Finance Minister Nirmala Sitharaman presented the Economic Survey 2023-24 in Parliament on Monday (22 July, 2024), highlighting India’s economic stability despite global challenges.
This 476-page report outlines India’s resilient recovery following the Covid-19 pandemic. Policymakers have prioritized economic and financial stability, ensuring continued growth amidst global uncertainties.
“India’s real GDP grew by 8.2 per cent in FY24, exceeding 8 per cent mark in three out of four quarters of FY24,” said the survey.
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Below are some major highlights from the annual report on the Indian economy:
Resilient Indian Economy
According to the economic survey, the Indian economy has remained strong despite global challenges, expanding by over 7% for the third consecutive year. This growth was fueled by steady consumer demand and increased investment.
Gross Value Added (GVA) at 2011-12 prices increased by 7.2% in Financial Year 2024. Net taxes at constant prices grew by 19.1%, supported by strong tax growth at both central and state levels, and efficient subsidy expenditure.
India’s Current Account Deficit (CAD) improved, standing at 0.7% of GDP in FY24, down from 2.0% in FY23. Forex reserves at the end of March 2024 could cover over 10 months of projected imports for FY25 and 98% of external debt. The external debt-to-GDP ratio was 18.7%.
Effective macroeconomic policies helped minimize external impacts on the economy.
Fiscal balances have improved despite increased public investment. Improved tax compliance, expenditure control, and digitization contributed to this balance.
Healthier corporate and bank balance sheets are expected to boost private investment, with strong growth prospects for FY25, subject to geopolitical, financial, and climatic risks.
Stable Banking Sector
The economic survey highlighted that India’s banking and financial sectors performed exceptionally well in FY24.
“Double-digit and broad-based growth in bank credit, gross and net non-performing assets at multi-year lows, and improvement in bank asset quality highlight the government’s commitment to a healthy and stable banking sector,” said the survey.
The economic survey also highlighted that primary capital markets facilitated capital formation amounting to Rs 10.9 lakh crore in FY24, which is about 29% of the gross fixed capital formation of private and public companies during FY23.
Additionally, the market capitalization of the Indian stock market has seen significant growth, with its market capitalization to GDP ratio ranking as the fifth largest in the world.
Core Inflation Falls Significantly
The economic survey revealed that timely actions by the government and the Reserve Bank of India have kept retail inflation at 5.4%, the lowest since the pandemic began. This decrease was largely due to a drop in core inflation for both goods and services.
In FY24, inflation for core services reached a nine-year low, while inflation for core goods dropped to a four-year low.
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Food Inflation a Global Concern
The economic survey pointed out that food inflation has been a major issue worldwide for the past two years. In India, extreme weather, low water levels in reservoirs, and crop damage have caused significant challenges in agriculture, leading to increased food prices.
Food inflation in India was 6.6% in FY23 and rose to 7.5% in FY24.
Positive Short-term Inflation Outlook
Inflation is expected to decrease in the short term due to normal monsoons and no external policy shocks.
“Going forward, the RBI projects inflation to fall to 4.5 per cent in FY25 and 4.1 per cent in FY26, assuming normal monsoon and no external or policy shocks,” said the survey.
Growth Strategy for New India
The economic survey stressed the need for a fresh approach for a new India.
The report highlighted that creating jobs and developing skills should be top priorities in the future. Other important areas include fully utilizing the agriculture sector, addressing issues faced by MSMEs, managing the transition to green energy, handling challenges related to China, expanding the corporate bond market, tackling inequality, and improving the health of the youth.
The growth plan for Amrit Kaal focuses on six key areas:
- Boosting private investment.
- Expanding and supporting MSMEs.
- Recognizing agriculture as a growth driver and removing policy obstacles.
- Securing funds for green energy initiatives.
- Closing the education-employment gap.
- Strengthening state capacity and capability to support and speed up India’s progress.
FDI Inflows Slow
According to the economic survey, Foreign direct investment slowed due to geopolitical and economic factors. Net FDI inflows decreased from $42 billion in FY23 to $26.5 billion in FY24. However, gross FDI inflows remained steady at $71 billion.
Growing Energy Needs
According to the economic survey, India’s energy requirements are projected to increase by 2 to 2.5 times by 2047 to support the country’s growing economic goals and ambitions.
The survey highlighted significant advancements in India’s climate action, notably through increased renewable energy capacity and improved energy efficiency.
As of May 31, 2024, non-fossil fuel sources now account for 45.4% of India’s installed electricity generation capacity. Additionally, the country has reduced the emission intensity of its GDP by 33% from 2005 levels by 2019.
Quality in Skill Development and Employment
According to the economic survey, Labour market indicators have improved, with unemployment dropping to 3.2% in 2022-23. Formal employment has grown, supported by skill development programs. Balancing technology and workforce employment is crucial as AI becomes more dominant.
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Sectoral Performance
The agriculture and food management sector has seen a steady average annual growth of 4.18% over the past five years, as mentioned in the survey.
The economic survey report highlighted that India’s 8.2% growth in FY24 was boosted by a 9.5% increase in industrial output. Among the four main industrial areas, manufacturing and construction came close to double-digit growth, while mining and quarrying, as well as electricity and water supply, also showed strong positive growth.
Additionally, the services sector remains a major driver of India’s economy, making up about 55% of the total economic size in FY24.
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