Economic Survey: CEA flags geopolitics, rise of AI as key challenges for Viksit Bharat and urges India Inc to step up

Highlighting a changed economic environment, the survey states that India today faces challenges from geo politics , concerns over climate change and global warming.

The second economic survey by V. Anantha Nageswaran presents a sobering view of the Indian economy, talks about emerging geo political concerns, skilling challenges and urges India Inc to step up.

Economic Survey 2023-24, authored by the Chief Economic Advisor, V. Anantha Nageswaran, his second one  made a definitive statement on the Indian economy, while presenting a growth  outlook of 6.5-7 percent , the survey iterated the challenges that face India today are far different from the time of China’s rise between 1980 and 2015.

Highlighting the economic shocks, Nageswaran stated that bad debts in the Indian banking system and high corporate indebtedness were one of the challenges, followed by the pandemic.

Highlighting a changed economic environment, the survey states that India today faces challenges from geo politics , concerns over climate change and global warming. In addition to that, “the advent of Artificial Intelligence casts a huge pall of uncertainty as to its impact on workers across all skill levels -low, semi and high. These will create barriers and hurdles to sustained high growth rates for India in the coming years and decades.”

STEP UP! MESSAGE TO THE PRIVATE SECTOR

On employment, the CEA states it categorically that “ in more than one respect, the action lies with the private sector. In terms of financial performance, the corporate sector has never had it so good. The results of over 33,000 companies show that , in the three years between FY 20 and FY 23, the profit before taxes of the Indian corporate sector quadrupled…hiring and compensation growth hardly kept up with it… it is in the interest of the companies to step up hiring and worker compensation.

The Union Government cut taxes in September 2019 to facilitate capital formation -the CEA asks if the corporate sector has responded?

Between FY 19 and FY 23, the cumulative growth in private sector non-financial Gross Fixed Capital Formation is 52 percent in current prices, during the same period, the cumulative growth in general government (which includes states) is 64 percent. “The gap does not appear to be too wide” but, the survey states, that on breaking down the data a different picture emerges.

Private Sector GFCF in machinery and equipment  and intellectual property products has grown cumulatively by only 35 percent in four years to FY 23, while GFCF in ‘Dwellings, other buildings and structures ‘ has increased by 105 percent-“this is not a healthy mix,” says the CEA.

Slow pace of investment in M&E and IP Products  will delay India’s quest to raise the manufacturing share of GDP , delay the improvement in India’s manufacturing competitiveness and create only a smaller number of higher-quality formal jobs.