Highlights of the Economic Survey

31 Jan 2023 , 03:15 PM

GDP Growth

FY24 real GDP growth is seen at 6-6.8%. This is below the FY23 estimated GDP growth and is partly a function of reduced exports following global slowdown. Improving domestic demand, pick up in capital expenditure are likely to aid economic growth.

	FY23 GDP growth forecast
Reserve Bank of India	6.8%
World Bank	6.9%

India’s GDP growth stood at 8.7% in FY22, boosted by the pandemic-induced low base of FY21. Annual nominal GDP growth to be around 10%-12% on average in the coming years.

Inflation

• In November 2022, retail inflation came within RBI’s target range of 2-6%
• The RBI’s anchoring of inflationary expectations through forward guidance and responsive monetary policy has helped guide the trajectory of inflation in the country
• Inflation will continue to be sticky and authorities will remain vigilant and proactive in the inflation fight

Climate action

• The availability of adequate and affordable finance remains a constraint in India’s climate actions
• India has already achieved its target of 40% installed electric capacity from non-fossil fuels ahead of 2030
• India has advanced the target to 50%, which shall also translate to a significant reduction in the average emission rate.
• The National Hydrogen Mission and Green Hydrogen Policy have been introduced to enable India to be energy independent by 2047. Its pivotal role is also reflected in India’s Long Term Low Emissions Development Strategy (LT-LEDS).

FDI inflows

• Amid global uncertainty in the wake of the Russia-Ukraine conflict, FDI equity inflow in manufacturing in the first half of FY23 fell below its corresponding level in the first half of FY22
• The monetary tightening at the global level has further restricted the FDI equity inflows
• A rebound in FDI inflows is, however, expected as the Indian economy sustains its high growth while monetary tightening the world over eventually eases with the weakening of inflationary pressures
• Annual FDI equity inflows in the manufacturing sector have been steadily increasing over the last few years. It jumped from US$ 12.1 billion in FY21 to US$ 21.3 billion in FY22 as the pandemic-driven expansionary policies of advanced economies led to a surge in global liquidity.
• FDI inflows have stayed above the pre-pandemic levels, driven by structural reforms and measures improving the ease of doing business
• Government has implemented an investor-friendly FDI policy under which FDI up to 100% is permitted through automatic route in most sectors

Insurance sector

• Life insurance penetration has gone up to 4.2% in 2021 almost similar to what it was a year before that, but significantly higher than 2.7% growth registered in 2000
• In India, due to low awareness and mis-selling by a section of the insurance industry, most policyholders typically buy policies that return money back to policyholders at the end of their tenures

NBFCs

• Have shown improvement in overall health particularly in terms of asset quality and capital adequacy
• GNPA (Gross Non-Performing Assets) ratio of NBFCs has fallen from the peak of 7.2% recorded in June 2021 to 5.9% in September 2022, reaching close to the pre-pandemic level
• GNPA ratio of the services sector remains in double digits
• Capital position of NBFCs remains robust, with a CRAR of 27.4% in end-September 2022, slightly lower than 27.6% in March 2022
• RBI’s stress test to assess the resilience of the NBFC sector to credit risk shocks for a sample of 152 NBFCs reveals that the number of NBFCs that would fail to meet the minimum regulatory capital requirement of 15% stood at 8% under the baseline scenario. It increases to 10% and 13% under the medium and severe stress scenarios, respectively.
• Credit extended by NBFCs is picking up momentum, with the aggregate outstanding amount at Rs 31.5 lakh crore as of September 2022