Economic Survey 2023-24 Highlights Finance Minister Nirmala Sitharaman presented the Economic

Economic Survey 2023-24 Highlights Finance Minister Nirmala Sitharaman presented the Economic

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  Economic Survey 2023-24Highlights Finance Minister Nirmala Sitharaman presented the Economic Survey in Parliament today. This annual report, issued by the Ministry of Finance, is usually released a day before the Union Budget. It delivers an in-depth analysis of the country’s economic performance over the past year, along with insights, recommendations for future economic strategies, and an overview of the major challenges and opportunities for the economy. Chapter 1: STATE OF THE ECONOMY: STEADY AS SHE GOES Diverging Global Growth Patterns The global economy grew by 3.2% in 2023, according to the April World Economic Outlook. Diverging Growth Patterns:  Significant differences in growth among countries.  Variations attributed to domestic structural issues, uneven exposure to geopolitical conflicts, and the effects of monetary policy tightening. India’s Economic Resilience and Growth  Resilience: India maintained economic momentum into FY24 despite external challenges.  Recovery and Expansion: The Indian economy expanded post- pandemic, with real GDP in FY24 being 20% higher than FY20 levels.  Macroeconomic Stability: Focus on macroeconomic stability helped mitigate the impact of external challenges. Real GDP Growth:
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   Growth Rate:India’s real GDP grew by 8.2% in FY24, with three out of four quarters exceeding 8%.  Future Projections: Economic Survey projects a conservative growth of 6.5–7% for FY25, acknowledging market expectations. Improved Economic Indicators  Retail Inflation: Reduced from 6.7% in FY23 to 5.4% in FY24 due to effective administrative and monetary policies.  Current Account Deficit (CAD): CAD decreased to 0.7% of GDP in FY24, down from 2.0% in FY23.  Tax Collection: 55% of tax revenue came from direct taxes, and 45% from indirect taxes. Chapter 2- MONETARY MANAGEMENT AND FINANCIAL INTERMEDIATION: STABILITY IS THE WATCHWORD Steady Inflation Rate  Policy Rate: The RBI kept the policy repo rate steady at 6.5% throughout FY24.  Inflation Control: The overall inflation rate was managed effectively, aligning gradually with the target while supporting economic growth. Stellar Performance of India’s Financial and Banking Sector in FY24 Banking Sector Performance:  Credit Disbursal Growth: Scheduled Commercial Banks (SCBs) disbursed ₹164.3 lakh crore in credit, reflecting a 20.2% growth by March 2024.  Non-Performing Assets: Gross and net non-performing assets reached multi-year lows, indicating improved asset quality.  Broad Money Growth: Growth in broad money (M3) was 11.2% year-on-year as of 22 March 2024, up from 9% the previous year. Financial Sector Performance:  Stock Market Capitalisation: India’s market capitalisation to GDP ratio is the fifth largest globally.  Capital Formation: Primary capital markets facilitated ₹10.9 lakh crore in capital formation during FY24, about 29% of gross fixed capital formation by corporates. Financial Inclusion:
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   Significance: Financialinclusion drives sustainable economic growth, reduces inequality, and helps eliminate poverty.  Focus on Digital Inclusion: The next major challenge is enhancing Digital Financial Inclusion (DFI). Insurance and Microfinance Sector:  Insurance Market: India is expected to become one of the fastest-growing insurance markets in the coming decade.  Microfinance Sector: India’s microfinance sector is the second largest globally, following China. Chapter 3- PRICES AND INFLATION: UNDER CONTROL Inflation Management Retail Inflation:  Current Level: Retail inflation was maintained at 5.4% in FY24, the lowest since the pandemic.  Government Interventions: The Central Government's price cuts for LPG, petrol, and diesel contributed to keeping retail fuel inflation low. Food Inflation:  Challenges: The agriculture sector faced extreme weather events, depleted reservoirs, and crop damage, leading to increased food prices.  Current Rate: Food inflation rose from 6.6% in FY23 to 7.5% in FY24.  Government Actions: Measures included dynamic stock management, open market operations, subsidized essential food items, and trade policy interventions to mitigate food inflation. Projected Inflation:  RBI Forecast: Inflation is projected to decline to 4.5% in FY25 and 4.1% in FY26, assuming normal monsoon and absence of external or policy shocks.  IMF Forecast: The IMF estimates inflation to be 4.6% in 2024 and 4.2% in 2025 for India. Chapter 4- EXTERNAL SECTOR: STABILITY AMID PLENTY India’s External Sector Performance Global Export Market Share:
