Economic Survey 2023 Updates: Finance Minister Nirmala Sitharaman tabled India’s annual pre-budget economic survey in Parliament today. The Economic Survey has pegged India’s GDP growth at 6-6.8% for FY24 under the baseline scenario. This would be the slowest in three years. Nominal growth is likely to be projected at 11% for 2023-24. While the Survey cautioned about above-target inflation, widening current account deficit, and rupee depreciation, it maintained that India will remain the fast-growing economy in the next financial year.
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“We remain optimistic about the performance of the Indian economy, and by extension of the real estate sector in 2023, on the back of sustained domestic consumption, continued structural reforms, and improved capital expenditure. The economic survey’s projection of a 6-6.8% growth for FY2023-24 is a reaffirmation of the country’s strong macro-economic fundamentals. The survey also recognised the contribution that pent-up demand made in the recovery of the Indian economy from the pandemic, which was also reflected in the boom witnessed in the housing sector. It also projected that India would remain the fastest growing economy in the world despite global headwinds but at the same time sounded a note of caution due to the ongoing monetary tightening exercise, given the entrenched inflation.”
– Anshuman Magazine, Chairman & CEO – India, South-East Asia, Middle East & Africa, CBRE
“The survey correctly predicts that pitch is becoming easy with nascent recovery in global macros, lower energy prices/ inflation and revival in private sector investment in days to come. It also highlights an odd doosra ball which needs to be managed in the form of balance of payment deficit and support to the consumption at the bottom of the pyramid. India from being a coach (follower) to global growth has become the engine (leader) for global growth. Economic survey presents the direction of that journey. The speed of that journey will be determined by the execution on the ground.”
– Nilesh Shah, Managing Director, Kotak Mahindra Asset Management Company
“At 7 per cent GDP growth in FY23 and 6-6.8 per cent growth in FY24, India will continue to hold its fastest growing large nation tag. This will create tailwinds for the Indian economy as global capital and technology finds India a bright spot to participate in an otherwise weak global economic order. This shall create employment opportunities and further strengthen the domestic demand base of the country. Real estate, being a derived demand product and an economic multiplier, will certainly benefit from this improved economic outlook for the country. While housing demand remains strong leading to reduced inventory levels, the resumption of construction activities has ensured sustained supply thereby averting sharp price rise risk in the sector.”
– Vivek Rathi, Director-Research, Knight Frank India
“Economic survey is optimistic that India will continue to grow at a healthy rate in the medium term, led by consumption and capital expenditure. And the growth can expand to as high as 7 to 8 percent in the future. The fundamentals of the Indian economy are solid, however, in the short to medium-term, widening current account deficit for an extended period is a concern that could have an implication on growth and depreciation of the INR. For the budget, it is going to be a challenge in FY24 to plan out the expenditures due to a short-term slowdown in the economy, high core inflation, and fiscal deficit.”
– Vinod Nair, Head of Research, Geojit Financial Services.
Commenting on the Economic Survey 2023, Ramesh Nair, CEO, India and Managing Director, Market Development, Asia, Colliers, said, “The Economic Survey 2023 provides an optimistic picture of India’s growth performance and outlook, amidst looming global recessionary concerns. The economy has largely recovered from the pandemic, with GDP likely to grow at 6.5 per cent in FY2024. Robust domestic demand and a pickup in capital investment are likely to steer growth. Interestingly, inflation is now within RBI’s target, after a year of measures to curtail it. In 2022, the RBI increased the repo rate by 225 basis points.
The reduced inflation levels should give some room for RBI to keep repo rates stable over the next few months. This is likely to keep home loan rates stable and thus will give some breather to homebuyers, especially in the affordable and mid-range segments. Out of the 50 cities surveyed, the survey states that 46 cities registered an increase in the index, whereas 4 cities experienced a decline, on an annual basis. All eight major metros of the country witnessed an annual increase in the housing price index. Going ahead, housing prices remain stable led by steady demand likely to be seen in 2023″
“The survey alludes to the fact that the tightening cycle may remain prolonged, which means higher interest rates for a longer period of time. All eyes now on the budget which could determine the trajectory of growth as also direction of interest rates given the borrowing programme that will be announced tomorrow. Key to watch will be the gross borrowing numbers, which we estimate that it should be Rs 16 lakh crore.”
– Lakshmi Iyer, CEO-Investment Advisory, Kotak Investment Advisors
“The economic survey has projected FY 2024 growth at 6-6.8% This seems a tad stretched given the fact that there is a global slowdown, specifically in global exports. It also comes at a time when domestic demand is slowing down initially and we need to be fiscally prudent, especially after almost 3 years of fiscal breach (globally too) due to the pandemic phase.”
