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Indian economy in a strong wicket: Economic Survey of India 2023-24

Union Finance Minister Nirmala Sitharaman presented the Economic Survey of India 2023-24, accompanied by a statistical appendix, in both Houses of Parliament. The survey indicates a bright outlook for India’s financial sector but highlights the need to prepare for potential vulnerabilities. The Indian financial sector is at a “turnpike moment,” with a decreasing reliance on banking for credit and an increasing role of capital markets. The Union Budget for 2024-25 will be presented by Sitharaman in the Lok Sabha on July 23, marking the first budget of the Modi Government since the NDA’s third consecutive term victory.

Highlights of the Economic Survey 2023-24:
Startup Ecosystem Flourishing:

• Over 13,000 DPIIT-recognised startups in AI, IoT, robotics, and nanotech.
• The number of patents filed per year has increased 17-fold between FY15 and FY24.

Agriculture’s Potential:

• Significant potential for growth if incentives and allied services in agriculture are aligned.
• Land consolidation is necessary for the efficiency of mechanisation and technology adoption, as more than 85% of landholdings are two hectares or less.

Extreme Weather and Crop Damage:

• Extreme weather and crop damage have led to a hike in food prices over the past two years.
• Lower reservoir levels have also contributed to higher food prices.

Female Labour Participation:

• Female labour participation has surged by 13.7% over the past six years, reaching 37% in 2022-23.
• Unemployment rate has dropped to 3.2%, with rural India leading this positive trend.

Economic Resilience Amid Global Challenges:

• The Indian economy grew over 7% for the third consecutive year, driven by stable consumption and improving investment demand.
• Gross Value Added (GVA) at 2011-12 prices grew by 7.2% in FY24.
• Net taxes at constant (2011-12) prices grew by 19.1% in FY24.

Banking and Financial Sector Performance:

• Double-digit growth in bank credit.
• Gross and net non-performing assets at multi-year lows.
• Improvement in bank asset quality underscores government’s commitment to a stable banking sector.

Food Inflation:

• Global concern over the past two years due to extreme weather events and crop damage.
• Inflationary pressures have been managed through administrative and monetary policy responses.
• Retail inflation declined to 5.4% in FY24 from 6.7% in FY23.

Capital Formation Growth:

• Government’s focus on capital expenditure and private investment has boosted growth.
• Gross Fixed Capital Formation increased by 9% in real terms in 2023-24.
• Healthier corporate and bank balance sheets are expected to further strengthen private investment.