Union Minister of Finance and Corporate Affairs Nirmala Sitharaman today presented the Economic Survey 2022-23 in Parliament, which projects a baseline GDP growth of 6.5% in real terms in fiscal year 24.
The projection is broadly comparable to estimates provided by multilateral agencies such as the World Bank, IMF and ADB and by RBI, at the national level.
The Economic Survey has been prepared by the Department of Economic Affairs (DEA) under the direction of Chief Economic Adviser V Anantha Nageswaran. Below are the highlights from the Economic Survey on the state of the Indian economy.
It says growth is expected to be rapid in FY24 as robust credit disbursement, and the capital investment cycle is expected to unfold in India with balance sheets in the corporate and banking sectors strengthening.
Additional support for economic growth will come from the expansion of public digital platforms and pioneering measures such as PM GatiShakti, the National Logistics Policy, and production-linked incentive schemes to boost manufacturing output.
Economic Survey 2022
- The Economic Survey has forecast GDP growth of 8 to 8.5% in fiscal year 23 (April 2022 to March 2023). For the current FY22, GDP growth has been projected at 9.2%.
- Total consumption is estimated to have grown by 7.0% in 2021-22 with significant contributions from public spending.
- Agriculture and related sectors are expected to grow by 3.9% in 2021-22.
- It is estimated that the Services sector will grow by 8.2% in the current year.
- The 2021-22 Economic Study details the state of the different sectors of the economy, as well as the reforms that must be undertaken to accelerate growth.
- GDP contracted by 7.3% in 2020-21.
- In addition, the Economic Study focuses on supply-side issues to improve the resilience of the Indian economy.
Ten things to look forward to in the Economic Survey 2023
GDP Growth: Recovery from Covid is Complete
India will remain the fastest-growing major economy in the world. Rebounding from the pandemic-induced contraction, the Russia-Ukraine conflict and inflation, the Indian economy is staging a broad-based recovery across sectors, positioning itself to move up to the pre-pandemic growth path in the year prosecutor 23.
Fiscal Consolidation Roadmap
The Economic Survey is expected to influence the government’s fiscal consolidation roadmap. Despite a higher subsidy bill in the current fiscal year, the government is expected to meet its fiscal deficit target thanks to buoyant tax collections.
A lower subsidy bill next fiscal year due to falling energy prices is expected to help the government meet the fiscal deficit roadmap.
The growth of credit to the Micro, Small and Medium Enterprises (MIPYME) sector has been remarkably high, more than 30.5% on average during January-November 2022.
Central government capital spending, which rose 63.4 per cent in the first eight months of FY23, was another driver of growth for the Indian economy in the current year.
Current account deficit
The Economic Survey warns that the rupee’s depreciation challenge while outperforming most other currencies, persists with further policy rate hikes from the US Federal Reserve likely.
The Survey is expected to have a special chapter devoted to India’s manufacturing ambition and Atmanirbhar’s drive, especially in the wake of changes in global supply chains.
Success stories like the iPhone have shown that PLI has worked to make India an attractive hub for manufacturers.
Making Indian logistics globally competitive
Rapid increase in highway/National Highway (NH) construction with 10,457 km NH/roads built in FY22 compared to 6,061 km in FY2016.
Budget spending increased from ₹1.4 lakh crore in FY20 to ₹2.4 lakh crore in FY23, giving renewed impetus to capital spending.
More than one million air passengers have taken advantage of the UDAN scheme since its inception in 2016.
One of the most pressing problems facing the world economy has been rising inflation. Central banks around the world fought off the stubborn onslaught of inflation by raising interest rates.
India’s RBI also raised rates to keep inflation in check. Retail inflation in India eased in November and December and fell within the RBI’s tolerance band.
The Survey emphasizes that growth is inclusive when it creates jobs. Both official and unofficial sources confirm that employment levels have increased in the current year, as the Periodic Labor Force Survey (PLFS) shows that the urban unemployment rate for people aged 15 and over decreased from 9.8 per cent in the quarter ending September 2021 to 7.2 per cent a year later (quarter ending September 2022).
This is also accompanied by an improvement in the labour force participation rate (LFPR), confirming the economy’s emergence from the pandemic-induced slowdown early in FY23.
Boost in the agricultural sector
Private investment in agriculture has risen to 9.3% in 2020-21. Institutional credit for the agricultural sector continued to grow at 18.6 lakh crore in 2021-22. In terms of credit growth, institutional credit to the agricultural sector continued to grow at 18.6 lakh crore in 2021-22.
Greater job creation has been observed and the urban unemployment rate has decreased. Higher net registration numbers have been seen in the Employees Provident Fund scheme.
Labour markets have recovered beyond pre-COVID-19 levels, in both urban and rural areas, and unemployment rates have fallen from 5.8% in 2018-19 to 4.2% in 2020-21.
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