About Economic Survey

What is the Economic Survey?

The Economic Survey of India is an annual flagship document presented by the Ministry of Finance, usually a day before the Union Budget is announced. It provides a detailed account of the state of the Indian economy over the past year, along with insights into various macroeconomic trends, challenges, and future prospects.

Purpose of the Economic Survey:

1. Review of Economic Developments:
   • It provides a comprehensive overview of the economy’s performance in terms of GDP growth, inflation, employment, investment, trade, and fiscal deficit.
   • It assesses key sectors such as agriculture, industry, and services, highlighting their contribution to the economy.
2. Policy Guidance:
   • The Survey offers policy recommendations for the government, aiding in the formulation of strategies to tackle current economic challenges.
   • It addresses key socio-economic issues like poverty, unemployment, inequality, and the environment, giving guidance for reforms.
3. Data and Statistics:
   • It presents a wide array of economic data that helps economists, policymakers, students, and other stakeholders to understand the health of the Indian economy.
4. Reflection on Global and Domestic Context:
   • The Survey discusses the impact of global economic trends such as international trade, monetary policies of major economies, and geopolitical events on India’s economic landscape.
   • It also evaluates how domestic factors like government policies, natural calamities, or pandemics have influenced the economy.
5. Roadmap for Future:
   • The Economic Survey often suggests a medium- to long-term strategy for sustained economic growth, addressing critical challenges like climate change, infrastructure, education, and healthcare.
   • It projects future economic prospects, enabling the government to plan for the coming fiscal year and beyond.

Who Prepares the Economic Survey?

• It is prepared by the Department of Economic Affairs under the guidance of the Chief Economic Adviser (CEA). The CEA is typically an economist appointed by the government and plays a significant role in shaping the economic narrative of the country.

Structure of the Economic Survey:

The Survey is divided into two volumes:

1. Volume I:
   • This is more analytical and contains theoretical insights, policy analysis, and broader discussions on economic trends. It delves into policy challenges, suggests reforms, and often introduces new concepts for India’s development agenda.
2. Volume II:
   • This volume is data-driven and presents a statistical review of the economy. It includes an in-depth analysis of key sectors like agriculture, industry, services, and external sectors (trade and foreign exchange).

Key Concepts Highlighted in the Economic Survey:

• Fiscal Consolidation: Strategies for managing the government’s fiscal deficit.
• Monetary Policy: Insights into the RBI’s role in controlling inflation and promoting growth.
• Agricultural Reforms: Discusses improvements in productivity and measures like irrigation, credit, and market access for farmers.
• Climate Change and Sustainability: India’s efforts towards green growth and renewable energy.
• Digital Economy: Focus on UPI, e-commerce, and India’s digital transformation.

In summary, the Economic Survey serves as both a reflection of the past year’s economic journey and a forward-looking blueprint for future policies and reforms.

Economic Survey 2023-24:

1. State of the Economy – Steady as She Goes

• GDP Growth:
  • The real GDP growth for FY24 is projected between 6.5% and 7%, signaling steady economic momentum.
  • For comparison, the real GDP growth was 8.2% in FY23, indicating a strong post-pandemic recovery.
  • The current level of real GDP is 20% higher than the pre-pandemic level (FY20).
• Inflation:
  • Retail inflation decreased from 6.7% in FY23 to 5.4% in FY24, a significant improvement, highlighting the government’s success in managing inflation post-pandemic.
  • The RBI’s inflation target for FY25 is set at 4.5%, indicating that inflation control remains a priority.
• Current Account Deficit (CAD):
  • CAD is 0.7% of GDP, reflecting stable external trade despite global challenges. A lower CAD signals that India is managing its trade balance effectively.
• Tax Revenue:
  • The tax structure shows that 55% of total tax revenue comes from direct taxes and 45% from indirect taxes, ensuring a balanced approach to revenue generation.
  • The government’s food security program continues to provide free food grains to 81.4 crore people, a major welfare initiative ensuring that essential needs are met.

2. Monetary Management and Financial Intermediation – Stability is the Watchword

• RBI’s Monetary Policy:
  • The RBI maintained the repo rate at 6.5%, ensuring that the policy remains steady while balancing growth and inflation control.
  • Credit disbursal saw a strong growth of 20.2%, with double-digit bank credit growth, highlighting a robust financial system capable of supporting economic expansion.
• Non-Performing Assets (NPAs):
  • Both gross and net NPAs are at multi-year lows, indicating a healthier banking sector. This is important for sustainable growth and boosting investor confidence.
• Financial Inclusion:
  • The government’s target-based approach emphasizes digital public infrastructure. This includes expanding UPI, and digital banking services, especially to rural and underserved areas.

3. Prices and Inflation – Under Control

• Retail Inflation:
  • Retail inflation averaged 5.4% in FY24, the lowest since the pandemic. This drop was helped by price cuts in LPG, petrol, and diesel.
• Food Inflation:
  • Food inflation remained a concern, increasing to 7.5%, driven by supply-side constraints.
  • Government interventions, such as improving food grain distribution and increasing supply, helped mitigate further food price rises.
• State-level Inflation:
  • 29 out of 36 states recorded inflation below 6%, showcasing effective localized efforts to keep inflation under control.

