On Tuesday, India projected that its economy will expand between 6% to 6.8% in financial year 24, a decrease from the 7% growth expected in the current year, as a worldwide economic slowdown is predicted to negatively impact exports. The government’s Economic Survey report for 2023 stated a growth estimate of 6.5% for 2023-2024, with an expected nominal growth of 11% that takes inflation into consideration.
The Economic Survey, presented by Finance Minister Nirmala Sitharaman in parliament prior to the annual budget announcement on Wednesday, provides a comprehensive review of the previous year’s economic performance.
Here are the key points from the Economic Survey 2022-23, presented in Parliament on Tuesday:
- The Indian economy is expected to grow by 6.5% in 2023-2024, compared to 7% this fiscal year and 8.7% in 2021-2022.
- The nominal GDP is expected to be 11% in the next fiscal year.
- The growth will be driven by private consumption, higher capital expenditures, stronger corporate balance sheets, credit growth to small businesses, and the return of migrant workers to cities.
- India is the third-largest economy in terms of purchasing power parity and the fifth-largest based on exchange rates.
- The economy has nearly recovered what was lost, renewed what had paused, and reenergized what had slowed during the pandemic and conflict in Europe.
- The real GDP growth is expected to be in the range of 6-6.8% next fiscal year, depending on global economic and political developments.
- India’s relatively quick recovery from the pandemic and solid domestic demand will support growth in the next fiscal year, along with a pickup in capital investment.
- The RBI’s projection of 6.8% inflation this fiscal year is outside the upper target limit but not high enough to deter private consumption or too low to weaken investment incentives.
- Borrowing costs may remain elevated for a longer period, and entrenched inflation may prolong the tightening cycle.
- The challenge of rupee depreciation persists with the likelihood of further interest rate hikes by the US Federal Reserve.
- The trade deficit may continue to widen due to elevated global commodity prices and strong economic growth momentum.
- If the trade deficit widens further, the rupee may come under depreciation pressure.
- The overall external situation is expected to remain manageable.
- India has enough foreign exchange reserves to cover its current account deficit and control currency fluctuations.
- Global economic outlook is facing significant downside risks due to persistent inflation in advanced economies and potential interest rate hikes by central banks.
- Despite inflation being above the tolerance range, it is not as high as in several developed countries.
- Export growth slowed in the second half of the current fiscal year due to a reduction in world growth and trade.
- Government programs like PM KISAN and PM Garib Kalyan Yojana helped alleviate poverty.
- The growth of the economy will be driven by disbursed credit, capital investments, expansion of digital platforms, and initiatives such as PLI, National Logistics Policy, and PM Gati Shakti.
- Bank credit is expected to increase in the next fiscal year due to moderate inflation and credit cost.
- Credit growth to small businesses has been strong at over 30.5% from January to November 2022.
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