Spectrum Books - Economic Review 2023

Economic Review 2023–24

Ahead of the interim budget (2024-25) speech, the Department of Economic Affairs released, in January 2024, a comprehensive report showcasing the government’s achievements over the past decade from 2014 until 2024, witnessing significant development across various sectors in India. The review also highlights significant transition and challenges from the 1950s until 2014. This review, published just two days before the budget address, highlights India’s economic trajectory amidst global challenges, with its gross domestic product (GDP) poised to exceed 7.2 per cent in FY24.

Noteworthy achievements include India’s ascent as the world’s third-largest fintech economy and fourth in global stock markets, driven by sustained initial public offerings (IPO) activity and investor interest. Initiatives like the Pradhan Mantri Jan Dhan Yojana (PMJDY) and Skill India Mission have fostered financial inclusion and increased female participation in the workforce and higher education. Supportive measures for micro, small, and medium enterprises (MSMEs) and the implementation of the goods and services tax (GST) have bolstered economic efficiency, signalling India’s resilience and have set the stage for informed policy discussions in the upcoming budget session. Here are insights into different aspects of the Indian economy, ranging from GDP growth forecasts to challenges and policy responses.

The Hindu in its report, Finance Ministry says economy likely to grow closer to 7% in 2024–25, published on January 29, 2024, discusses the economic review report released ahead of the Interim Union Budget, forecasts India’s real GDP growth to be around 7 per cent in 2024–25, with potential to surpass 7 per cent by 2030. The report envisions India becoming the world’s third-largest economy, reaching US$ 5 trillion in the next three years. Chief Economic Advisor V. Anantha Nageswaran emphasises the quality of growth over mere numbers, highlighting the significance of sustained growth amid global economic challenges.

The report examines India’s economic journey, dividing it into two phases: pre-2014 and the “Decade of transformative growth” from 2014 to 2024. It acknowledges challenges faced during the initial years of Prime Minister Narendra Modi’s tenure, including sub-5 per cent GDP growth, high food inflation, and structural constraints. However, it highlights subsequent structural reforms that strengthened macroeconomic fundamentals, leading India to become the fastest-growing economy among G20 nations.

Key reforms such as the GST and the Insolvency and Bankruptcy Code are noted, with a brief mention of demonetisation. The report emphasises the resilience of domestic consumption, contributing to sustained growth despite global uncertainties. It also underscores the government’s welfare initiatives aimed at expanding the middle class and enhancing overall consumption. However, it cautions against over-reliance on exports for growth, citing evolving global production dynamics and supply chain vulnerabilities.

Money Control’s article, No Econ Survey, but Fin Min’s review report says FY25 GDP growth may be close to 7%, written by Siddharth Upasani, published on January 29, 2024, discusses a report on economic review by the Finance Ministry, released just before the presentation of the interim Budget for 2024–25, predicting a GDP growth rate close to 7 per cent for the following year. It attributes this growth to robust domestic demand, fuelled by government reforms over the past decade, particularly in infrastructure and manufacturing. The report forecasts that India’s GDP growth could exceed 7 per cent by 2030 due to ongoing infrastructure development, improved institutional efficiency, and technological progress. Despite global economic challenges, the Indian economy has maintained a growth rate of over 7 per cent between 2014 and 2019, indicating potential for sustained growth in the future. The report identifies areas for future reform, such as skilling, healthcare, energy security, and reducing compliance burdens for small businesses. It also outlines a vision for India to become a US$ 7 trillion economy by 2030, aiming to fulfil the aspirations of its people for a higher quality of life.

Money Control in its report, Five key charts from Fin Min’s ‘not-an-Economic Survey’ report, published on January 29, 2024, discusses that the Finance Ministry released a report titled ‘The Indian Economy: A Review’ shortly before the presentation of the Union Budget for 2024-25. Authored by officials from the office of Chief Economic Adviser V. Anantha Nageswaran, the report serves as a pre-budget document but is distinct from the traditional Economic Survey. It highlights several key aspects of the Indian economy:

Investments The report indicates a potential increase in investments, particularly from the private sector, driven by stronger balance sheets of banks and companies.
Housing sector Housing prices have begun to recover post-pandemic, with average annual growth in real estate prices showing an uptick, suggesting optimism about future prospects.
Women in the workforce Initiatives to increase female participation in the labour force are yielding results, with improvements seen in the female labour force participation rate, sex ratio at birth, and maternal mortality rates.
Macroeconomic vulnerability Despite ongoing reforms, maintaining macroeconomic stability is crucial. The government is committed to an institutional architecture that fosters resilience, as evidenced by the construction of a macro-vulnerability index.
External strength India’s external position is considered a key strength, with manageable external debt and prudent management over time, particularly in terms of serviceability and the composition of short-term debt.