– Lakshmi Iyer, CEO-Investment Advisory, Kotak Investment Advisors
“The economic survey 2022-23 is a testament to India-specific triggers aligned in the right direction of sustained economic growth. Despite the global headwinds, India is projected to log a growth rate of 6-6.8% in FY24 which would be the fastest amongst the major global economies. We believe that many structural factors like PLIs, FTAs, alternate technologies/fuels, domestic demand, and healthy balance sheets of consumers, corporates and banks are likely to propel economic growth higher in the long term. With inflation off from its peak, the demand side of the story looks intact, further helped by private capex cycle revival along with growing public sector investments. We believe that if India is able to steer through the elevated risks arising from higher inflation and slowing growth in advanced economies, we may usher into a new era of growth which may drive us closer to the $5 trillion GDP in the near term,” says Manish Chowdhury, Head of Research at Stoxbox.
There was talk of India having prematurely deindustrialized. I would say India had not industrialized enough, said CEA Anantha Nageswaran.
“The growth projections for the Indian economy provide comfort given the headwinds around global slowdown. The Budget is likely to build upon this momentum through policy reforms, consistent and predictable tax regime, measures to strengthen the investment eco-system including for start-ups and reduce compliances, disputes and litigation for businesses and individuals,” says Vikas Vasal, National Managing Partner – Tax, Grant Thornton Bharat.
Quality of public expenditure has gone up, govt. has become more transparent with budget deficit numbers, there is increased transparency in public procurement; various such dimensions have led to improved expenditure management: CEA
Share of private sector investment in agriculture has reached a high level, facilitated by various government initiatives. The sector is no longer about being a primary sector, it has tremendous export potential as well, observes CEA.
According to Economic Survey 2023, the GDP growth will be driven by higher capital expenditure, private consumption, credit growth to small businesses, strengthening corporate balance sheet and return of migrant workers to cities.
The lagged effect of reforms will show through, the full effect of reforms could not be reflected in data in past years due to successive one-off shocks: CEA
Economic Survey 2022-23 points out that the story of reforms in last eight years strikes a parallel to the reforms undertaken during 1998 – 2002.
Reforms of last eight years spanning multiple dimensions including digital, social and physical infrastructure were happening even as banking clean-up was going on, observes CEA, in his presentation on Economic Survey
Leverage ratio in corporate sector went very sharply in first decade of millenium, second decade was thus a payback time, excessive credit growth had to be adjusted for in second decade, balance sheets now have been repaired, & credit growth is picking up: CEA Nageswaran
Recovery of economy is complete; non-banking and corporate sectors now have healthy balance sheets, hence, we don't have to speak of pandemic recovery any more, we have to look ahead to the next phase: CEA
Inflation challenge will be a lot less next financial year compared to what was seen this year, says CEA Anantha Nageswaran.
IMF, in its World Economic Outlook Update, has maintained India's GDP forecast for current FY at 6.8%, next FY at 6.1% & for 2024-25 at 6.8%. India's economy is poised to do better in the remainder of this decade: Chief Economic Advisor V Anantha Nageswaran on Economic Survey 2023.
India’s external sector displays a position of strength in spite of global headwinds. India’s exports show resilience during FY23 on the back of record levels of export in FY22.
India's pandemic recovery was quick, says CEA Anantha Nageswaran, adding that the growth was backed by domestic demand and investment.
CEA Anantha Nageswaran in his address noted that Economic Survey 2023's growth projections for FY24 are consistent with that of IMF.
Chief Economic Advisor V Anantha Nageswaran is all set to address the post-Economic Survey 2023 press conference along with other senior officials of the finance ministry.
“That India’s import cover and external debt ratios are not matters of concern is largely due to India’s long-standing conservative external borrowing policies and RBI’s deft management of foreign exchange reserves,” said V. Anantha Nageswaran, Chief Economic Adviser in the Economic Survey 2023.
India’s foreign direct investment has been steady, and investors’ interest in including India in their supply chain diversification is now noticeably higher. PM Gati Shakti and the National Logistics Policy are expected to play big roles in improving India’s cost and export competitiveness in the years ahead: Economic Survey 2023
India now has the physical and digital infrastructure to raise the share of the manufacturing sector in the economy and make a realistic bid to be an important player in global supply chains. In the last eight years, the government has created just the platform for this ambition to be fulfilled, says Economic Survey.
