Third successive year of 7+% growth: Economic Review

FinMin’s document says macroeconomic fundamentals stronger now

GN Bureau | January 29, 2024


#Economy   #Budget   #Finance Ministry   #growth  
(Illustration: Ashish Asthana)
(Illustration: Ashish Asthana)

FY24 marks the third successive year of 7% plus strong growth of the Indian economy even as the global economy struggles to grow at more than 3%, the finance ministry has said.

At this time of the year, the ministry tables the Economic Survey in the parliament, ahead of the annual Union Budget. This year, however, since general elections are slated to be held by May, there will only be a Vote on Account, also known as Interim Budget. There is no provision for an Economic Survey in these circumstances. Instead, the department of economic affairs of the ministry has come out with “The Indian Economy: A Review”.

V. Anantha Nageswaran, chief economic adviser, ministry of finance, writes in the preface: “This is not the Economic Survey of India prepared by the Department of Economic Affairs. That will come before the full budget after the general elections. This review takes stock of the state of the Indian economy and its journey in the last ten years and offers a brief sketch of the outlook for the economy in the coming years.”   

The 74-page document has two chapters; the first provides an overview of the past, present and future of the Indian economy, while the second takes a more detailed look at the government’s policies and progress on various parameters in different sectors.

Here are the “key highlights” of the review:
1. FY24 marks the third successive year of 7 per cent plus strong growth of the Indian economy even as the global economy struggles to grow at more than 3 per cent.

2. Exporting one's way to growth is no longer easy amid onshoring and friend-shoring of production, increasing vulnerabilities of global supply chains and the legacy of twin-global shocks.

3. India’s unwavering commitment to ensuring steady economic growth is generating resources for investment needed for climate change adaptation, building resilience, and mitigating emissions.

4. The public sector capital investment has surged in the last 10 years, the financial sector is healthy, and non-food credit growth is strong, enabling the Indian economy grow at a brisk rate.

5. Greater inclusive development, much lower unemployment rate, and moderate inflation, mark the journey from fragility to stability and strength during the last 10 years.

6. The government’s COVID management, mature stimulus measures and the monumentally successful vaccination launched the return of the economy to a high-growth path

7. The structural reforms implemented since 2014 have strengthened the macroeconomic fundamentals of the economy.

8. The reforms undertaken to strengthen the financial sector have helped clean up the balance sheets of banks and corporates and emboldened banks to resume lending to all sectors of the economy

9. The unification of the domestic markets brought in by the adoption of the GST has incentivised production on a larger scale, enhanced economic efficiency while reducing logistics costs.

10. Investment incentives and initiatives to ease business compliances and remove policy uncertainties have created an ecosystem for start-ups to nurture.

11. People of India are not only the beneficiaries of government programmes during the last 9 years but also the drivers of its economic success.

12. India embarks on her ‘Amrit Kaal’ with the confidence that challenges to growth and inclusive development are stepping stones and not obstacles.

13. The all-inclusive welfare approach of the government is expected to contribute to the enlargement of the consumption base through the expansion of the middle class.

14. Despite challenges posed by the global health crisis and variability in climate conditions, the agriculture sector has demonstrated remarkable tenacity and resilience.

15. India’s robust Digital Public Infrastructure has transformed the authentication ecosystem, reducing the cost of conducting e-KYC from ₹1000 to ₹5. It has also enabled online, paperless, and cashless digital access to various public and private services. 16. The proliferation of internet connectivity and smartphones in India, coupled with rapid urbanisation and the rising influence of the middle class, have propelled the e-commerce market, with ONDC opening global markets for even the smallest business.

16. The proliferation of internet connectivity and smartphones in India, coupled with rapid urbanisation and the rising influence of the middle class, have propelled the e-commerce market, with ONDC opening global markets for even the smallest business.

17. India is the third-largest fintech economy in the world after the USA and the UK.

18. The firms undergoing the IBC resolution process have witnessed a significant improvement in their performance in the post-resolution period.

19. India became the world’s fourth largest stock market in the world by market capitalisation, overtaking Hong Kong thanks to significant interest from domestic and global investors in the Indian stock market and sustained IPO activity has placed the Indian market fourth in the world by market capitalisation.

20. Over the last decade, the Indian concept of welfare has been significantly transformed into a more long-term-oriented, efficient, and empowering avatar.

21. The employment situation in India has experienced a positive transformation, with notable achievements in formalisation, skill development, entrepreneurship, and inclusive growth.

22. Despite low historical contribution to global carbon stock, India has adopted a comprehensive approach that addresses adaptation, resilience building and mitigation action as part of its contribution to the global response to climate change.

23. MSMEs are becoming increasingly vibrant and dynamic, with the supportive measures implemented by the government.

24. Reservations for women in panchayats have led to greater investment in public goods closely linked to women’s concerns, such as drinking water and public roads.

25. The PM Jan Dhan Yojana has increased the proportion of women having a bank account that they themselves use, from 53 per cent in 2015-16 to 78.6 per cent in 2019-21.

26. Female LFPR rose from 23.3 per cent in 2017-18 to 37 per cent in 2022-23, reflecting a tectonic shift towards women-led development in India.

27. Female participation has been encouraging in the wave of human capital formation through Skill India Mission and Start-up and Stand-Up India.

28. Female Gross Enrolment Ratio in senior secondary education more than doubled from 24.5 per cent in FY05 to 58.2 per cent in FY22, and the female GER in higher education quadrupled from 6.7 per cent in FY01 to 27.9 per cent in FY21.

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