On the eve of presenting the Union Budget 2024-25, Finance Minister Nirmala Sitharaman tabled the Economic Survey 2023-2024 in Parliament. This comprehensive 522-page document, divided into 13 chapters, provides a detailed overview of the state of the Indian economy, highlighting its strengths and identifying the challenges ahead. The survey, authored by the Chief Economic Advisor (CEA), presents an optimistic view of the Indian economy and outlines a strategic roadmap for its future.
According to the survey, the Indian economy has shown remarkable resilience in the face of global geopolitical challenges, consolidating its post-COVID recovery with robust support from fiscal and monetary authorities ensuring economic and financial stability. The CEA noted that the economy is on a "strong wicket and stable footing," which has bolstered confidence both domestically and internationally.
However, the survey also underscores that for sustained recovery and high growth aspirations, significant domestic efforts are required. The global environment poses increasing difficulties in reaching a consensus on key issues like trade, investment, and climate change. This necessitates a focus on internal reforms and robust policy measures to navigate these challenges effectively.
The Economic Survey delves into several crucial sectors, including agriculture, industry, infrastructure, and services. Each chapter discusses the government's policies, their impacts, innovations, developments, and success stories worth emulating. It also outlines the challenges ahead and offers potential solutions.
The agriculture sector has shown consistent growth, supporting the rural demand trajectory. With an expected growth rate between 5% to 6% for the current year, agriculture remains a critical component of the Indian economy. The survey suggests that connecting farmers to markets, both national and international, is essential for the sector's development. Initiatives like the National Agricultural Market (eNAM) aim to streamline this process. Additionally, improvements in rural infrastructure, such as roads and internet connectivity, are highlighted as necessary steps to create "smart villages" and attract investments.
The manufacturing sector has shown impressive growth, with a 10% increase in the last year. The survey credits this growth to various reforms over the past 7-8 years, including "Make in India," "Atmanirbhar Bharat," and the Production Linked Incentive (PLI) scheme. These reforms have started yielding visible results, pushing the economy toward an 8% growth trajectory, which might even exceed 8% in the current year.
India's services exports have performed exceptionally well, compensating for the slight decline in goods exports. The survey highlights that despite global headwinds like high inflation and interest rates, India remains a fast-growing exporter, showcasing the underlying strength of its economy. Services exports have helped maintain the current account deficit at manageable levels, reflecting the economy's adaptability and resilience.
The survey points out several positive economic indicators. India's GDP growth of 8.2% has surpassed expectations, and the International Monetary Fund (IMF) has updated its growth projection for India to 7%. Inflation remains under control compared to global standards, and the current account deficit is manageable. These factors collectively argue for an upgrade in India's credit rating by international rating agencies.
The survey identifies employment generation as a critical area needing intervention. It notes that only about 50% of Indian youth are truly employable, highlighting the need for significant improvements in skill development and training. The survey also emphasizes the importance of female workforce participation, which remains low at around 16-17%.
Micro, Small, and Medium Enterprises (MSMEs) are identified as potential major growth drivers. The survey suggests that more needs to be done to improve the ease of doing business at the factory level and to provide better handholding for MSMEs. These enterprises are crucial for job creation and economic growth, with the potential to create millions of jobs in the coming years.
The survey discusses the importance of sustainable energy solutions, such as solar and wind energy, and the need for sustainable electricity generation. It highlights the challenges of transitioning to green energy, particularly the high costs associated with it, and calls for innovative solutions and incentives to attract investments in this sector.
The survey stresses the need for increased public investment in agriculture and rural infrastructure. It points out the decline in gross capital formation in agriculture, which now stands at around 10-12%, and calls for more investments to keep pace with food production growth and reduce food wastage.
The survey underscores the importance of governance and the role of the private sector in driving economic growth. It suggests that states should focus on creating an enabling environment for private sector participation, particularly in job creation and investment. The survey emphasizes that the private sector can play a pivotal role in driving economic growth through innovation, investment, and job creation.
The survey also highlights the need for better coordination between the central and state governments to implement reforms effectively. It suggests that a collaborative approach, where the central government provides strategic direction and states focus on execution, can lead to better outcomes.
The Economic Survey 2023-2024 presents a comprehensive analysis of the Indian economy, highlighting its strengths and identifying key areas for improvement. It calls for sustained domestic efforts and significant reforms to maintain the current growth trajectory and achieve the goal of a developed India by 2047. The survey's insights and recommendations provide a roadmap for policymakers to address the challenges and capitalize on the opportunities ahead.
By focusing on inclusive growth, enhancing the ease of doing business, promoting sustainable development, and improving governance, India can build on its current momentum and achieve long-term economic prosperity.
The survey's emphasis on rural development, MSMEs, skill development, and women's workforce participation highlights the need for a holistic approach to economic growth. As India navigates the complex global economic landscape, these strategic interventions will be crucial in ensuring sustainable and inclusive development.
(The author is an Advocate by profession)