“India’s services sector is a source of strength and is poised to gain more. India is large enough to accommodate and nurture vibrant manufacturing and services sectors. From low to high value-added activities with export potential, the sector has enough scope to generate employment and foreign exchange and contribute to India’s external stability,” said V. Anantha Nageswaran, Chief Economic Adviser in the Economic Survey 2023.
India's Human Development Index (HDI) value falls from 0.645 in 2019 to 0.633 in 2021, ranking 132 out of 191 countries and territories in the 2021/2022 HDI report, according to the Economic Survey 2023.
Job creation appears to have moved into a higher orbit with the initial surge in exports, a strong release of the “pent-up” demand, and a swift rollout of the capex. Since export growth is plateauing and the “pent-up” release of demand will have a finite life, it is essential that capex continues to grow to facilitate employment in the economy, at least until such time the global economy rebounds and, through the export channel, provides an additional window to India for job creation, says Economic Survey.
“According to broad status in employment, the share of self-employed increased and that of regular wage/salaried workers declined in 2020-21 vis-à-vis 2019-20, driven by trend in both rural and urban areas,” said the Economic Survey 2023.
“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,” stated the Economic Survey 2023.
The Covid-19 crisis significantly impacted the residential real estate market. The Housing Price Index (HPI) monitored by the National Housing Bank. Out of the 50 cities, 46 cities registered an increase in the index, whereas 4 cities experienced a decline, on an annual basis. All of the eight major metros of the country witnessed an annual increase in the index, according to the Economic Survey 2023.
On the external front, risks to the current account balance stem from multiple sources. While commodity prices have retreated from record highs, they are still above pre-conflict levels. Strong domestic demand amidst high commodity prices will raise India’s total import bill and contribute to unfavourable developments in the current account balance. These may be exacerbated by plateauing export growth on account of slackening global demand. Should the current account deficit widen further, the currency may come under depreciation pressure.
Budgeted capital expenditure rose 2.7X in the last seven years, from FY16 to FY23, re-invigorating the Capex cycle. Structural reforms such as the introduction of the Goods and Services Tax and the Insolvency and Bankruptcy Code enhanced the efficiency and transparency of the economy and ensured financial discipline and better compliance.
On current trend, it appears that the full year’s capital expenditure budget will be met. A sustained increase in private Capex is also imminent with the strengthening of the balance sheets of the Corporates and the consequent increase in credit financing it has been able to generate, said the Economic Survey 2023.
According to the Economic Survey, Bank credit growth will remain brisk in the coming financial year. Benign inflation and moderate credit cost will impact bank credit. Credit growth to small businesses remarkably high at over 30.5% in January-November, 2022
The country's unemployment rate fell from 8.3% in July-September 2019 to 7.2% in July-September 2022.
Credit disbursal, capital investment cycle, expansion of public digital platform and schemes like PLI, National Logistics Policy, and PM Gati Shakti to drive economic growth, says Economic Survey 2023.
India is third-largest economy in the world in PPP (purchasing power parity) terms; 5th largest in terms of exchange rate. The economy has nearly recouped what was lost, renewed what had paused; re-energised what had slowed during the pandemic, said the Economic Survey 2023.
India to remain fastest-growing major economy in the world. 6.8% inflation for current fiscal not high enough to deter private consumption or low enough to weaken investment. Borrowing cost may remain 'higher' for longer period; entrenched inflation may prolong tightening cycle, says Economic Survey
India withstood extraordinary set of challenges better than most economies and the country's recovery from pandemic was relatively quick, said the Economic Survey 2023.
Economic Survey 2023 Live: India's recovery from pandemic was relatively quick; growth, pick up in capital investment, says Economic Survey.
The widening current account deficit may pose a risk to and put pressure on the rupee, according to the Economic Survey 2023, adding that a challenge to rupee depreciation persists with the likelihood of further interest rate hikes by the US Fed.
India on Tuesday forecasted that its economy will grow 6% to 6.8% in the FY24, down from 7% projected for the current financial year. The government's annual Economic Survey report said its baseline scenario for growth for 2023/24 was 6.5%, with nominal growth, which accounts for inflation, forecast at 11%. Gross domestic product is expected to grow 6.5% in the fiscal year starting April, compared with the 7% expansion estimated for the current year.
Domestic demand, capital expenditure pick up to help boost growth, according to the Economic Survey 2023.
Risks to current account balance stem from multiple sources, says Economic Survey 2023.
FM Sitharaman has tabled the Economic Survey 2023 in Parliament. The Survey has pegged GDP growth for current financial year at 7%.
India's FY24 GDP growth is seen at 6-6.8%. Baseline Nominal GDP growth is pegged at 11%.
Finance Minister Nirmala Sitharaman has tabled Economic Survey 2023 in Parliament.