Summary: Economic Survey 2023-24 | Indian Economy for UPSC CSE PDF Download

Why It’s in the News

The Economic Survey for 2023-24 was recently presented by the Union Finance Minister in Parliament. This document provides a detailed assessment of India's economic performance and future prospects.

What is the Economic Survey? 

The Economic Survey is an annual report released by the government before the Union Budget. Prepared by the Economic Division of the Department of Economic Affairs in the Ministry of Finance, under the supervision of the Chief Economic Adviser (currently V. Anantha Nageswaran), it is presented in both houses of Parliament by the Union Finance Minister.

Purpose

• To review the Indian economy’s performance over the past year.
• To summarize major development programs and government policy initiatives.
• To analyze economic trends and offer an outlook for the coming year.

Historical Context:

• First introduced in 1950-51 as part of the budget documents.
• Became a separate publication in 1964.

Key Takeaways from the Economic Survey 2023-24

State of the Economy:

• Real GDP Growth: India’s real GDP grew by 8.2% in FY24, surpassing the 8% mark in three out of four quarters.
• Retail Inflation: Retail inflation decreased from 6.7% in FY23 to 5.4% in FY24.
• Current Account Deficit (CAD): Improved to 0.7% of GDP in FY24 from 2.0% in FY23.
• Tax Revenue: Direct taxes contributed 55% of total tax revenue; indirect taxes made up 45%.
• Capital Spending: Increased government capital expenditure and free food grains provided to 81.4 crore people.

Monetary Management and Financial Stability:

• Monetary Policy: RBI maintained a steady repo rate at 6.5% throughout FY24, resulting in a core inflation decline of about 4% from April 2022 to June 2024.
• Credit Growth: Credit disbursal by Scheduled Commercial Banks (SCBs) reached Rs 164.3 lakh crore, a 20.2% increase by March 2024.
• Banking Sector: Non-performing assets (NPA) are at multi-year lows with the GNPA ratio falling to 2.8%, a 12-year low. The Insolvency and Bankruptcy Code has addressed 31,394 corporate debtors worth Rs 13.9 lakh crore as of March 2024.
• Capital Markets: Facilitated Rs 10.9 lakh crore in capital formation, about 29% of gross fixed capital formation for corporates in FY23.
• Insurance and Microfinance: India is among the fastest-growing insurance markets and has the second-largest microfinance sector globally.

Prices and Inflation:

• Inflation Trends: 29 states and UTs had inflation below 6% in FY24. Core services inflation eased to a nine-year low, while food inflation increased to 7.5%.
• Future Projections: RBI forecasts inflation to decline to 4.5% in FY25 and 4.1% in FY26.

External Sector:

• Exports: Services exports grew by 4.9% to USD 341.1 billion in FY24.
• Remittances: India remains the top recipient of global remittances, totaling USD 120 billion in 2023.
• External Debt: India’s external debt to GDP ratio was 18.7% as of March 2024.
• Logistics Performance: Improved to 38th in the World Bank Logistics Index in 2023 from 44th in 2014.
• Tourism: India’s share in global tourism receipts increased from 1.38% in 2021 to 1.58% in 2022.

Medium-Term Outlook:

• Growth Strategy: To sustain over 7% growth, collaboration between the Union Government, State Governments, and the private sector is essential.
• Focus Areas: Key areas include job and skill creation, agriculture, MSME bottlenecks, green transition, and addressing the education-employment gap.

Climate Change and Energy Transition:

• Renewable Energy: Non-fossil sources accounted for 45.4% of installed electricity generation capacity as of May 2024.
• Energy Needs: Projected to grow 2 to 2.5 times by 2047. Clean energy investments totaled Rs 8.5 lakh crore between 2014 and 2023.

Social Sector:

• Welfare Expenditure: Increased at a CAGR of 12.8% between FY18 and FY24.
• Healthcare: Over 34.7 crore Ayushman Bharat cards issued.
• Housing: 2.63 crore houses built under PM-AWAS-Gramin in the last 9 years.
• Rural Infrastructure: 15.14 lakh km of roads constructed under the Gram Sadak Yojana since 2014-15.

Employment and Skill Development:

• Unemployment Rate: Declined to 3.2% in 2022-23.
• Net Payroll Additions: Doubled to 13.15 million in five years.
• Youth Unemployment: Fell from 17.8% in 2017-18 to 10% in 2022-23.
• Female Labor Force Participation: Rising for six years, currently at 37.0%.
• Gig Economy: Expected to reach 2.35 crore by 2029-30.

Agriculture and Food Management:

• Agricultural Growth: Average annual growth rate of 4.18% over the last five years.
• Credit and Irrigation: Rs 22.84 lakh crore credit to agriculture and 90 lakh hectares under micro-irrigation since 2015-16.
• Kisan Credit Cards: 7.5 crore cards issued with a Rs 9.4 lakh crore limit.

Industry:

• Industrial Growth: 8.2% economic growth supported by 9.5% industrial growth.
• Pharmaceuticals and Clothing: India’s pharmaceutical market is the third-largest by volume, and it is the second-largest clothing manufacturer.
• Electronics Manufacturing: Accounts for 3.7% of the global market, with domestic production rising to Rs 8.22 lakh crore.

Services:

• Sector Contribution: Contributed 55% of the economy in FY24 and grew by 7.6%.
• Digital Services: India’s share in global digitally delivered services exports increased to 6%.
• Aviation: 15% YoY increase in total air passengers in FY24.
• E-commerce: Expected to cross USD 350 billion by 2030.
• Start-ups: Increased from around 2,000 in 2014 to approximately 31,000 in 2023.

Infrastructure:

• National Highways: Construction pace increased to approximately 34 km per day by FY24.
• Railways: Capital expenditure increased by 77% over five years.
• Aviation: 21 new airport terminal buildings operationalized in FY24.
• Logistics: Rank improved to 22nd in 2023 from 44th in 2014.
• Space: India has 55 active space assets.
• Digital Infrastructure: DigiLocker platform has over 26.28 crore registered users.

Climate Change and India:

• Current Strategies: Criticizes the Western approach to climate change as flawed and not universally applicable.
• India’s Ethos: Emphasizes a harmonious relationship with nature and suggests shifting to traditional multi-generational households for sustainable living.
• Mission LiFE: Focuses on mindful consumption and human-nature harmony.

Major Challenges and Recommended Solutions

Challenges:

• Global Headwinds and FDI: High interest rates in developed countries and geopolitical uncertainties pose challenges for FDI.
• China Dependency: Heavy reliance on China for imports and low-skill manufacturing.
• AI Threat: Potential disruption from artificial intelligence to the BPO sector.
• Tepid Private Investment: Underwhelming response from the corporate sector despite tax cuts.
• Employment Data: Lack of high-quality data on employment impedes labor market analysis.
• Lifestyle Disadvantages: Social media, excessive screen time, and unhealthy lifestyles affecting public health and productivity.

Recommended Solutions:

• Job Creation: Encouraging the corporate sector to take an active role in job creation.
• Lifestyle Changes: Promoting traditional lifestyle practices and healthy food options.
• Revitalising Agriculture: Improving agricultural practices and increasing value addition.
• Removing Regulatory Bottlenecks: Streamlining regulations for MSMEs.
• Administrative Strengthening: Enhancing state capacity for effective implementation and management.