Overall, the report provides insights into various facets of the Indian economy, highlighting both strengths and areas for further attention.

CNBC TV18 in its report, Ten highlights from the government’s economic review, published on January 29, 2024, mentions that the Department of Economic Affairs issued a report outlining the government’s achievements over the past decade, serving as a substitute for the annual economic survey typically presented by the finance minister before the Union Budget. This decision was made due to 2024 being an election year, according to Chief Economic Advisor V. Anantha Nageswaran. Despite global economic challenges, India’s GDP is expected to grow faster than 7.2 per cent in FY24, marking the third consecutive year of growth over 7 per cent. Key achievements highlighted include increased public sector investment, a robust financial sector, and strong non-food credit growth. India ranks third globally in fintech and fourth in the stock market, overtaking Hong Kong. Initiatives like the PM Jan Dhan Yojana have boosted women’s bank account ownership, while programs like Skill India Mission have increased female labour force participation and enrolment in higher education. Supportive measures for MSMEs, along with the implementation of GST, have improved economic efficiency and reduced logistics costs.

The Hindustan Times in its article, Why Economic Survey won’t be presented on January 31 this year, written by Vaishnawi Sinha, published on January 30, 2024, discusses the unusual delay in presenting the Economic Survey, usually scheduled a day before the Union Budget, due to the interim nature of Budget 2024. This interim budget, to be presented by Finance Minister Nirmala Sitharaman on February 1, precedes the Lok Sabha elections in April-May. Consequently, major policy changes would not be announced in this interim budget session. Instead, a comprehensive budget and the Economic Survey are slated for presentation in July, post-elections.

The Business Today in its report, Interim Budget 2024: 5 challenges for Indian economy listed in mini economic survey, published on January 30, 2024, discusses the economic outlook for India, particularly focusing on the upcoming fiscal year 2024-25 and the challenges ahead. V. Anantha Nageswaran, Chief Economic Adviser, forecasts a growth rate close to 7 per cent for FY25, marking the fourth year of post-pandemic growth at or above 7 per cent if realised. The report suggests India’s potential to become a US$ 7 trillion economy by 2030.

Key challenges highlighted in the report include:

Global economic integration India’s growth is influenced not only by domestic factors but also by global developments. Increased geo-economic fragmentation and shifts in global trade patterns may impact India’s growth trajectory.
Climate action and development The report emphasises the need for development to build resilience and facilitate effective climate action. Balancing development goals with emissions mitigation is crucial for sustainable growth.
Impact of Artificial Intelligence (AI) AI presents challenges to employment, particularly in service sectors. Developing economies need to invest in infrastructure and digital skills to harness AI’s potential while addressing displacement risks.
Workforce development Ensuring a skilled and healthy workforce is vital for economic productivity. The report highlights the importance of age-appropriate learning outcomes and a fit population for future policy priorities.
Export challenges Geopolitical tensions, such as events in the Red Sea, pose obstacles to exporting for India. Lowering logistics costs and improving product quality are crucial for maintaining and expanding market share amid geopolitical uncertainties.

Overall, the report underscores the importance of addressing these challenges to sustain India’s economic growth and competitiveness in the global landscape.

The Hindu in its report, Economic encomium: On the Finance Ministry’s 10-year review of the economy, published on January 31, 2024, discusses the Finance Ministry’s 10-year review of the Indian economy, which serves as a precursor to the interim budget for 2024–25. It highlights projections that India’s GDP will grow close to 7 per cent in 2024–25 and could surpass 7 per cent by 2030. The review outlines two phases of India’s growth: pre-2014, characterised by challenges such as slow decision-making and high inflation, and post-2014, marked by reforms leading to healthy economic growth. It argues that India’s current 7 per cent growth, amidst a global growth rate of 2 per cent, is superior to the 8–9 per cent growth during periods of global growth at 4 per cent. However, it emphasizes the need for faster growth to address unemployment and ensure equitable prosperity, particularly for the youth. The review calls for broader-based consumption growth to drive private investment and mentions priorities such as reforms in education, healthcare, and compliance for smaller firms. It also suggests addressing flaws in reforms like GST and reconsidering certain policy tools to maintain India’s image as an open market with predictable policies.

