Report Summary - Economic Survey 2023-24 | Economic Survey & Government Reports - UPSC PDF Download

 Page 1


 
 
  
  
    
      
   
Report Summary 
Economic Survey 2023-24 
? The Finance Minister, Ms. Nirmala Sitharaman tabled 
the Economic Survey 2023-24 on July 22, 2024 in 
Parliament.  Key highlights of the Survey include: 
State of the economy 
? Gross Domestic Product (GDP):  The Economic 
Survey has estimated a real GDP growth of 6.5%-7% 
in 2024-25.  In 2023-24, India’s real GDP grew by 
8.2%.  Growth in 2024-25 is expected to be supported 
by strong domestic investment demand, improved 
agricultural performance, and an increase in 
merchandise and services exports.  On the other hand, 
the survey recognised that geopolitical risks leading to 
supply-chain distortions, higher commodity prices, 
increased protectionism, and reviving inflationary 
pressures can adversely impact economic growth.  In 
addition, any slowdown in private capital formation on 
fears of cheaper imports and the progress of the 
southwest monsoon will also impact economic growth.   
? Inflation:  Retail inflation in 2023-24 was 5.4%, the 
lowest level since the Covid-19 pandemic.  Food 
inflation increased from 6.6% in 2022-23 to 7.5% in 
2023-24.  This was driven by higher food inflation 
caused by Russia-Ukraine war and domestic weather 
conditions.  Core inflation (which excludes food and 
energy prices) moderated in 2023-24 driven by services 
such as housing rental inflation.  According to the 
Reserve Bank of India, retail inflation is estimated at 
4.5% in 2024-25.  The Survey noted that India’s short-
term inflation outlook is benign.  However, long-term 
price stability may need certain measures.  These 
include: (i) expansion in cultivation of pulses, (ii) 
developing modern storage facilities for vegetables, 
and (iii) effective monitoring of build-up of prices from 
the farm gate to the final consumer.  
? Current account balance:  In 2023-24, India’s current 
account deficit reduced to USD 23.2 billion (0.7% of 
GDP) from USD 67 billion (2% of GDP) in 2022-23.  
The improvement in the current account balance was 
because of a decrease in merchandise trade deficit, 
increasing net services exports, and increasing 
remittances.  Increase in services exports was driven by 
software exports, travel, and business services.  India’s 
trade deficit is expected to decrease further in the 
coming years as production linked incentive schemes 
help in creating a competitive manufacturing base.  
However, risks to India’s external sector include: (i) 
fall in demand from major trading partners, (ii) rising 
trade costs, (iii) volatility in commodity prices, and (iv) 
changes in trade policies by major trading partners. 
? Fiscal deficit:  The fiscal deficit of the central 
government has reduced from 6.4% of GDP in 2022-23 
to 5.6% of GDP in 2023-24.  The reduction in fiscal 
deficit is due to a strong growth in direct and indirect 
tax collections and higher-than-budgeted non-tax 
revenue.  This was combined with restrained revenue 
expenditure with a larger share of the fiscal deficit 
being accounted for by capital outlay.  The fiscal 
deficit of the central government is expected to further 
reduce to 4.5% of GDP or lower by 2025-26.  
? Debt:  The general government debt-to-GDP ratio 
increased slightly in 2023-24 due to increasing interest 
rates and lower-than-budgeted nominal GDP growth.  
However, it is expected to decline on the back of 
monetary policy easing, increase in WPI inflation, and 
continued fiscal consolidation.  The Survey noted that 
the Centre’s debt is characterised by low currency and 
interest rate risks.  This is due to a low share of 
external debt and external borrowings being from 
official sources.     
Agriculture and allied activities       
? India’s agriculture sector has recorded an annual 
average growth rate of 4.2% over the last five years.  
The sector grew at a rate of 1.4% in 2023-24, as against 
a growth rate of 4.7% in 2022-23.  This was due to a 
decrease in foodgrain production driven by delayed and 
poor monsoons.  The Survey noted that while India is a 
major agriculture producer, its crop yields are much 
lower compared to other major producers.  Low yields 
are caused by: (i) fragmented land holdings, (ii) low 
farm investment, (iii) lack of farm mechanisation, and 
(iv) insufficient access to quality inputs.   
? Allied activities such as livestock and fisheries have 
performed better than traditional crops.  Between 2014-
15 and 2022-23, the share of livestock in agriculture 
gross value added increased from 24.3% to 30.4% 
while the share of fisheries increased from 4.4% to 
7.3% respectively.  
? The Survey noted that the growth of allied sectors 
suggest that greater emphasis should be placed on them 
to boost farmers’ income.  Small farmers need to move 
to high-value agriculture such as fruits, vegetables, 
poultry, and dairy.  Increasing private investment in the 
sector remains vital.  
Industry 
? The industrial sector grew by 9.5% in 2023-24.  The 
GVA of the industrial sector (at constant prices) in 
2023-24 is 25% higher than the pre-covid level in 
2019-20.  This was supported by greater credit offtake, 
focus on capital formation, and a supportive policy 
framework.  The sectoral composition of India’s 
manufacturing has changed, with automobiles, 
chemicals, and pharmaceuticals gaining importance.  
? The Survey highlighted that electronics manufacturing 
has witnessed significant growth since 2014.  In 2021-
22, it contributed 4% to India’s total GDP.  The direct 
Page 2


