Economics Survey 2023-2024

Economics Survey 2023-2024

The Economic Survey 2023-24 based on the provided information:

The Economic Survey 2023-24, presented by Union Minister for Finance and Corporate Affairs, Smt. Nirmala Sitharaman, offers valuable insights into India’s economic performance and future prospects. Here are the key highlights from the thematic chapters:

1. State of the Economy – Steady as She Goes:
   • GDP Growth Projection: The survey conservatively projects a real GDP growth rate of 6.5–7% for the upcoming fiscal year, despite heightened market expectations.
   • Momentum Maintenance: India’s economy sustained its momentum from FY23 into FY24, demonstrating resilience against external challenges due to macroeconomic stability.
   • Real GDP Growth: In FY24, real GDP expanded by 8.2%, surpassing 8% growth in three out of four quarters.
   • Gross Value Added (GVA): GVA increased by 7.2% (at 2011-12 prices), and net taxes at constant prices grew by 19.1%.
   • Inflation Management: Effective administrative and monetary policies led to a decline in retail inflation from 6.7% (FY23) to 5.4% (FY24).
   • Current Account Deficit (CAD): The CAD improved to 0.7% of GDP in FY24, down from 2.0% in FY23.
   • Post-Pandemic Recovery: India’s real GDP in FY24 exceeded pre-COVID levels (FY20) by 20%, showcasing a remarkable recovery compared to other major economies.
   • Tax Collection: Direct taxes contributed to 55% of total tax collections, while indirect taxes accounted for the remaining 45%.
   • Welfare Programs: The government ensured free food grains for 81.4 crore people and progressively increased capital expenditure¹.
2. Chapter 2: Monetary Management and Financial Intermediation based on the provided information:

Banking Sector Performance:India’s banking and financial sectors demonstrated exceptional performance in FY24.

Policy Rate Stability:The Reserve Bank of India (RBI) maintained a steady policy rate, keeping the policy repo rate at 6.5%.

Credit Growth:Scheduled Commercial Banks (SCBs) disbursed credit amounting to ₹164.3 lakh crore, growing by 20.2% by March 2024.

Broad Money (M3) Growth:Excluding the HDFC merger, M3 grew by 11.2% year-on-year as of March 22, 2024.

Non-Performing Assets (NPA):Gross and net NPAs reached multi-year lows, indicating improved bank asset quality.

Agriculture and Industrial Credit:Agriculture and allied activities witnessed double-digit credit growth in FY24.

Industrial credit growth increased from 5.2% in the previous year to 8.5%.

Insolvency and Bankruptcy Code (IBC):A total of 31,394 corporate debtors involving ₹13.9 lakh crore were resolved by March 2024.

Capital Markets and Market Capitalization:Primary capital markets facilitated capital formation of ₹10.9 lakh crore in FY24.

India’s stock market capitalization-to-GDP ratio ranks fifth globally.

Financial Inclusion and Digital Financial Inclusion (DFI):Ensuring DFI remains a critical challenge for sustainable economic growth.

3.Chapter 3: Prices and Inflation based on the provided information:

Retail Inflation:

1. In FY24, retail inflation remained at 5.4%, the lowest since the pandemic, thanks to timely policy interventions.

Fuel Prices:

1. The Central Government implemented price cuts for LPG, petrol, and diesel, effectively managing retail fuel inflation.

LPG and Fuel Inflation:

1. LPG cylinder prices were reduced by ₹200 in August 2023.
2. Petrol and diesel prices also decreased by ₹2 per litre.

Core Inflation:

1. Core services inflation reached a nine-year low.
2. Core goods inflation declined to a four-year low.

Food Inflation:

1. Food inflation increased from 6.6% (FY23) to 7.5% (FY24) due to extreme weather events affecting farm output.

Inflation Management:

1. Dynamic stock management, open market operations, and subsidised food items helped mitigate food inflation.

State Inflation:

