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Informist, Monday, Jul 22, 2024

NEW DELHI – Following are the highlights of Economic Survey for 2023-24 (Apr-Mar), tabled in Parliament by Finance Minister Nirmala Sitharaman today:

MACROECONOMY

* India FY25 GDP growth seen 6.5-7.0%

* Risks to FY25 GDP growth evenly balanced

* FY25 growth view optimistic; see broad-based growth
* Market expectations of FY25 growth higher than projection

* Indian economy on strong wicket, stable footing

* India aspires to be a developed nation by 2047
* India showing resilience amid geopolitical challenges

* Need to sustain economic growth rate over quarter century

* Economic policies need to balance broad-based issues
* Must generate local resources for invest, growth priority
* Must raise fisc resources without compromising on growth

* India facing stiff challenges in growing its manufacturing base
* Need public policy to boost manufacturing competitiveness

* India needs to prioritise manufacturing sector
* See capital goods' positive demand on firm pvt capex
* Trade policies must weigh security issues with econ impact
* India growth inclusive with fall in unemployment
* India growth inclusive, labour force participation rose
* India emerging as hub for Global Capability Centres
* See demand for construction inputs on firm pvt capex
* Cheaper imports can affect pvt capital formation
* Govt's focus must turn to bottom-up reforms
* Must strengthen governance to implement structural reform

* Headline inflation largely under control

* Clarity on food prices can improve govt steps' efficacy
* Additional trade restrictions can push food prices higher

* Inflation rate of some specific food items is elevated

* See headwinds in terms of high input prices

* Short-term inflation outlook for India benign

* Shocks in commodity prices may impact India's trade gap
* Should expedite CPI revision
* Shocks in commodity prices may impact India inflation

* Must expedite PPI for better grasp of cost-push inflation

* Fall in commodity prices positive for inflation outlook

* World Bank sees 3% fall in commodity price index in 2024
* World Bank sees 4% fall in commodity price index in 2025

* Must balance inward-looking policies vs outward-looking
* India graduated from being low-income to low-middle income
* Must review regulatory gaps, benchmark with global norms
* Expect crisis due to climate change, global warming
* Integrating climate change policies more than imperative
* Viksit Bharat 2047 opportunity for strong public finances
* India has huge potential to become large agri exporter
* Viksit Bharat opportunity for robust financial services sector
* Rural demand revival to be supported by normal rains
* Need to update IIP for efficient policymaking
* Tax policies on capital, labour income may play key role
* Need to up demand for high-tech services in production
* Must ensure pvt sector capital formation grows organically
* Trade gap to fall more as output linked-sops increases
* Path to further industrialisation paved with deregulation
* Becoming global mfg base to lower India trade gap
* Need state-level variants of industry indices
* Labour market indicators have improved in last 6 years
* Unemployment rate declined to 3.2% in 2022-23

* Declining trend in unemployment rate since pandemic

* Urban unemployment rate fell to 6.7% Jan-Mar
* Urban unemployment rate was 6.8% in Jan-Mar 2023

* Need to create job avenues for labour force leaving agri
* Need to generate 7.85 mln jobs annually in non-farm sector

* Need regular source-wise data on infra investment
* Need regular source-wise data on infra investment
* Scope to enhance asset ownership among women

* Easing trade environment to aid India exports 2024, 2025
* India to become 3rd largest economy by 2030
* India's energy needs seen growing 1.5 times in 30 years
* Potential for National Pension System in rural areas
* Need states' support to facilitate private funding in infra
* Infra-related data gaps persist in some key areas
* Need to address infra-related data gaps in some areas
* Need index to track utilisation of infra facilities

* General govt debt-to-GDP ratio likely to start falling

* Need constant vigil on northwest, northeast borders

INDUSTRY

* Private sector needs to sustain invest momentum in econ

* See firm local demand in near term aiding industry growth

* Uncertain global demand a risk to industry output growth

* Need private sector to invest in research, development

* IT sector hiring unlikely to pick up significantly FY25

* Business, consultancy, ITeS exports can expand

* Better balance sheets to help cos cater to invest demand

* Corporate sector profitability at 15-year high in FY24

* Industry, academia collaboration to help meet skill gap

* Need data on industry-wise gross disbursement of bank loans
* Future invest must be via multiple routes beyond banking