 
 
  
  
    
      
   
Report Summary 
Economic Survey 2023-24 
? The Finance Minister, Ms. Nirmala Sitharaman tabled 
the Economic Survey 2023-24 on July 22, 2024 in 
Parliament.  Key highlights of the Survey include: 
State of the economy 
? Gross Domestic Product (GDP):  The Economic 
Survey has estimated a real GDP growth of 6.5%-7% 
in 2024-25.  In 2023-24, India’s real GDP grew by 
8.2%.  Growth in 2024-25 is expected to be supported 
by strong domestic investment demand, improved 
agricultural performance, and an increase in 
merchandise and services exports.  On the other hand, 
the survey recognised that geopolitical risks leading to 
supply-chain distortions, higher commodity prices, 
increased protectionism, and reviving inflationary 
pressures can adversely impact economic growth.  In 
addition, any slowdown in private capital formation on 
fears of cheaper imports and the progress of the 
southwest monsoon will also impact economic growth.   
? Inflation:  Retail inflation in 2023-24 was 5.4%, the 
lowest level since the Covid-19 pandemic.  Food 
inflation increased from 6.6% in 2022-23 to 7.5% in 
2023-24.  This was driven by higher food inflation 
caused by Russia-Ukraine war and domestic weather 
conditions.  Core inflation (which excludes food and 
energy prices) moderated in 2023-24 driven by services 
such as housing rental inflation.  According to the 
Reserve Bank of India, retail inflation is estimated at 
4.5% in 2024-25.  The Survey noted that India’s short-
term inflation outlook is benign.  However, long-term 
price stability may need certain measures.  These 
include: (i) expansion in cultivation of pulses, (ii) 
developing modern storage facilities for vegetables, 
and (iii) effective monitoring of build-up of prices from 
the farm gate to the final consumer.  
? Current account balance:  In 2023-24, India’s current 
account deficit reduced to USD 23.2 billion (0.7% of 
GDP) from USD 67 billion (2% of GDP) in 2022-23.  
The improvement in the current account balance was 
because of a decrease in merchandise trade deficit, 
increasing net services exports, and increasing 
remittances.  Increase in services exports was driven by 
software exports, travel, and business services.  India’s 
trade deficit is expected to decrease further in the 
coming years as production linked incentive schemes 
help in creating a competitive manufacturing base.  
However, risks to India’s external sector include: (i) 
fall in demand from major trading partners, (ii) rising 
trade costs, (iii) volatility in commodity prices, and (iv) 
changes in trade policies by major trading partners. 
? Fiscal deficit:  The fiscal deficit of the central 
government has reduced from 6.4% of GDP in 2022-23 
to 5.6% of GDP in 2023-24.  The reduction in fiscal 
deficit is due to a strong growth in direct and indirect 
tax collections and higher-than-budgeted non-tax 
revenue.  This was combined with restrained revenue 
expenditure with a larger share of the fiscal deficit 
being accounted for by capital outlay.  The fiscal 
deficit of the central government is expected to further 
reduce to 4.5% of GDP or lower by 2025-26.  
? Debt:  The general government debt-to-GDP ratio 
increased slightly in 2023-24 due to increasing interest 
rates and lower-than-budgeted nominal GDP growth.  
However, it is expected to decline on the back of 
monetary policy easing, increase in WPI inflation, and 
continued fiscal consolidation.  The Survey noted that 
the Centre’s debt is characterised by low currency and 
interest rate risks.  This is due to a low share of 
external debt and external borrowings being from 
official sources.     
Agriculture and allied activities       
? India’s agriculture sector has recorded an annual 
average growth rate of 4.2% over the last five years.  
The sector grew at a rate of 1.4% in 2023-24, as against 
a growth rate of 4.7% in 2022-23.  This was due to a 
decrease in foodgrain production driven by delayed and 
poor monsoons.  The Survey noted that while India is a 
major agriculture producer, its crop yields are much 
lower compared to other major producers.  Low yields 
are caused by: (i) fragmented land holdings, (ii) low 
farm investment, (iii) lack of farm mechanisation, and 
(iv) insufficient access to quality inputs.   
? Allied activities such as livestock and fisheries have 
performed better than traditional crops.  Between 2014-
15 and 2022-23, the share of livestock in agriculture 
gross value added increased from 24.3% to 30.4% 
while the share of fisheries increased from 4.4% to 
7.3% respectively.  
? The Survey noted that the growth of allied sectors 
suggest that greater emphasis should be placed on them 
to boost farmers’ income.  Small farmers need to move 
to high-value agriculture such as fruits, vegetables, 
poultry, and dairy.  Increasing private investment in the 
sector remains vital.  
Industry 
? The industrial sector grew by 9.5% in 2023-24.  The 
GVA of the industrial sector (at constant prices) in 
2023-24 is 25% higher than the pre-covid level in 
2019-20.  This was supported by greater credit offtake, 
focus on capital formation, and a supportive policy 
framework.  The sectoral composition of India’s 
manufacturing has changed, with automobiles, 
chemicals, and pharmaceuticals gaining importance.  
? The Survey highlighted that electronics manufacturing 
has witnessed significant growth since 2014.  In 2021-
22, it contributed 4% to India’s total GDP.  The direct 
Economic Survey 2023-24   
 