1. In FY24, 29 States and Union Territories recorded inflation below 6%.

4. Chapter 4: External Sector based on the provided information:

Geopolitical Challenges:

1. Despite geopolitical challenges, India’s external sector remained robust.

Logistics Performance Index:

1. India’s logistics performance improved, moving from 44th in 2018 to 38th out of 139 countries in 2023.

Current Account Deficit:

1. The current account deficit improved to 0.7% of GDP in FY24 due to controlled imports and increased services exports.

Global Export Share:

1. India’s share in global goods exports reached 1.8% in FY24.

Services Exports:

1. Services exports grew by 4.9% to USD 341.1 billion, driven by IT/software services and other business services.

Remittances:

1. India topped the list of global remittance recipients, receiving USD 120 billion in 2023.

External Debt:

1. The external debt-to-GDP ratio stood at 18.7% at the end of March 2024.

5. Chapter 5: Medium-Term Outlook – A Growth Strategy for New India:

Policy Focus Areas:

1. The strategy emphasizes several key areas:
   • Job and Skill Creation: Fostering employment opportunities and skill development.
   • Agricultural Potential: Leveraging agriculture as a growth engine.
   • MSME Bottlenecks: Addressing challenges faced by Micro, Small, and Medium Enterprises (MSMEs).
   • Green Transition: Promoting sustainable practices and environmental consciousness.
   • Managing Relations with China: Navigating geopolitical dynamics.
   • Deepening the Corporate Bond Market: Enhancing financial infrastructure.
   • Tackling Inequality: Ensuring equitable growth.
   • Improving Youth Health: Prioritizing the well-being of the younger population.

Amrit Kaal Strategy:

1. Based on six critical areas:
   • Boosting Private Investment: Encouraging investment from the private sector.
   • Expanding MSMEs: Supporting the growth of small businesses.
   • Agriculture as a Growth Engine: Harnessing the potential of the agricultural sector.
   • Financing Green Transition: Facilitating environmentally friendly initiatives.
   • Bridging Education-Employment Gap: Aligning education with job market needs.
   • Building State Capacity: Strengthening administrative capabilities.

Growth Compact:

1. To achieve sustained growth of 7% or more, collaboration among the Union Government, State Governments, and the private sector is crucial.

6. Chapter 6: Climate Change and Energy Transition: Dealing with Trade-Offs:

Climate Action Recognition:

1. India stands out as the only G20 nation aligned with a 2-degree centigrade warming target.
2. The country’s vision of achieving Net Zero carbon emissions by 2070 guides its interventions for high and robust economic growth while remaining environmentally sustainable.

Renewable Energy:

1. Non-fossil sources now constitute 45.4% of the installed electricity generation capacity as of 31 May 2024.
2. India has made significant progress in transitioning toward cleaner energy sources.

Emission Reduction:

1. India successfully reduced the emission intensity of its GDP by 33% from 2005 levels by 2019.
2. This achievement demonstrates the country’s ability to decouple economic growth from greenhouse gas emissions.

Energy Savings:

1. The total annual energy savings amount to 51 million tonnes of oil equivalent, resulting in substantial cost savings (₹1,94,320 Crore).

Green Bonds:

1. India issued ₹16,000 Crore in green bonds during January-February 2023 and an additional ₹20,000 Crore during October-December 2023.
2. These bonds play a crucial role in financing sustainable and environmentally friendly projects.

7. Chapter 7: Social Sector – Benefits that Empower:

Welfare Impact:

1. The digitization of healthcare, education, and governance has amplified the impact per rupee spent, benefiting citizens across various sectors.

Welfare Expenditure Growth:

1. Despite nominal GDP growing at a 9.5% CAGR, welfare expenditure surged at an impressive 12.8% CAGR between FY18 and FY24.
2. This commitment reflects the government’s focus on social development.

Inequality Reduction:

1. Both rural and urban areas witnessed a decline in the Gini coefficient:
   • Rural: From 0.283 to 0.266
   • Urban: From 0.363 to 0.314
2. These improvements signify efforts to address income disparities.