* Need fast-paced move to online payments services, e-commerce
* Enhancing private sector investment in agriculture vital

* See IT, business services retain prominent global presence

* AI may restrain growth opportunities for business services 
* Application of AI may pose challenge to job creation

* Demand for more focussed skills in services sector jobs
* Services sector focus areas must include blockchain, AI

* Must move to data-based lending vs judgment-based lending

* Global commodity price concern pose risk to services demand

* Public, private financial firms must become customer-centric

* Dominance of banking support to credit being reduced

* Need to raise private participation in infra development

* India in mid of private capex upcycle
* Private capex upcycle aided by govt capital expenditure

EXTERNAL SECTOR

* See mini, major geopolitical conflicts in coming decades

* Geopolitical conflicts 2024 may lead to supply disruption

* Geopolitical tension 2024 may raise commodity prices
* Geopolitical row 2024 may stall monetary policy easing
* Geopolitical tension 2024 may revive price pressures

* Geopolitical tension 2024 may influence RBI policy stance
* Global trade outlook for 2024 remains positive
* Geopolitics puts ceiling on external deficit, financing
* Geopolitical fragmentation may hit India external sector
* Geopolitical conflicts to influence capital flows

* Global uncertainties pose risk to export demand

* Global uncertainties may pose risk to import costs

* Free trade pacts to better India exports' global mkt share

* Econ ties with China continue to be extremely complex

* May not be prudent to think we can take over China in mfg

* Geopolitical issues pose risks to India external sector

* Policy uncertainty poses risk to India external sector

* High protectionism may weigh on trade recovery going ahead

* Gloomy global growth risk for industrial commodities

* Trade policy changes by partners can affect India exports

* Global demand for India services sector exports here to stay

* Need to improve export competitiveness in many product areas

* Stronger regional trade ties to curb global demand shocks

* Growing exports to be tougher on geopolitical issues
* Growing exports to be tougher on protectionism

* Outlook for remittance in India for 2024 is strong
 

FINANCIAL SECTOR

* Outlook for India's financial sector appears bright
* India financial sector at turnpike moment
* Financial sector needs to support capital formation
* Financial sector needs to promote trade, invest in MSMEs
* Financial market value correction can affect household finances

* Financial market value correction can affect corporate valuation
* Financial market value correction can hit growth prospects

* Despite good rating, sovereign green bonds hardly got greenium

* Efficient corp bond market to aid with funding requirements

* India corp bond market lacks depth on limited investor base

* Despite geopolitical issues India share market has been stable

* Can explore improving market infra by incentivising states
* Financial intermediation costs must decline globally

* Role of capital markets is rising in extending credit

* Must brace for vulnerability from rising capital markets role

* Financial cos must be ready if govt intervenes in capital market

* GIFT IFSC banking ecosystem rapidly evolving

* See high flows on India gilts' JP Morgan index inclusion

* Gilts' JPMorgan index inclusion may up exposure to India
* Robust FX inflows may keep rupee within comfortable range

* Favourable trade gap may keep rupee in comfortable range

FARM SECTOR

* Farm sector performance to improve on normal rains
* Need to improve price discovery mechanism for agri products

* Must up crop diversification, cut disguised unemployment
* Agriculture sector remains critical for economic growth
* Agriculture sector grew at average 4.18% over last 5 years

* Need to up oilseed output to stabilise domestic prices

* Need to tap potential of animal husbandry, dairy sectors
* Also need to tap potential of fisheries sector

* Can examine expanding National Mission on Edible Oils

* Smallholder farmers must move to high-value agri segments
* More efforts needed to expand area under pulses
* Need to develop storage facilities for seasonal vegetables

* MSP has incentivised crop diversification
* MSP has a positive effect on retail prices of all crops
* MSP has stronger effect for crops such as paddy, wheat

* Focus on post-harvest infrastructure can reduce wastage
* Focus on food processing post-harvest can reduce wastage
* Pvt-public partnership key to funding green transition

* Need farmer-friendly policies to make agri a growth engine

* E-NAM, promoting FPOs in agri-sales can improve market infra

End

Compiled by Vinod Bhovad

Filed by Avishek Dutta

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