The highly anticipated Economic Survey for the Financial Year 2022-23 was presented by India’s Union Finance Minister, following the President’s address. This year’s survey highlights a full recovery of India’s economy from the pandemic, projecting growth in the range of 6%-6.8% for FY 2023-24.
About the Economic Survey
The Economic Survey is an annual document released by the Ministry of Finance. Its main purpose is to review and present an outlook of the Indian economy, covering key economic indicators such as gross domestic product (GDP), inflation, employment, and trade. The first Economic Survey was presented in 1950-51 and has been dissociated from the Union Budget since 1964.
State of Indian Economy in 2022-23: Highlights and Challenges
India’s economic performance in 2022-23 was largely influenced by the global pandemic. Despite the challenges, the country showcased remarkable resilience, particularly in its vaccination drive, which was the world’s second-largest involving over 2 billion doses. However, the economy also grapples with persistent challenges like a depreciating rupee risk and possibly widening current account deficit (CAD) due to high global commodity prices.
Outlook for 2023-24
The economic forecast for FY23 is significantly positive, with growth being led by private consumption and capital formation. Measures like the expansion of public digital platforms, PM GatiShakti, National Logistics Policy, and Production-Linked Incentive schemes are expected to fuel economic growth and manufacturing output.
Medium-Term Growth Prospects
The Indian economy is expected to grow at a better than pre-pandemic pace over the medium term. A comparison is drawn to the period of 1998-2002, where transformative reforms led to delayed growth returns initially, but eventually paid dividends in terms of growth.
Fiscal Developments Related to Revenue
The Union Government’s finances showed resilience during the fiscal year 2023. Factors such as the increase in direct taxes and Goods and Services Tax (GST) revenues played a major role in this. The government’s focus on Capex-led growth has kept the growth-interest rate differential positive, ensuring a sustainable debt-to-GDP ratio in the medium run.
Monetary Management and Financial Intermediation
The Reserve Bank of India (RBI) initiated its monetary tightening cycle in April 2022, leading to an improvement in the balance sheets of financial institutions and making lending easier. In FY22, the Gross Non-Performing Assets (GNPA) ratio of SCBs dropped to a seven-year low of 5.0.
Price Regulation and Inflation Control in 2022-23
Inflation peaked at 7.8% due to global conflicts and crop shortages caused by heat waves but was brought under control by prompt actions from the government and the RBI. A multi-pronged approach was adopted to control price increase, including reducing duties on certain commodities and implementing timely policy interventions in the housing sector.
Social Infrastructure and Employment Status in 2022-23
Government spending on the social sector increased significantly, aimed at strengthening education and healthcare. Policy initiatives like the National Education Policy 2020 and Ayushman Bharat Scheme have made considerable strides in improving educational enrolment and healthcare coverage respectively. The labour markets have also seen recovery from the effects of Covid-19, with falling unemployment rates.
India’s Economic Performance in Climate Change and Environment
India has made significant commitments towards mitigating climate change, including achieving ‘Net Zero’ emissions by 2070 and transitioning to renewable energy resources. Investments in renewables have stood at USD 78.1 billion over the past seven years, with the installed solar power capacity reaching 61.6 GW as of October 2022.
India’s Economic Performance in Agriculture and Food Management
India’s agricultural sector has witnessed robust annual growth, enabling it to contribute significantly towards the country’s overall development and food security. A series of government measures including crop diversification, augmentation of livestock productivity, and increasing agricultural credit have positively impacted the sector.
India’s Economic Performance in the Industrial Sector
A rise of 3.7% of overall Gross Value Added (GVA) by the Industrial Sector was noted for the first half of FY 22-23. India also emerged as the second-largest mobile phone manufacturer globally, and several Production Linked Incentive (PLI) schemes were introduced to plug India into global supply chains.
India’s Economic Performance in the Services Sector
The Services Sector is expected to grow at 9.1% in FY23, compared to 8.4% in FY22. Digital platforms are transforming India’s financial services, and the country’s e-commerce market is projected to grow at 18% annually through 2025.
India’s Economic Performance in the External Sector
India is grappling with global headwinds due to geopolitical developments. Nevertheless, India remains the largest recipient of remittances worldwide, receiving US$ 100 bn in 2022.
India’s Economic Performance in Digital Public Infrastructure
India’s Digital Public Infrastructure (DPI) can add around 60-100 basis points (BPS) to its potential GDP growth rate. The digital public infrastructure products like e-RUPI, e-Way Bill etc., have played a pivotal role in providing value for money to consumers while reducing the compliance burden for producers. The future platforms such as Open Network for Digital Commerce (ONDC), Open Credit Enablement Network (OCEN) will open avenues for e-commerce market access and credit availability for smaller businesses.
