The Economic Survey 2023-24, presented by Finance Minister Nirmala Sitharaman in Parliament on Monday, covered several key sectors with potential to boost economic growth through targeted incentives. Here are some of the key highlights from the survey.
Growth: India's GDP is projected to grow at 6.5 to 7 per cent in the current fiscal year despite global challenges affecting exports. This projection is lower than the 8.2 per cent growth estimated for the previous financial year. The Reserve Bank projects GDP growth at 7.2 per cent for the fiscal year ending March 2025.
Inflation: The short-term inflation outlook is benign, supported by expectations of a normal monsoon and moderating global prices of key imports. In 2023, India's inflation rate was within the target range of 2 to 6 per cent, and retail inflation was managed at 5.4 per cent, the lowest since the pandemic. However, June saw a rise to 5.1 per cent, with wholesale inflation at 3.36 per cent due to higher food and manufactured goods prices.
FDI: Increased foreign direct investment (FDI) inflows from China could enhance India’s global supply chain participation and boost exports. To benefit from the 'China plus one' strategy, India needs to integrate into China's supply chain or promote FDI from China. Currently, FDI from China requires government approval and accounts for only 0.37 per cent of total FDI equity inflow in India from April 2000 to March 2024.
Financial Sector: The financial sector is at a "turnpike moment," with a shift from banking dominance to rising capital market roles. The sector must support capital formation, trade, business, MSME investments, and provide insurance and retirement security. The share of insurance and pension fund assets in GDP is significantly lower in India compared to the US and UK.
Capital Markets: Capital markets are gaining prominence in India's growth, driven by technology, innovation, and digitization, expanding their share in capital formation and investment landscape.
Agriculture: Key challenges in agriculture include managing food price inflation, improving price discovery mechanisms, and addressing land fragmentation. Policymakers must balance incentivizing production with keeping food prices stable.
Infrastructure: Increased private sector financing and resource mobilisation are crucial for building quality infrastructure. Capital expenditure by railways and the National Highway Authority of India has risen significantly, and the capital investment in the road sector has increased from 0.4 per cent of GDP in FY15 to about 1.0 per cent in FY24.
Net Exports: Government initiatives like mandatory quality norms and higher customs duties have boosted domestic toy exports and reduced Chinese imports. India's smartphone production and exports have also increased, making it the world's sixth-largest smartphone exporter in 2022.
Energy: Coal will remain central to India’s energy system for the next two decades. The phase-down of coal depends on importing critical minerals for clean energy and battery storage.
Auto Sector: The production-linked incentive (PLI) scheme for automobiles and auto components has attracted proposed investments of Rs 67,690 crore, with Rs 14,043 crore invested by the end of March 2024. In FY24, India produced around 49 lakh passenger vehicles, 9.9 lakh three-wheelers, 214.7 lakh two-wheelers, and 10.7 lakh commercial vehicles.
Artificial Intelligence: AI poses significant uncertainty regarding its impact on workers across skill levels. While AI can boost productivity, it also has the potential to disrupt employment in certain sectors.
Health: The Survey raised concerns about growing obesity and unhealthy diets, noting that 54 percent of India's total disease burden is due to poor diets. Urban obesity rates are significantly higher than rural rates. Mental health is also highlighted, with 10.6 percent of adults suffering from mental disorders and a treatment gap of 70 to 92 per cent.
Employment: India needs to generate an average of 78.5 lakh non-farm jobs annually until 2030. Economic growth should focus on generating livelihoods, with a declining share of agriculture in the workforce expected from 45.8 percent in 2023 to 25 per cent in 2047.
Skill Development: Only 4.4 per cent of India's young workforce is formally skilled. Linking skill development with PLI and employment-linked incentive schemes in high-growth sectors like toys, apparel, tourism, logistics, and textiles can help upgrade skills.
Aviation: India’s aviation industry is poised for unprecedented growth. The focus should be on improving airline efficiency and viability while ensuring environmental sustainability. India is the third-largest domestic aviation market, with a 15 per cent year-on-year growth in air passenger numbers.
Remittances: Remittances to India are expected to grow by 3.7 percent to $124 billion in 2024 and 4 per cent to $129 billion in 2025.
Telecom: The government will allocate 5 per cent of the Universal Services Obligation Fund (USOF) for telecom technology research and development. The fund, renamed Digital Bharat Nidhi, has a corpus of around Rs 80,000 crore.
