The Economic Survey highlights released on July 22 has presented an optimistic picture of India’s macro-economic stability. Here are the key points:
Real GDP growth
In FY24, India’s real GDP grew by 8.2%, exceeding the 8% mark in three out of four quarters of FY24.
Bank and cooperate performance
Improved Bank and corporate balance sheets hold out promise for private investment. Upward trend in residential real estate market indicates household sector capital formation is rising significantly.
Strong services exports
On the export front, global demand for goods was muted, but strong services exports largely counterbalanced it. As a result, Current Account Deficit was at 0.7% of GDP in FY24 compared to 2.0% in FY23.
Strong capital markets
Primary capital markets facilitated capital formation of ₹10.9 lakh crore in FY24, which is about 29% of gross fixed capital formation of private and public companies in FY23.
Bank credit
Double-digit and broad-based growth in bank credit, gross and net non-performing assets at multi-year lows and improvement in bank asset quality were the key areas of a healthy banking sector.
Employment gains since pandemic
India’s annual unemployment rate declining since the COVID-19 pandemic, with rising labour force participation and worker-to-population ratios.
Urban unemployment rate for ages 15+ dropped to 6.7% in March 2024 from 6.8% the previous year.
Youth unemployment decline
The youth unemployment rate fell from 17.8% in 2017-18 to 10% in 2022-23, with increasing formal employment among youth.
India’s workforce is estimated at 56.5 crore in 2022-23: 45% in agriculture, 11.4% in manufacturing, 28.9% in services, and 13% in construction.
Energy prices down
Sharp decline in global energy price index observed in FY24. The government announced price cuts for LPG, petrol, and diesel, which brought down core inflation.
Inflation management deft
Inflation management has been deft. After averaging 6.7% in FY23, retail inflation declined to 5.4% in FY24. Core services inflation fell to a nine-year low in FY24. Core goods inflation also declined to a four-year low.
Food inflation a scourge
Food inflation has been a global concern for two years. In the country, the agriculture sector faced challenges due to extreme weather events, depleted reservoirs, and crop damage, which impacted farm output and food prices. As a result, food inflation were at 6.6% in FY23 and 7.5% FY24.
The RBI projects inflation to fall to 4.5% in FY25 and 4.1% in FY26, assuming normal monsoon and no external or policy shocks.
Improvement in logistics
India’s rank in the World Bank’s Logistics Performance Index improved by six places, from 44 in 2018 to 38 in 2023, out of 139 countries.
India is adding more export destinations, signalling regional diversification of exports.
Six-point strategy for growth
The growth strategy for Amrit Kaal will take place in six key areas. First, a deliberate focus on boosting private investment. Second, growth and expansion of India’s MSMEs is a strategic priority. Third, agriculture would be boosted as an engine of future growth. Fourth, securing financing of green energy transition in India. Fifth, the education-employment gap must be bridged. Sixth, focused building of state capacity and capability is needed.
Towards a green future
As of 31 May 2024, share of non-fossil sources in India’s installed electricity generation capacity has reached 45.4%. Emission intensity of its GDP went down from 2005 levels by 33% in 2019.
The Economic Survey quotes RBI to express the hope that inflation rates would come down in next two years. It has also outlined six key areas where the government would focus on booting growth. Economy Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
