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Informist, Monday, Jul 22, 2024

 

--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 growth inclusive with fall in unemployment
--India growth inclusive, labour force participation rose
--India emerging as hub for Global Capability Centres
--Cheaper imports can affect pvt capital formation
--India graduated from being low-income to low-middle income
--Viksit Bharat 2047 opportunity for strong public finances
--Viksit Bharat opportunity for robust financial services sector
--Rural demand revival to be supported by normal rains

--Farm sector performance to improve on normal rains 

--Must ensure pvt sector capital formation grows organically

--India to become 3rd largest economy by 2030

--Econ adviser: FY24 GDP momentum continued Apr-Jun, indicators show 

--Econ adviser: Agri sector expected to perform better in coming yrs 

--Econ adviser:Projecting 6.5-7.0% growth but expect positive surprise 

 

NEW DELHI - The Economic Survey for 2023-24 (Apr-Mar) has projected India's real GDP growth at 6.5-7.0% for the current financial year, against 8.2% growth last year. The survey's projection is lower than the Reserve Bank of India's GDP growth forecast of 7.2% for the current year. 

 

"The Survey conservatively projects a real GDP growth of 6.5–7%, with risks evenly balanced, cognizant of the fact that the market expectations are on the higher side," the survey, tabled today in Parliament by Finance Minister Nirmala Sitharaman, said.

 

At a post survey press conference, V. Anantha Nageswaran, chief economic adviser to the government, today said that he expects a positive surprise on the growth projection made in the survey. The growth momentum seen in 2023-24 continued in the first quarter of the current year, Nageswaran said, citing high frequency economic indicators. 

 

The Indian economy is "on a strong wicket and stable footing", and is demonstrating resilience despite uncertain global economic performance and in the face of geopolitical challenges, the document said. India's growth has been inclusive as it reduced unemployment and multi-dimensional poverty, and also increased labour force participation, it said.

The economic outlook for the current year is optimistic, and growth is likely to be broad-based and inclusive, the survey said.

 

GDP growth in recent years has been led by government-led push on capital expenditure, while private sector capital spending has lagged behind. "It is important to note that while it remains the government's responsibility to facilitate the development of infrastructure and address logistical challenges, it is incumbent upon the private sector to take forward the momentum in capital formation on its own and in partnership with the government."

According to the survey, while private capital formation has seen good growth in the last three years, the sector may turn "slightly more cautious" because of fears of cheaper imports from countries that have excess capacity. However, improved balance sheets of the banking and the financial sector will help the private sector meet the strong financing needs of investment demand, the survey said. 

 

While growth was robust in 2023-24 thanks to strong investment growth, the agricultural sector and consumption demand, particularly in rural areas, remained tepid.   

 

Both farm sector performance, and a revival in rural demand is likely to improve on the projection of normal monsoon rains, and the satisfactory spread of monsoon so far, the survey said. Nageswaran said that the farm sector is expected to perform better in coming years.  

 

MEDIUM-TERM OUTLOOK

India is on course to become the world's third-largest economy by 2030, and aims to become a developed economy by 2047. "India has graduated from being a low-income country to a low-middle-income country. As it journeys further towards middle and upper-middle-income status, aspirations of the people keep rising," the survey said.

 

India has to maintain its economic growth rate over 25 years and do it sustainably, keeping the environment and climate in mind. For this, India needs to adopt next-generation reforms that are bottom-up in nature to yield strong, sustainable, balanced and inclusive growth, the survey said. Policies should be crafted in such a way that they do not address issues narrowly or incompletely while rendering problems in other areas more intractable.

 

For the medium-term, the government should form a strategy which ensures that capital formation in the private sector "grows organically and steadily, delivering endogenous growth in jobs and a fair share of income for workers", the survey said.

 

"It is worth reiterating that job creation happens mainly in the private sector. Second, many of the issues that influence economic growth, job creation and productivity and the actions to be taken therein are in the domain of state governments," the survey said. "So, in other words, India needs a tripartite compact, more than ever before, to deliver on the higher and rising aspirations of Indians and complete the journey to Viksit Bharat by 2047."

 

India has to generate domestic resources mostly for its own investment and growth priorities in the medium-term as geopolitical tensions and economic fragmentation impose a ceiling on the external deficit and, consequently, external financing, the survey said.

 

The country will also have to increase financial resources for national security and 

resources must rise without compromising on economic growth, the survey said.

 

The vision of Viksit Bharat by 2047 is an opportunity for a prosperous society, robust financial services sector, strong public finances, and economic sovereignty.  End

 

Reported by Shubham Rana

Edited by Vandana Hingorani

 

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