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Economic Survey 2023 Highlights: The Economic Survey 2023 was tabled by Finance Minister Nirmala Sitharaman today in Parliament a day before she presents the Union Budget for 2023-24. The Economic Survey, a flagship document of the government, pegged economic growth forecast for FY24 at 6-6.8 per cent. While presenting the survey, Chief Economic Adviser V Anantha Nageswaran said that India is poised to perform well in this decade on the back of reforms ushered by the Modi government in the last eight years.
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The document, prepared by a team of economists led by chief economic adviser V Anantha Nageswaran, analyses developments in the economy in the past year and makes projections for the following year. Here are some of the key takeaways:
Growth
The Indian economy is expected to expand 7 percent in real terms in 2022-23, following the 8.7 percent growth in 2021-22. The survey notes that the economy had staged a full and broad-based recovery in 2021-22 and was positioned to ascend to the pre-pandemic growth path.
Inflation
India’s retail inflation rate peaked at 7.8 percent in April 2022, above the Reserve Bank of India’s (RBI) upper tolerance limit of 6 percent. The overshoot of inflation above the upper end of the target range in India was, however, one of the lowest in the world.
Fiscal developments
The government’s finances showed a resilient performance during the year, aided by the recovery in economic activity, buoyancy in revenues from direct taxes and goods and services tax (GST).
Monetary management
The growth in credit off take is expected to sustain, and combined with a pick-up in private capex, will usher in a virtuous investment cycle.
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The Economic Survey 2022-23 under the section titled growth magnets in this decade notes that going forward, there will be Initiatives to sensitise the population towards a healthy lifestyle and introduce strategies to arrest and reverse the rising obesity levels.
According to the latest National Family Health Survey (NFHS-5) data, obesity levels in India have increased between the years 2019-2021 and one in every four persons is overweight compared to one in every five earlier. The family health survey notes that there is an overall increase in mean Body Mass Index from 21.9 in 2015-16 to 22.4 in 2019-21.
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"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," says Nomura Holdings on Economic Survey 2023
The Japanese financial holding company and investment bank expects the government to announce a 5.9% of GDP fiscal deficit for FY24 in the Union Budget tomorrow, with the focus on capex.
If one looks at the growth forecasts made by the last five Economic Surveys, they have all been missed.
Over the last five years, actual GDP growth has missed the midpoint of the Economic Survey'sforecasts by a massive 409 basis points on average.
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The Economic Survey 2023 is rife with hope, stating that India’s growth outlook is better than it was in the pre-pandemic years. Banks are healthy, the digital revolution is making the economy more efficient — a large part of which is now formalised — and financial inclusion is at its peak.
Taking this into consideration, the optimistic CEA Anatha Nageswaran points out that India’s macroeconomic parameters, spanning from growth to debt sustainability, are in sound condition, and also, the economy will now begin to show the full virtuous effect of the reforms that the government has taken over the past years.
"It is difficult for us to give a prediction for the oil price. RBI takes a number that is below $100 per barrel. And we can live with that number and be able to achieve the growth rates that we have projected in the Survey," Nageswaran said.
"The uncertainties with respect to the oil market are tremendous. As long as they stay at a number that is less than $100 per barrel, I think the real GDP growth projections will remain undisturbed," the CEA added.
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Here are some key reactions of economists, policymakers and market participants compiled by Moneycontrol:
Vinod Nair, head of research at Geojit Financial Services
“The Economic Survey is optimistic that India will continue to grow at a healthy rate in the medium term, led by consumption and capital expenditure... For the budget, it is going to be a challenge in FY24 to plan out expenditure due to a short-term slowdown in the economy, high core inflation, and fiscal deficit.”
Lakshmi Iyer, CEO-investment advisory, Kotak Investment Advisors
“ All eyes are now on the budget, which could determine the trajectory of growth as well as the direction of interest rates, given the borrowing programme that will be announced tomorrow. Key to watch will be the gross borrowing numbers, which we estimate should be Rs 16 lakh crore.”
The participation of women in the labour force in India is underrepresented because of measurement issues, according to the Economic Survey 2023, calling for an improved quantification of “work” through redesigned surveys.
Adding the correct proportion of women in the official labour force participation rate (LFPR) results in an augmented female LFPR of 46.2 percent, which is much higher than the 32.5 percent estimated by the conventional definition.
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Green hydrogen will be crucial for India's economic development, energy security and achieving decarbonisation of harder to abate sectors, according to the Economic Survey 2022-23 released on January 31.
"From the emerging global momentum on green hydrogen, India can situate this decarbonisation opportunity not just within the context of a low-carbon economy but also as an enabler of energy security and economic development for the nation," it stated.
The Economic Survey 2023 showed that the mostly micro, small, and medium enterprises that availed of an emergency credit scheme repaid a large part of what they owed.
A report from credit information company CIBIL showed that the scheme supported MSMEs facing the COVID shock, with 83 percent of borrowers being micro-enterprises. Among the micro units, half had an overall exposure of less than Rs 10 lakh.
Investments of Rs 47,500 crore were seen under the Production Linked Incentive (PLI) schemes in FY22, which is 106 percent of the designated target for the year. Production/sales worth Rs 3.85 lakh crore and employment generation of 3 lakh have been recorded due to PLI schemes, said the Economic Survey 2023.
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