Ayushman Bharat:

1. The scheme generated 34.7 crore cards, covering 7.37 crore hospital admissions.
2. Mental health coverage now includes 22 disorders under Ayushman Bharat – PMJAY.

Early Childhood Education:

1. The ‘Poshan Bhi Padhai Bhi’ program aims to create the world’s largest, universal, high-quality preschool network at Anganwadi Centres.
2. This initiative prioritizes early education and nutrition for children.

Vidyanjali Initiative:

1. Community engagement enhanced educational experiences for 1.44 crore students.
2. Collaborative efforts contribute to holistic learning environments.

Higher Education Enrolment:

1. Underprivileged sections (SC, ST, OBC) witnessed a 31.6% increase in higher education enrolment since FY15.
2. Access to education is expanding inclusively.

R&D Progress:

1. Nearly one lakh patents were granted in FY24, a significant leap from less than 25,000 in FY20.
2. Innovation and research are thriving.

Housing and Roads:

1. PM-AWAS-Gramin facilitated the construction of 2.63 crore houses.
2. Gram Sadak Yojana completed 15.14 lakh km of roads since 2014-15.
3. Infrastructure development enhances quality of life.

8. Chapter 8: Employment and Skill Development: Towards Quality:

Labour Market Improvement:

1. The unemployment rate declined to 3.2% in 2022-23, reflecting positive trends in the job market.
2. Urban unemployment also decreased to 6.7% in the quarter ending March 2024.

Workforce Distribution:

1. Approximately 45% of the workforce is engaged in agriculture.
2. Manufacturing employs 11.4%, services employ 28.9%, and construction employs 13%.

Youth Unemployment:

1. Youth unemployment dropped from 17.8% in 2017-18 to 10% in 2022-23.
2. Increased youth participation in the labor force contributed to this positive trend.

EPFO Payroll and Membership:

1. EPFO payroll saw significant growth, especially among subscribers aged 18-28.
2. EPFO membership increased at an 8.4% CAGR between FY15 and FY24.

Female Labor Force Participation:

1. Female participation in the workforce has been rising steadily over the past six years.

Manufacturing Sector Recovery:

1. Employment in the organized manufacturing sector has surpassed pre-pandemic levels.

Wages Growth and Factories Growth:

1. Rural wages grew at a 6.9% CAGR, while urban wages grew at a 6.1% CAGR.
2. The number of factories employing over 100 workers increased by 11.8% from FY18 to FY22.

Job Generation Requirement:

1. The non-farm sector needs to create 78.5 lakh jobs annually until 2030 to meet workforce demands.

9. Chapter 9: Agriculture and Food Management based on the provided information:

Agriculture Growth:

1. The agriculture sector has registered an average annual growth rate of 4.18% over the last five years.
2. This steady growth underscores the sector’s resilience and importance for economic development.

Agricultural Credit:

1. As of January 31, 2024, the total credit disbursed to agriculture amounted to ₹22.84 lakh crore.
2. This credit infusion supports farmers and contributes to agricultural development.

Kisan Credit Cards (KCC):

1. A total of 7.5 crore KCCs have been issued, with a credit limit of ₹9.4 lakh crore.
2. KCCs empower farmers by providing efficient access to credit for their agricultural needs.

Micro Irrigation:

1. Under the “Per drop more crop” initiative, 90.0 lakh hectares of land have been covered with micro-irrigation techniques.
2. This sustainable approach enhances water efficiency and crop productivity.

10. Chapter 10: Industry – Small and Medium Matters based on the provided information:

Industrial Growth:

1. In FY24, industrial growth surged by 9.5%, significantly contributing to the overall economic growth of 8.2%.
2. The manufacturing sector played a pivotal role in this expansion.

Manufacturing Sector:

1. Over the last decade, the manufacturing sector achieved an average annual growth rate of 5.2%.
2. Key drivers within manufacturing include chemicals, wood products, furniture, transport equipment, pharmaceuticals, machinery, and equipment.

