Budget 2023 Expectations: India is seen to slow to 6.5 per cent in the fiscal year starting April but will remain the fastest growing major economy in the world as it fared better in dealing with the extraordinary set of challenges the world faced, the Economic Survey 2022-23 tabled on Tuesday said. The survey sees GDP growth of 6.5 per cent in 2023-24 compared with an estimated 7 per cent expansion this fiscal (April 2022 to March 2023) and 8.7 per cent in the previous year.
Key highlights
-- Economy to grow 6.5 pc in 2023-24, compared to 7 pc this fiscal and 8.7 pc in 2021-22
-- India to remain the fastest growing major economy in the world
--- GDP in nominal terms to be 11 percent next fiscal
-- Growth driven by private consumption, higher capex, strengthening corporate balance sheet, credit growth to small businesses and return of migrant workers to cities
- Economy has "recouped" what was lost, "renewed" what had paused, and "reenergised" what had slowed during the pandemic and since the conflict in Europe
-- Real GDP growth to be in the range of 6-6.8 pc next fiscal depending on global economic, political developments
-- RBI projection of 6.8 pc inflation this fiscal outside the upper target limit, not high enough to deter private consumption, also not too low to weaken inducement to invest
--Challenge to rupee depreciation persists with the likelihood of further interest rate hikes by the US Fed
--CAD may continue to widen as global commodity prices remain elevated, economic growth momentum stays strong
--If CAD widens further, rupee may come under depreciation pressure
--Overall external situation to remain manageable
--India has sufficient forex reserves to finance CAD and intervene in forex market to manage rupee volatility
--Elevated downside risks to global economic outlook as inflation persisting in advanced economies and hints of further rate hikes by central banks
--Inflation did not "creep too far above" tolerance range compared to several advanced nations
--The growth in exports has moderated in second half of current fiscal; the surge in growth rate in 2021-22 and first half of current fiscal led to production processes shifting gears from 'mild acceleration' to 'cruise mode'
--Slowing world growth, shrinking global trade led to loss of export stimulus in the second half of current year
--Schemes like PM KISAN, PM Garib Kalyan Yojana significantly contributed to lessening impoverishment
--Credit disbursal, capital investment cycle, expansion of public digital platform and schemes like PLI, National Logistics Policy and PM Gati Shakti to drive economic growth
--Bank credit growth likely to be brisk in FY24 on back of benign inflation, moderate credit cost
--Credit growth to small businesses remarkably high at over 30.5 pc in January-November, 2022
--Housing prices firming up after release of pent-up demand, decline in inventories
--Central govt capex grew 63.4 pc in April-November of current fiscal
--India's economic resilience has helped it withstand the challenge of mitigating external imbalances caused by the Russia-Ukraine conflict without losing growth momentum
--Stock market gave positive returns in calendar year 2022 unfazed by FPI withdrawal
--Private consumption, capital formation led economic growth in current fiscal has helped generate employment; urban employment rate declined, while Employee Provident Fund registration rose.
Economic Survey: Full coverage
Financial holding firm Nomura said the optmistic growth outlook in India's Economic Survey 2023 carries "seeds of potential fiscal slippage".
"The Economic Survey, released as a precursor to the FY24 Union Budget, provided a particularly optimistic growth outlook, while emphasising the need to continue to focus on capex and fiscal consolidation. We believe that over-optimism on growth may limit the extent of potential expenditure consolidation and boost revenue projections in the FY24 Budget. This in turn would make it difficult for the government to fiscally ‘walk the walk’ if growth prospects disappoint, as we expect," it said.
The National Judicial Data Grid (NJDG), a database maintained by the Ministry of Law and Justice, shows that over 40 million cases are pending in India's district and subordinate courts. The database also reveals that lack of proper infrastructure is one of the main reasons for the backlog. Infrastructure includes technological aids to smooth operations of the courts, an increase in the number of courtrooms and an increase in the number of judges.