4. External Sector – Stability Amid Plenty

• Logistics Performance Index:
  • India’s rank improved to 38th place in the World Bank’s Logistics Performance Index, reflecting better infrastructure and supply chain management.
• Services Exports:
  • Services exports increased by 4.9% to $341.1 billion, a testament to India’s growing strength in sectors like IT, consultancy, and financial services.
• Remittances:
  • India is the top recipient of remittances, receiving $120 billion, followed by Mexico, China, the Philippines, and Pakistan.
  • This underscores the importance of the Indian diaspora in supporting the domestic economy.
• External Debt:
  • India’s external debt to GDP ratio stood at 18.7%, indicating that external borrowing is within safe limits and manageable.

5. Medium-Term Outlook – A Growth Strategy for New India

• Private Investment:
  • There is a deliberate push to boost private investment in sectors like infrastructure, manufacturing, and services to drive economic growth.
• MSME Sector (Mittelstand):
  • The focus is on the growth and expansion of India’s Micro, Small, and Medium Enterprises (MSMEs), often referred to as the Mittelstand, which play a crucial role in job creation and innovation.
• Agriculture:
  • Agriculture is highlighted as an engine of future growth. This involves increasing productivity, adopting technology, and investing in agro-based industries.
• Education & Employment:
  • Emphasis on bridging the education-employment gap through skill development and creating job opportunities for the youth.

6. Climate Change and Energy Transition: Dealing with Trade-Offs

• Climate Alignment:
  • India is the only G20 country aligned with the 2°C warming target as per international climate commitments.
• Renewable Energy:
  • 45.4% of India’s energy comes from non-fossil sources, reflecting significant progress towards a cleaner energy mix.
• Green Bonds:
  • Sovereign green bonds worth ₹216,000 crore were issued, funding projects focused on reducing carbon emissions and promoting sustainability.
• Solar Power:
  • An additional 30 GW of solar capacity was added under the PM-Surya Ghar Yojana, promoting rooftop solar installations across India.

7. Social Sector – Benefits that Empower

• Ayushman Bharat:
  • Issued 34.7 crore health cards, saving over ₹1.25 lakh crore in out-of-pocket medical expenses for poor families.
• Poshan Bhi, Padhai Bhi:
  • A new initiative for preschool education that aims to address child malnutrition while promoting early childhood education.
• Higher Education:
  • There has been a marked rise in SC, ST, and OBC enrolment in higher education institutions, reflecting a positive shift toward inclusivity in education.
• Women Empowerment:
  • DAY-NRLM has reached over 89 million women through 83 lakh Self Help Groups (SHGs), contributing significantly to women’s socio-economic empowerment.

8. Employment and Skill Development: Towards Quality

• Unemployment Rate:
  • The overall unemployment rate has declined to 3.2%, and youth unemployment has reduced to 10%, signaling better job opportunities.
• Female Labour Force Participation:
  • There is a rising trend in female labor force participation, indicating progress toward achieving gender equality in the workforce.
• Gig Economy:
  • The gig workforce is expected to grow, providing flexible employment opportunities, especially for women and youth.
• Job Creation:
  • India needs to generate 78.5 lakh jobs annually in the non-formal sector until 2030 to harness its demographic dividend.

9. Agriculture and Food Management – Plenty of Upside Left

• Agriculture Growth:
  • Agriculture grew at 4.18%, showcasing its resilience and importance to India’s economy.
• Credit to Agriculture:
  • Agricultural credit disbursement reached ₹22.84 lakh crore, enhancing farmers’ access to funds for productivity improvement.
• Micro Irrigation:
  • 90 lakh hectares are now covered under micro-irrigation schemes, improving water efficiency and crop yields.
• Investment in Research:
  • Investment in agricultural research has shown high returns, leading to improved crop varieties and farming techniques.

10. Industry – Small and Medium Matters

• Industrial Growth:
  • The industry grew at 9.5%, with sectors like chemicals, pharmaceuticals, and machinery driving growth.
• PLI Scheme:
  • The Production Linked Incentive (PLI) scheme attracted ₹1.28 lakh crore, boosting domestic manufacturing and exports.
• Steel Production:
  • The steel sector reached its highest production levels in FY24, a critical contributor to the manufacturing ecosystem.

11. Services – Fuelling Growth Opportunities

• Services Sector Contribution:
  • The services sector now contributes 55% of India’s Gross Value Added (GVA).
• Pharmaceuticals:
  • India is the 3rd largest pharmaceutical market by volume. The domestic market is valued at $50 billion and has positioned India as the Pharmacy of the World.
• E-commerce:
  • E-commerce is projected to cross $350 billion by 2030, driven by increased internet penetration and digital transactions.

12. Infrastructure – Lifting Potential Growth

• National Highways:
  • The pace of National Highway construction has tripled to 34 km/day, enhancing connectivity across the country.
• Railways Investment:
  • Capital expenditure for Indian Railways increased by 77%, focusing on modernization and capacity expansion.
• Clean Energy Investments:
  • ₹8.5 lakh crore has been invested in the clean energy sector, boosting India’s efforts toward renewable energy production.

13. India’s Global Approach to Climate Change

• Traditional Knowledge Systems:
  • India advocates for adopting traditional wisdom in sustainability, promoting Mission LiFE (Lifestyle for Environment), which focuses on mindful consumption of resources.