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   Goods Exports:India’s share in global goods exports increased to 1.8% in FY24 from an average of 1.7% during FY16-FY20.  Services Exports: Services exports grew by 4.9% to USD 341.1 billion in FY24, driven primarily by IT/software and business services.  Current Account Deficit: Improved due to moderated merchandise imports and rising services exports, narrowing to 0.7% in FY24. Global Ranking: India remains the top remittance recipient globally, with remittances totaling USD 120 billion in 2023. Debt Sustainability: India’s external debt remained sustainable, with the debt-to-GDP ratio at 18.7% as of March 2024. Chapter 5- MEDIUM TERM OUTLOOK: A GROWTH VISION FOR NEW INDIA Required Tripartite Compact for Growth For India to sustain a growth rate of 7% or more, a collaborative effort among the Union Government, State Governments, and the private sector is essential. Amrit Kaal’s Growth Strategy  Boosting Private Investment: Increase investment to drive economic expansion.  Expansion of MSMEs: Support and grow Micro, Small, and Medium Enterprises.  Agriculture as Growth Engine: Leverage agriculture to fuel economic growth.  Financing Green Transition: Invest in environmentally sustainable projects.  Bridging Education-Employment Gap: Align education with employment opportunities.  Building Capacity of States: Enhance the capabilities of State Governments. Key Areas of Policy Focus (Short to Medium Term)  Job and Skill Creation: Develop strategies for generating employment and skill development.  Agriculture Sector Potential: Fully utilize the agriculture sector’s capabilities.
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   Addressing MSMEBottlenecks: Resolve issues faced by MSMEs.  Managing Green Transition: Navigate the transition to a greener economy effectively.  Dealing with Chinese Conundrum: Strategically manage economic and geopolitical issues with China.  Deepening Corporate Bond Market: Expand and develop the corporate bond market.  Tackling Inequality: Address and reduce economic inequality.  Improving Health of Young Population: Enhance the health quality of the younger generation. Chapter 6- CLIMATE CHANGE AND ENERGY TRANSITION: DEALING WITH TRADEOFFS International Finance Corporation Report on India’s Climate Actions India is acknowledged for its commitment to climate actions, being the only G20 nation on track to limit warming to 2°C. CAGR of GDP and Emissions  GDP Growth: India’s GDP grew at a Compound Annual Growth Rate (CAGR) of approximately 7% from 2005 to 2019.  Emissions Growth: During the same period, emissions grew at a CAGR of about 4%. Renewable Energy and Energy Efficiency  Renewable Energy Capacity: As of May 31, 2024, non-fossil sources account for 45.4% of India’s installed electricity generation capacity.  Energy Efficiency: India reduced the emission intensity of its GDP by 33% from 2005 levels by 2019. Chapter 7- SOCIAL SECTOR: BENEFITS THAT EMPOWER New Welfare Approach Focuses on maximizing impact per rupee spent, leveraging digitization in healthcare, education, and governance to enhance welfare program effectiveness. Nominal GDP Growth vs. Welfare Expenditure  GDP Growth: Nominal GDP grew at a CAGR of approximately 9.5% from FY18 to FY24.
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   Welfare Expenditure:Welfare expenditure grew at a CAGR of 12.8% during the same period. Decline in Gini Coefficient  Rural Sector: Gini coefficient decreased from 0.283 to 0.266.  Urban Sector: Gini coefficient decreased from 0.363 to 0.314. Healthcare and Nutrition  Ayushman Bharat: Over 34.7 crore Ayushman Bharat cards issued; covered 7.37 crore hospital admissions.  Mental Health: 22 mental disorders covered under Ayushman Bharat – PMJAY.  ‘Poshan Bhi Padhai Bhi’: Aims to create a universal, high-quality preschool network at Anganwadi Centres. Education and R&D  Vidyanjali Initiative: Enhanced educational experiences for over 1.44 crore students through community engagement and volunteer contributions.  Higher Education: Enrollment increased by 31.6% since FY15, with notable growth in SC, ST, and OBC categories and faster growth in female enrollment.  R&D Progress: Nearly 1 lakh patents granted in FY24, up from less than 25,000 in FY20. Chapter 8- EMPLOYMENT AND SKILL DEVELOPMENT: TOWARDS QUALITY Decline in Unemployment Rates  Overall Unemployment: Improved to 3.2% in 2022-23.  Youth Unemployment: Reduced from 17.8% in 2017-18 to 10% in 2022-23.  Female Labour Force Participation: Rising steadily over the past six years. Future Job Needs  Annual Job Creation: Approximately 78.5 lakh jobs needed annually until 2030 in the non-farm sector.  Workforce Projection: From 50.7 crore in 2022 to 64.7 crore by 2050.
