The Indian economy showcases remarkable resilience and stability despite global geopolitical challenges, according to the Economic Survey 2023-24. Presenting the 476-page survey in the Indian Parliament on July 22, Finance Minister Nirmala Sitharaman highlighted the successful consolidation of India’s post-Covid recovery.
Role of Fiscal and Monetary Policies
The survey credits both fiscal and monetary policymakers for playing crucial roles in ensuring economic and financial stability. These efforts have contributed significantly to the continued economic expansion of the country. However, it warns that global market volatility means constant change for a nation with high growth aspirations.
Sustained Recovery and Domestic Efforts
The survey emphasizes the need for substantial efforts on the domestic front to sustain recovery. The challenging global environment has made it difficult to reach agreements on key issues such as trade, investment, and climate. Public investment has driven capital formation over the past several years, while the private sector began investing in FY22 after overcoming balance sheet issues. Now, the private sector must take over from the public sector to maintain investment momentum. Encouraging signs include robust economic growth rates of 9.7% and 7.0% in the previous two financial years leading up to FY24.
Inflation and Trade Deficit
The survey reports that the headline inflation rate remains largely under control, though some food items have seen elevated inflation rates. The trade deficit in FY24 was lower compared to FY23, and the current account deficit stands at approximately 0.7% of GDP. Additionally, the current account registered a surplus in the last quarter of the financial year, and foreign exchange reserves are deemed ample.
Strong Wicket and Stable Footing
The Economic Survey 2023-24 affirms that the Indian economy is on a “strong wicket and stable footing,” showing resilience in the face of geopolitical challenges. Policymakers have ensured economic and financial stability, consolidating the post-Covid recovery.
Heavy Lifting for Sustained Recovery
The survey reiterates the need for heavy lifting on the domestic front to sustain recovery, given the difficult environment for global agreements on trade, investment, and climate. The high economic growth in FY24 followed growth rates of 9.7% and 7.0% in the previous two financial years. The headline inflation rate is largely under control, though some specific food items have seen elevated inflation.
Trade and Current Account Deficit
The Economic Survey highlights that the trade deficit was lower in FY24 than in FY23, with the current account deficit for the year around 0.7% of GDP. It also notes that foreign exchange reserves are ample.
Public and Private Investment
Public investment has driven capital formation in recent years, and the private sector began investing again in FY22. Now, the private sector must sustain the investment momentum. The survey points out that non-financial private-sector capital formation, measured in current prices, expanded vigorously in FY22 and FY23 after a decline in FY21.
The Economic Survey 2023-24 presents a positive outlook for the Indian economy, emphasizing its resilience and stability despite global challenges. Continued efforts on the domestic front and a focus on investment are essential for sustaining recovery and achieving high growth aspirations. The encouraging signs in economic growth, controlled inflation, and robust trade and current account metrics underscore the strength of the Indian economy.
(With inputs from agencies)
