The Economic Survey 2023 was tabled by the Finance Minister Nirmala Sitharaman in the parliament today, kicking off the Budget Session for FY24. While the Survey allows an extensive insight into the various economic indicators and the performance of the economy in 2022, here’s a condensed version of the top eight highlights from the Economic Survey.
The Economic Survey has pegged GDP growth for the current financial year at 7%. India’s FY24 GDP growth is seen at 6-6.8%, while predicting that the nominal GDP will grow 11% in the next financial year. “Despite strong global headwinds and tighter domestic monetary policy, if India is still expected to grow between 6.5 and 7%… it is a reflection of India’s underlying economic resilience; of its ability to recoup, renew and re-energise the growth drivers of the economy,” said the Economic Survey.
The Economic Survey predicts that the capital expenditure budget for the full year will be met, especially since it increased by 63.4% in the first eight months of FY23. The government also sought to compensate for the private sector’s hesitation in capex, by raising theirs significantly. The Survey also hints at a significant increase of capex in the FY23 budget, continuing the government’s capital expenditure thrust from the last two budgets.
“The challenge of the depreciating rupee, although better performing than most other currencies, persists with the likelihood of further increases in policy rates by the US Fed,” said V Anantha Nageswaran, Chief Economic Adviser, adding that the widening CAD might put pressure on the domestic currency. However, the Survey seeks to allay concerns and worries, stating that India contains sufficient forex reserves to finance the widening CAD or intervene to manage the rupee’s volatility in the forex markets for FY23.
The country’s unemployment rate fell from 8.3% in July-September 2019 to 7.2% in July-September 2022. “This is accompanied by an improvement in the labour force participation rate (LFPR) as well, confirming the emergence of the economy out of the pandemic induced slowdown early in FY23,” said the Survey.
According to the Economic Survey, Bank credit growth will remain brisk in the coming financial year if inflation declines in FY24 and if real cost of credit does not rise.The on-year growth in non-food bank credit accelerated to 15.3% in December 2022. The Survey anticipates the continuation of rising credit growth, touting the financial soundness of the banking and financial sector and recovery in economic activity as the factors bolstering the growth.
Schemes That Drive Growth
PM Gati Shakti, PLIs and the National Logistics Policy are expected to play big roles in improving India’s cost and export competitiveness in the years ahead. The government aims to utilize PLIs in order to reconfigure supply chains, thus reaffirming its goal to plug India into global supply chains and increase the share of the manufacturing sector in the economy.
While the CPI and WPI significantly diverged in early FY23, the gap is being bridged. The rising inflation (7.8%) in April was a result of the war between Russia and Ukraine and has since been brought to 5.8% by the RBI. The core inflation remains sticky and there is significant variance in retail inflation rates among the States and Union Territories (UTs) of India.
“RBI forecasts elevated domestic prices for cereals and spices in the near term owing to supply shortages. Milk prices are also expected to spike reflecting high feed costs. In general, climate across the world has become increasingly erratic, further fortifying upside risks to food prices,” said the Economic Survey 2023.