The government collected Rs 1.56 lakh crore in Goods and Services Tax (GST) in January 2023. The figure was second only to the record Rs 1.68 lakh crore collected in April 2022, and it was up 10.6% from the first month of 2022 and 4.3% higher than December 2022.The GST collection numbers for January come just over 12 hours before Finance Minister Nirmala Sitharaman presents the 2023-24 Union Budget in Parliament at 11 am on February 1.The Centre expects to assume a nominal GDP growth rate of 10.5-11 percent for 2023-24, sharply lower than the 15.4 percent growth for this year.
According to the Economic Survey 2023, capital expenditure on housing and urban affairs declined by 32.47 percent in the first eight months of the financial year 2022-2023.During the financial year 2022-2023, housing and urban affairs have been allocated Rs 11,000 crore (April-November 2022) as against Rs 17,000 crore in the same period last year. The budgeted capex estimate is Rs 27,000 crore for the entire 2022-2023 financial year.
- Homecoming of Indian startups: Amid a spate of startup layoffs, the Survey said that direct jobs in the country’s startups jumped 36 percent to 269,000 last year.The number of recognised startups in the country has increased from 452 in 2016 to 84,012 in 2022.
-Digital Public Goods find pride of place: While presenting the Economic Survey today, Nageswaran said that India's digital public infrastructure (DPI) can add around 100 basis points to the GDP growth rate.UPI accounted for 52% of India's total digital transactions in FY22
-Tackling policy challenges from new tech:Not just internet users and citizens, these legislations are also expected to create an impact on nascent, emerging technologies such as drones and the space tech sector.
Thesection titled growth magnets in this decade notes that going forwardthere will be strategies to arrest and reverse the rising obesity levels, and manage diabetes among other growth concerns to better the quality of life.
“Notwithstanding an overall drop in FDI in the first half of FY23, inflows have stayed above the pre-pandemic levels, driven by structural reforms and measures improving the ease of doing business,” the Survey says.The government has implemented an investor-friendly FDI policy under which FDI up to 100 percent is permitted through automatic route in most sectors.
The Economic Survey for 2022-23 predicts a real GDP growth rate of 6.5 percent for the next financial year, in a range of 6-6.8 percent. However, the forecast seems optimistic by comparison to other economic surveys made over the last few years; in fact, if one looks at the growth forecasts made by previous Economic Surveys, they also seem out of reach.
The Economic Survey of India has highlighted that the Indian auto industry is vital to transitioning to a green economy. By 2030, one crore EVs will be sold annually in India, with the domestic EV market growing at an average annual pace of 49% between 2022-2030. The survey cited government programs such as Faster Adoption and Manufacturing of Electric Vehicles (FAME) and Production Linked Incentive schemes, but was silent on the challenges facing the EV segment.
India’s macroeconomic parameters are good and are expected to remain so. The country will now begin to see the full beneficial effect of reforms that the government has taken over the past years. These are two points that Chief Economic Advisor V Anantha Nageswaran wants to drive home through his new economic survey of 2023.From the CEA comes #WhyIamNotLosingHopeinIndia
The document stressed on the need to harness Nari Shakti (women power), education and skilling. It said there was a need to dismantle LIC – licence, inspection and compliance; provide affordable, reliable and viable power supply; and ensure energy security and energy transition for India to fully realise its potential.
The focus of the Union Budget 2023-24 will be on the "overall economy", and not on the upcoming elections, said MoS Finance Pankaj Chaudhary, a day ahead of the release of the budget document. Nine crucial assembly elections are to be held this year, followed by the general elections in 2024. Expectations are rife that the government may increase capital expenditure, as this would be the final full-year budget of the Narendra Modi-led government before it seeks re-election.
"As far as budget is concerned in view of elections, elections keep coming and going, but how to improve the economic condition of the people of the country, Hon'ble Modi ji's attention is always there and it will be seen in this budget also," news agency ANI quoted Chaudhary as saying.
