Economic Survey 2023-24: India’s Resilient Growth Amid External Challenges

22 Jul 2024 , 03:20 PM

On Monday, July 22, Union Finance Minister Nirmala Sitharaman tabled the Economic Survey 2023-24 in Lok Sabha. The survey highlights India’s impressive economic performance and outlines key growth prospects for the upcoming fiscal year.

Key Highlights of Economic Survey 2023-24

1. Robust Economic Performance in FY24 India’s economy maintained strong momentum from FY23 into FY24, despite various external challenges. The country’s real GDP grew by 8.2% in FY24, surpassing the 8% mark in three out of four quarters. The focus on macroeconomic stability helped mitigate the impact of external challenges on India’s economy.
2. Growth in Capital Formation The government’s emphasis on capital expenditure (capex) and sustained private investment has significantly boosted capital formation. Gross Fixed Capital Formation (GFCF) increased by 9% in real terms in 2023-24, reflecting a healthy investment climate.
3. Optimistic GDP Growth Forecast The Economic Survey projects a real GDP growth rate of 6.5-7% for FY25. This forecast is higher than the previous survey’s prediction of 6-6.8% for FY24, indicating a positive outlook for the economy.
4. Corporate Sector Performance The survey highlights the remarkable financial performance of the corporate sector. Between FY20 and FY23, the profit before taxes of a sample of over 33,000 companies nearly quadrupled, showcasing robust profitability and resilience.
5. Increased Capital Expenditure on Railways Capital expenditure on Railways has jumped 77% over the last five years, reflecting the government’s commitment to enhancing infrastructure and connectivity.
6. Post-Pandemic Economic Recovery India’s economy has recovered and expanded significantly post-pandemic. The real GDP in FY24 was 20% higher than its level in FY20, a feat achieved by only a few major economies. Prospects for continued strong growth in FY25 and beyond look promising, subject to geopolitical, financial market, and climatic risks.
7. Impact of Artificial Intelligence The survey warns of the uncertainties posed by the advent of Artificial Intelligence (AI), which could impact workers across all skill levels. Addressing these challenges requires collaboration between union and state governments and the private sector.
8. Surge in Market Capitalisation The market capitalisation of the Indian stock market has seen a remarkable surge, with the market capitalisation to GDP ratio being the fifth largest in the world, indicating robust investor confidence.
9. Services Exports Growth India’s services exports grew by 4.9% to USD 341.1 billion in FY24, driven largely by IT/software services and other business services. This highlights the strength of the services sector in contributing to economic growth.
10. Increase in Remittances Remittances to India are projected to grow by 3.7% to USD 124 billion in 2024 and by 4% in 2025, reaching USD 129 billion. These inflows are crucial for the country’s foreign exchange reserves and economic stability.
11. Health and Nutrition The survey notes that 56.4% of the disease burden in India is due to unhealthy diets. It stresses the importance of transitioning towards a balanced and diverse diet to reap the demographic dividend.
12. Foreign Direct Investment (FDI) Inflows Increased FDI inflows from China are seen as a way to enhance India’s participation in the global supply chain and boost exports, contributing to economic growth.
13. Benign Inflation Outlook The short-term inflation outlook for India is benign, according to the survey, providing a stable environment for economic activities.