Economic Survey 2023: Key reactions from economists, policymakers & markets

FM Nirmala Sitharaman tabled the Economic Survey 2023 in the Parliament on January 31.

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. And the growth can expand to as high as 7 to 8 percent in the future. The fundamentals of the Indian economy are solid.

“However, in the short to medium term, the widening current account deficit for an extended period is a concern that could have an implication on growth and depreciation of the rupee. 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

“The Economic Survey has projected FY 2024 growth at 6-6.8 percent. This seems a tad stretched given the fact that there is a global slowdown, specifically in global exports. It also comes at a time when domestic demand is slowing down initially and we need to be fiscally prudent, especially after almost three years of fiscal breach (globally too) due to the pandemic phase.
“The survey also alludes to the fact that the tightening cycle may remain prolonged, which means higher interest rates for a longer period of time. 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.”

Nilesh Shah, MD, Kotak Mahindra Asset Management Company

“The Economic Survey presents a cautiously optimistic forecast. The survey correctly predicts that the pitch is becoming easy with the nascent recovery in global macros, lower energy prices/inflation and a revival in private sector investment in days to come. It also highlights an odd doosra ball, which needs to be managed in the form of balance of payments deficit and support to consumption at the bottom of the pyramid.

“India, from being a coach (follower) to global growth, has become the engine (leader) for global growth. The Economic Survey presents the direction of that journey. The speed of that journey will be determined by the execution on the ground.”

Vivek Rathi, director-research, Knight Frank India

“At 7 percent GDP growth in FY23 and 6-6.8 percent growth in FY24, India will continue to hold its fastest-growing large nation tag. This will create tailwinds for the Indian economy as global capital and technology find India a bright spot to participate in an otherwise weak global economic order. This will create employment opportunities and further strengthen the domestic demand base of the country.“Real estate, being a derived demand product and an economic multiplier, will certainly benefit from this improved economic outlook for the country. While housing demand remains strong, leading to reduced inventory levels, the resumption of construction activities has ensured sustained supply, thereby averting sharp price rise risk in the sector.”

Madhavi Arora, lead economist, Emkay Global Financial Services

“The Economic Survey depicts a positive picture about the economy ahead, hoping that the growth trajectory will be supported by multiple structural reforms taken over the years, and better economic health of corporates and bank balance sheets, helped by healthy public sector capex. The hope is that all of it should help in starting a new private sector capital formation cycle – signs of which are visible.

“However, the global risks of slowdown/recession, tighter financial conditions, external sector imbalances pose a risk. We think, despite recovery in domestic economic activity not yet broad-based, protracted global drags in the form of still-elevated prices, shrinking corporate profitability, demand-curbing monetary policies and diminishing global growth prospects weigh on output. This will put pressure on the domestic growth story, which still lacks the next lever of secular growth.”