  
     
 
workforce in the production of mobile phones more 
than tripled between 2016-17 and 2021-22.   
? The Survey observed that India continues to be import 
dependent in key sectors like coal, capital goods, and 
chemicals.  Sectors like textiles and food products have 
lost their relative positions.  Incentivising research and 
development and improving skill level of the work 
force is needed across industries.  Meeting the skill 
shortage would require collaboration between industry 
and academia.  
Services sector 
? The services sector constituted 55% of India’s 
economy in 2023-24.  The demand for services such as 
education, healthcare, and finance is driven by a large 
and young population.  The Survey noted that artificial 
intelligence is likely to restrain growth opportunities 
for business services and pose a challenge to long-term 
sustainability and job creation.      
? India’s e-commerce market has gained momentum over 
past few years due to technological advancements, 
new-age business models, and government initiatives.  
The sector’s growth is constrained by inadequate skills 
required for online selling.  Additionally, data privacy 
issues and increasing online fraud are also seen as 
hurdle to the sector’s growth. 
? Some of the challenges identified for the services 
sector include: (i) lack of workers with relevant digital 
skills, (ii) difficulties in accessing finance for small and 
medium enterprises, (iii) tentative global economic 
outlook, and (iv) commodity price uncertainties. 
Infrastructure 
? The central government’s capital expenditure 
witnessed a three-fold increase in 2023-24 as compared 
to 2019-20 with focus on sectors such as roads and 
railways.  The Survey noted that capital expenditure by 
the Union and states have a central role in funding 
large-scale infrastructure projects.  However, given the 
fiscal consolidation plans of the Union and state 
governments, it is important for viable projects to be 
executed through public-private partnership.      
? Private sector participation in creation of infrastructure 
is not forthcoming to the extent desired.  This could be 
due to: (i) lumpy capital investment and long payback 
period, (ii) project structuring issues involving risk 
estimation, allocation, and mitigation, (iii) delay in land 
acquisition, and (iv) lack of an independent regulator 
for infrastructure sectors.  Higher level of private sector 
financing and resource mobilisation from new sources 
will be crucial.  This would need support from central, 
state, and local governments.     
Employment 
? The Survey noted that Indian labour market indicators 
have improved in the last six years with unemployment 
declining to 3.2% in 2022-23.  However, India needs to 
generate an average of around 78.5 lakh jobs annually 
till 2030 in the non-farm sector.  This would be needed 
to cater to a rising workforce.  To generate and sustain 
quality employment, agro-processing and the care 
economy are seen as two promising sectors. 
? The biggest disruption for the future of work is the 
growth in artificial intelligence.  It has the potential to 
boost productivity and disrupt employment in certain 
sectors.  State governments can support hiring by 
businesses by easing compliances and reforming land 
laws.  As jobs are created in the private sector, 
businesses must bear in mind their responsibility for 
employment generation.     
Climate change and energy transition 
? India has performed well on the renewable energy 
front, achieving a cumulative 82.6 GW of installed 
solar power capacity at the end of April 2024.  As of 
May 31, 2024, non-fossil fuel sources consist of 45% 
of the total installed electricity generation capacity in 
India.  Additionally, the framework for Sovereign 
Green Bonds has enabled resource mobilisation for 
green projects.  The government has raised Rs 36,000 
crore via sovereign green bonds in 2023.   
? The Survey noted that India faces a dual challenge of 
meeting its energy demands while reducing carbon 
emissions.  Phasing in of non-fossil fuel sources has 
remained a challenge for India, amplifying the need for 
a diversified set of energy sources.  This is expected to 
help India pursue its low-emission pathways and help 
minimise risks associated with energy systems.  
Availability and affordability of financial resources 
will drive the green transition. 
DISCLAIMER: This document is being furnished to you for your information.  You may choose to reproduce or redistribute this report for non-
commercial purposes in part or in full to any other person with due acknowledgement of PRS Legislative Research (“PRS”).  The opinions expressed 
herein are entirely those of the author(s).  PRS makes every effort to use reliable and comprehensive information, but PRS does not represent that the 
contents of the report are accurate or complete.  PRS is an independent, not-for-profit group.  This document has been prepared without regard to the 
objectives or opinions of those who may receive it.