State of The Economy: Steady as She Goes (2023-24) | Indian Economy for UPSC CSE PDF Download

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CHAPTER
01
STATE OF THE ECONOMY: 
STEADY AS SHE GOES
India’s calibrated response to the pandemic on the economic front included three salient 
components. The first has been the focus on public spending on infrastructure, which 
kept the economy afloat by creating a strong demand for jobs and industrial output 
and triggered a lagged yet vigorous private investment response. Stronger balance 
sheets of the financial and non-financial private sector helped, aided by a decade of 
supporting initiatives by the Government and the Reserve Bank of India. The second has 
been partly a natural response of business enterprise and public administration amidst 
adversities, i.e., digitalisation of service delivery. The public policy focus and nurturing 
of processes and frameworks in digital technology greatly helped this irreversible and 
transformational change. The third has been embodied in the Atmanirbhar Bharat 
Abhiyan in terms of targeted relief to different sectors of the economy and sections of 
the population, and structural reforms that assisted a firm recovery and increased the 
medium-term growth potential. 
Global troubles, supply chain disruptions, and vagaries of monsoons intermittently 
stoked domestic inflationary pressures, which were, to a great extent, managed by 
administrative and monetary policy responses.  The fiscal balances of the general 
government—central and State Governments taken together - have improved 
progressively despite expansionary public investment. Tax compliance gains driven 
by procedural reforms, expenditure restraint, and increasing digitisation helped 
India achieve this fine balance. The external balance has been pressured by subdued 
global demand for goods, but strong services exports largely counterbalanced this. 
Global output is now somewhat more resilient than in 2022, inflationary pressures are 
shrinking, and trade is set to recover, should there be no further geo-political shocks 
or flare-ups. However, the chances of geopolitical disturbances and conflicts have only 
gone up in recent times.
The net impact of these developments has been that the Indian economy recovered and 
expanded in an orderly fashion in the last three years. The real GDP in FY24 was 20 
per cent higher than its level in FY20, a feat that only a very few major economies 
achieved, while also leaving a strong possibility for robust growth in FY25 and beyond. 
Growth has been inclusive with a reduction in unemployment and multi-dimensional 
poverty and an increase in labour force participation. Overall, the Indian economy 
looks forward to FY25 optimistically, anticipating broad-based and inclusive growth.