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  Chapter 9- AGRICULTUREAND FOOD MANAGEMENT: PLENTY OF UPSIDE LEFT IF WE GET IT RIGHT Key Growth Metrics of Indian Agriculture  Sector Growth: Agriculture and allied sectors grew at an average annual rate of 4.18% at constant prices over the past five years.  Credit Disbursement: ₹22.84 lakh crore in total credit disbursed to agriculture as of January 31, 2024.  Kisan Credit Cards (KCC): 7.5 crore KCCs issued with a limit of ₹9.4 lakh crore.  Micro Irrigation: 90 lakh hectares covered under the Per Drop More Crop (PDMC) scheme from 2015-16 to 2023-24. Importance of R&D  Return on Investment: ₹13.85 return for every rupee invested in agricultural research and education. Chapter 10- INDUSTRY: SMALL AND MEDIUM MATTERS Growth Rate of Industry  Economic and Industrial Growth: Economic growth of 8.2% in FY24 supported by an industrial growth rate of 9.5%.  Manufacturing Sector: Achieved an average annual growth rate of 5.2% over the last decade.  Key Growth Drivers: Chemicals, wood products and furniture, transport equipment, pharmaceuticals, machinery, and equipment. Status of India’s Industries  Pharmaceuticals: World's third-largest pharmaceutical market by volume, valued at USD 50 billion.  Clothing: Second-largest clothing manufacturer globally and among the top five exporting nations. PLI Scheme Importance  Investment and Production: PLI schemes attracted over ₹1.28 lakh crore in investments until May 2024, leading to production/sales of ₹10.8 lakh crore.  Employment Generation: Created over 8.5 lakh jobs (direct and indirect). Chapter 11- SERVICES: FUELLING GROWTH OPPORTUNITIES
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  Service Sector GVA Contribution to GVA: The services sector's contribution to Gross Value Added (GVA) has returned to pre-pandemic levels at approximately 55%.  Active Companies: Represents the highest number of active companies at 65% of the total. As of 31 March 2024, there are 16,91,495 active companies in India.  Global Share: India's services exports constituted 4.4% of global commercial services exports in 2022. Service Sector Industries Status  Revenue-Earning Freight: Increased by 5.3% in FY24 compared to the previous year (excluding Konkan Railway Corporation Limited).  Tourism: Over 92 lakh foreign tourist arrivals in 2023, reflecting a 43.5% year-on-year increase.  Residential Real Estate: Highest sales since 2013, with a 33% year-on-year growth and a total sale of 4.1 lakh units in the top eight cities in 2023.  Global Capability Centres (GCCs): Growth from over 1,000 centres in FY15 to more than 1,580 centres by FY23.  E-Commerce Industry: Expected to exceed USD 350 billion by 2030. Chapter 12- INFRASTRUCTURE: LIFTING POTENTIAL GROWTH Buoyant Public Sector Investment in Infrastructure  National Highways (NH) Construction: The average pace of NH construction increased nearly threefold, from 11.7 km per day in FY14 to approximately 34 km per day by FY24.  Railways Capital Expenditure: Increased by 77% over the past 5 years. Significant investments have been made in new line construction, gauge conversion, and doubling projects. Indian Railways plans to introduce Vande metro trainset coaches in FY25.  Airport Infrastructure: In FY24, new terminal buildings at 21 airports were operationalised, enhancing the overall passenger handling capacity by approximately 62 million passengers per annum.
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  Chapter 13- CLIMATECHANGE AND INDIA: WHY WE MUST LOOK AT THE PROBLEM THROUGH OUR LENS  Critique of Current Global Climate Strategies: Flawed Approaches: Current global strategies for climate change are criticized for being flawed and not universally applicable. The Western approach often fails to address the root problem of overconsumption, instead substituting means to achieve continued overconsumption.  Need for Diverse Pathways: A one-size-fits-all approach is deemed ineffective. Developing countries should be allowed to choose their own pathways to address climate change.  India’s Ethos: India’s cultural ethos promotes a harmonious relationship with nature, contrasting with the overconsumption culture prevalent in the developed world.  Sustainable Housing: Emphasizing traditional multi- generational households could provide a pathway towards sustainable housing and living practices.  Mission LiFE: The 'Mission LiFE' initiative focuses on fostering human-nature harmony and promoting mindful consumption, addressing the overconsumption problem that underlies global climate change issues.