Coal Production and Import Reduction:

1. Accelerated coal production reduced India’s dependence on coal imports.
2. In FY24, India produced 997.2 million tonnes of coal, imported 261 million tonnes, and consumed 1233.86 million tonnes.

Pharmaceutical Market:

1. India’s pharmaceutical market, valued at USD 50 billion, ranks as the world’s third-largest by volume.
2. The sector is projected to reach USD 130 billion by 2030.

Clothing Manufacturing:

1. India stands as the second-largest clothing manufacturer globally and is among the top five exporters.

Electronics Manufacturing:

1. India holds a 3.7% share of the global electronics market in FY22.

PLI Schemes:

1. The Production-Linked Incentive (PLI) schemes attracted over ₹1.28 lakh crore in investment until May 2024.
2. These investments led to production/sales of ₹10.8 lakh crore and generate employment opportunities for over 8.5 lakh people.

11. Growth opportunities within India’s services sector:

Services Sector Contribution:

1. The services sector plays a pivotal role, contributing 55% to the overall Gross Value Added (GVA).
2. Remarkably, it has rebounded to pre-pandemic levels, driving economic recovery.

Active Companies:

1. An impressive 65% of the highest number of active companies operate within the services sector.
2. This underscores its significance in India’s business landscape.

Global Services Exports:

1. India’s services exports constituted 4.4% of the world’s commercial services exports in 2022.
2. The country’s expertise in services continues to have a global impact.

Computer and Business Services Exports:

1. These services account for a substantial 73% of India’s total services exports.
2. Notably, they have grown by 9.6% year-on-year, reflecting sustained demand.

Aviation Sector Growth:

1. The aviation sector witnessed a remarkable 15% year-on-year increase in total air passengers handled.
2. This growth signals recovery and resilience in the face of challenges.

Services Sector Credit:

1. As of March 2024, the services sector credit stands at ₹45.9 lakh crore.
2. Its impressive 22.9% year-on-year growth reflects confidence and investment.

                            India’s services sector continues to be a dynamic force, driving economic progress and offering abundant opportunities for growth.

12. Chapter 12: Infrastructure – Lifting Potential Growth:

1. Public Sector Investment:
   • The public sector plays a significant role in funding large-scale infrastructure projects.
   • These investments are crucial for accelerating economic growth and sustaining it in the long run.
2. National Highway Construction:
   • The pace of national highway construction increased to around 34 km per day by FY24.
   • Improved road connectivity enhances transportation efficiency and accessibility.
3. Railway Capital Expenditure:
   • Railway capital expenditure has surged by 77% over the past five years.
   • Investments in rail infrastructure contribute to efficient freight and passenger transport.
4. Airport Infrastructure:
   • New terminal buildings have been operationalized at 21 airports.
   • This expansion has increased passenger handling capacity by 62 million per annum.
5. Clean Energy Investment:
   • India has invested ₹8.5 lakh crore (USD 102.4 billion) in clean energy between 2014 and 2023.
   • These investments promote sustainable development and reduce environmental impact.

India’s commitment to infrastructure development is essential for unlocking its growth potential and improving the quality of life for its citizens.

13. Chapter 13: Climate Change and India:

Global Climate Strategies:

1. Existing global climate strategies are often flawed and not universally applicable.
2. They frequently fail to address the issue of overconsumption, which exacerbates environmental challenges.

India’s Ethos:

1. India’s cultural ethos emphasizes a harmonious relationship with nature.
2. This perspective contrasts with cultures that prioritize excessive consumption and resource exploitation.

Sustainable Housing:

1. India is shifting towards a model of ‘traditional multi-generational households.’
2. This approach promotes resource efficiency and community living.

Mission LiFE:

1. Mission LiFE focuses on achieving human-nature harmony.
2. It encourages mindful consumption practices to mitigate the impact of global climate change.

India’s unique approach to climate change recognizes the importance of balance, sustainability, and cultural values in addressing environmental concerns.