 88.2% increase YoY in H1 of FY24 due to higher foreign investment inflows into India.
Foreign Direct Investment (FDI):
• Cumulative FDI of USD 596.5 billion received during FY15 and FY23, 2.5% of GDP.
• Higher FDI inflows during pandemic and European conflict compared to FY05-FY14.
• Factors attracting FDI include open sectors for 100% FDI, policies like PLI scheme and Make in India, natural
resources availability, stable macroeconomic environment, and global investment climate uncertainties.
Foreign Portfolio Investment (FPI):
• FPI inflow of USD 28.8 billion in H1 of FY24, compared to USD 7.8 billion outflow in H1 of FY23.
• FY15 saw highest FPI inflow in the last decade at USD 42.2 billion.
• Factors enabling FPI inflow include rupee stability, easing inflation, and expectations of future rate cuts.
Measures for simplification and rationalization of the FPI regulatory regime
• Expansion of Investment Opportunities: FPIs are now allowed to invest in various instruments such as
currency derivatives, REIT units, InvITs, and category III AIFs.
• Streamlined Onboarding Process: The registration process for FPIs has been made easier with the introduction
of an online Common Application Form (CAF) for registration with SEBI.
• Enhanced Transparency: FPIs are now required to disclose information about individuals who have ownership,
economic interest, or control in identified FPIs, promoting transparency in the regulatory regime.
Exchange Rate
• Indian Rupee stability due to macroeconomic improvements.
• Rupee-dollar exchange rates ranged from ₹60/USD to ₹80/USD from FY14 to FY23.
• Indian Rupee performing well compared to other currencies since Mar 2023.
• Foreign exchange reserves at USD 623.2 billion in Dec 2023, covering over ten months of imports.
• Reserves provide a buffer to External Debt up to 98.1% by Sep 2023.
External Debt

• India's external debt is deemed manageable, with a value of USD 635.3 billion as of September 2023. The
proportion of external debt to GDP decreased from 22.4% in March 2013 to 18.6% in September 2023.
• Over the past ten years, India's International Investment Position (IIP) has remained stable: by September 2023,
total assets—which mostly consist of reserve assets—had increased by 10.2% (YoY), while total liabilities—
which mostly consist of investments by non-residents—had increased by 6.5% (YoY).
• The balance sheet of a nation's financial obligations and assets abroad is called the IIP.
• It serves as a gauge of a nation's level of financial openness.
• Net claims of non-residents in India, or NIIP, is a measure of a nation's creditworthiness.

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4. Way Ahead for External Sector
• The global economy is nevertheless facing a number of difficulties, including persistently high inflation, slow
growth, geopolitical conflicts, and security concerns in international waterways.
• However, India's external industry is anticipated to be resilient with ongoing changes to the FDI policy,
infrastructural readiness, and investor facilitation.
2.5. Climate Actions
The nation's top priority continues to be achieving high robust growth while guaranteeing sustainable and equitable
livelihood for all. India will continue to be a low emitter (per capita) for some time to come.
1. India's Climate Action towards Building Resilience
Despite lack of climate aid from developed nations, India takes a comprehensive approach to climate action.
Nationally Determined Contributions (NDCs)
• India announced its first NDCs in 2015 and updated them in 2022 due to rapid implementation.
• Installed non-fossil fuel capacity in India has more than doubled in the last 9 years.
• India's solar energy capacity has increased by more than 25 times in the same period.
Schemes for NDCs:
• Development of Solar Parks and Ultra Mega Solar Power Projects.
• Rooftop Solar Scheme, Green Energy Corridor.
• PLI schemes for manufacturing 'High-Efficiency Solar PV Modules'.
• National Programme on Advanced Chemistry Cell Battery Storage'.
NDC Targets – 2015 Achievements Revised Targets (2022)
India's GDP emission intensity Decreased the economy's emission GDP emissions intensity is reduced
should be reduced from its 2005 level intensity from 2005 levels by 33% by from 2005 levels by 45%.
by 33 to 35 percent by 2030. 2019.
By 2030, attain roughly 40% of The percentage of installed power Achieve a cumulative installed
installed electrical power capacity capacity that is not derived from capacity of 50% for electricity from
from sources other than fossil fuels. fossil fuels was 43.9% in November non-fossil sources.
2023, up from 32.3% in 2014 and
30.4% in 2004.
By 2030, add more forest and tree By 2019, 1.97 billion tonnes of CO2 promoting a sustainable and health-
cover to provide a further 2.5–3 equivalent have been added to the conscious lifestyle by organizing a
billion tons of CO2eq carbon sink. atmosphere, an amount that is higher large-scale LiFE (Lifestyle for
than in 2005. Environment) campaign.
Strengthened National Action Plan on Climate Change (NAPCC):
• Comprises nine missions in specific areas.
• Includes missions on solar energy, energy efficiency, water, sustainable agriculture, and more.
• Recently added Health Mission to address climate change impacts on health.
National Adaptation Fund for Climate Change (NAFCC):
• Introduced in 2015-16 to support adaptation action.
• 30 projects sanctioned in 27 States and UTs in various sectors like agriculture, water, and forestry.
Perform Achieve and Trade (PAT) scheme:
• Energy savings-based market mechanism.
• Resulted in savings of about 24.3 million tonnes of Oil Equivalent.
• Avoided about 105.02 million tonnes of CO2 emissions by 2022.
Amendment to the Energy Conservation Act:
• Established a domestic carbon market- the Carbon Credit Trading Scheme (CCTS).

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Schemes to Promote Energy Efficiency:
• Includes PM-KUSUM, UJALA, Smart Meter National Program.
• Over 36.86 crore LED bulbs distributed under UJALA.
• Over 1.30 crore LED Street Lights installed under SNLP.
Fiscal Incentives for Renewable Energy:
• Lower GST rates, concessional custom duty, and priority sector lending status for renewable energy projects.
• These incentives aim to promote the adoption of renewable energy sources in India.
Measures in Transport Sector:
• National Policy on Biofuels and FAME scheme to promote electric vehicles.
• India has 10,000 EV charging stations as of December 2023.
• Metro Rail Policy of 2017 has expanded the operational metro rail network by over 450 km since 2018-19.
• National Green Hydrogen Mission launched in 2023 to boost hydrogen production using renewable energy
sources.
2. Building Resilience to Climate Change Impacts
1. Overall Approach
• Government focuses on economic growth, food and water security, disaster management, health, and social
infrastructure to enhance resilience.
2. Initiatives to mainstream climate into the financial economy:
• SEBI mandated ESG-related disclosures for top 100 listed entities since 2012
• Regulatory framework for issuing green debt securities introduced.
• RBI introduced 'Framework for Sovereign Green Bonds' and 'Framework for Acceptance of Green
Deposits'.
• Renewable energy projects included in Priority Sector Lending rules.
• Top companies required to report non-financial data, including sustainability impacts.
3. India-led initiatives supporting global efforts:
• International Solar Alliance (2014), Coalition for Disaster Resilient Infrastructure, Infrastructure for Resilient
Island States, Green Grids Initiative-One Sun One World One Grid
• India co-leads Leadership Group for Industry Transition with Sweden
• Launch of LeadIT 2.0 in COP28 to shape policy frameworks and international cooperation.
3. Balancing Ambition with Pragmatism
• Ambitious climate policies can have short-term costs that may outweigh long-term benefits if energy security is
ignored.
• Access to energy is crucial for industry, social well-being, and economic development, and should be a priority
to achieve maximum returns.
• The uncertainties surrounding the benefits of climate policies are greater than those surrounding their costs,
especially when considering limited access to critical minerals, green technologies, and concessional finance for
transition.
• For example, electric cars require six times the mineral inputs of conventional cars, highlighting the increased
need for energy in transitioning to green technologies.
4. Development as a Prerequisite
• Development is crucial for climate action: Development helps build resources and capacity for effective
climate action, making it essential for building resilience and enabling effective mitigation action.
• Risk of permanent low-income status: The current global approach to climate change may lead to the
permanent low-income status of several nations.
• India's energy transition policies: India is focusing on near-term pragmatism while also setting a clear long-
term goal of reducing dependence on fossil fuels in shaping its energy transition policies.
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 • Pursuing net zero by 2070 and enhanced NDC for 2030 through policy and regulatory measures.
o Implementing incentives to promote mindful and deliberate utilization.
o Shifting production and consumption patterns towards sustainability.
o India as a climate leader.
o Only G20 nation in line with 2°C warming compared to its fair share contribution to climate action.
2.6. Outlook
1. India's Economic Growth and Future Prospects:
• India is currently the 5th largest economy with a GDP of USD 3.7 trillion.
• Despite challenges like the pandemic and macro imbalances, real GDP growth is expected to be around 7% in
FY25.
• There is potential for growth rates to exceed 7% by 2030.
2. Priority Areas for Reforms:
• Skilling, learning outcomes, health, energy security, reducing compliance burden for MSMEs, and gender
balancing in the labor force are key areas for future reforms.
3. Future Economic Outlook:
• India is projected to become the 3rd largest economy in the world with a GDP of USD 5 trillion in the next 3
years.
• With the right conditions, India could aim to become a USD 7 trillion economy by 2030.
• The government's ambitious goal is to become a 'developed country' by 2047.

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