The mint in its report, India’s new economic review is just a feel-good document, published on January 31, 2024, discusses the common practice of governments crafting interim budgets in election years with a focus on political gains. It highlights India’s finance ministry introducing a new document called “The Indian Economy: A Review” just before the interim budget, inviting comparisons with the annual Economic Survey. The review serves as a platform to praise the current government’s economic management while downplaying chronic economic issues. It suggests that the document could be seen as a pre-election tool, aimed at appealing to the ruling party’s middle-class support base and potentially influencing the party’s manifesto.

Indian Express in its article, GDP to grow 7%-plus, touch $5 tn in 3 years: MoF says in review, by Aanchal Magazine, published on January 31, 2024, reveals that the Ministry of Finance released a report titled “The Indian Economy—A Review,” projecting a growth rate of over 7 per cent for the Indian economy in the coming years. Chief Economic Adviser V. Anantha Nageswaran highlighted the potential for India to become the world’s third-largest economy, reaching a GDP of USD 5 trillion within the next three years, driven by domestic demand and supply-side measures such as infrastructure investment and manufacturing initiatives. Nageswaran emphasised the resilience and potential of the Indian economy, anticipating the fourth consecutive year of post-pandemic growth at or above 7 per cent for FY25.

Despite optimistic growth prospects, Nageswaran acknowledged geopolitical conflicts as a potential risk factor, impacting global economic recovery and trade flows. He identified three key trends for the future: the end of hyper-globalisation in global manufacturing, the rise of artificial intelligence (AI), and the challenge of transitioning to greener energy sources.

Nageswaran praised the policies implemented over the last decade, which positioned the Indian economy to address these challenges effectively. Infrastructure development has seen significant growth, with substantial investments made in physical and digital infrastructure. The financial sector remains robust, with healthy balance sheets and strong lending activity.

Additionally, Nageswaran highlighted the financial health of Indian households, citing the success of initiatives such as the Jan Dhan Yojana in promoting financial inclusion. He credited effective COVID-19 management and vaccination efforts for the economy’s quick recovery, along with prudent management of crude oil supply.

Looking ahead, Nageswaran emphasised rising aspirations among young Indians and expressed confidence in India’s ability to achieve sustained economic growth. He underscored the importance of self-belief and positive expectations in driving significant societal changes, signalling a positive outlook for India’s future economic trajectory.

The India Brand Equity Foundation in its report, Indian Economy—A Review: Key Takeaways, published on February 1, 2024, discusses the release of a report titled ‘Indian Economy–A Review’ by the office of the Chief Economic Advisor (CEA) V. Anantha Nageswaran, in lieu of the traditional Economic Survey, due to upcoming elections. It covers India’s economic trajectory from 1950 to 2014, highlighting shifts in economic policies and the 1991 Balance-of-Payments Crisis as a pivotal moment. The decade from 2014 to 2024 saw significant structural reforms, positioning India as the fastest-growing economy among G20 nations. The report outlines key reforms, challenges, and driving factors of India’s economy, emphasising the need to address geopolitical changes, energy security, AI-driven employment risks, and workforce development. It also discusses the stability of the macroeconomic environment, robustness of the external sector, and the government’s focus on enhancing social infrastructure. Despite challenges, the report anticipates continued robust growth supported by macroeconomic stability and ongoing reforms.

Kotak Securities in its report ‘Decoding India’s Mini Economic Survey 2024’ published on February 2, 2024 discusses the unique circumstances surrounding the release of the Indian Economic Survey for 2024, titled “Indian Economy—A Review,” ahead of the interim budget announcement. This abbreviated report outlines India’s economic journey over the past decade and offers insights into future prospects.

Some key points include:

Decade of resilience Despite initial challenges in 2014, India has demonstrated remarkable economic growth and resilience over the past decade, driven by strategic reforms and policies.
Key drivers of growth Structural reforms such as GST and IBC, digital revolution, infrastructure development, financial sector revitalization, and inclusive development policies have contributed to India’s economic progress.
Global economic outlook India is projected to achieve a growth rate of 7 per cent or higher for FY24, with predictions of sustained growth in FY25, marking four consecutive years of robust post-pandemic growth. The global economy faces challenges like supply chain disruptions and AI impact, but India is navigating them effectively.
Challenges ahead The report identifies challenges including AI’s threat to the services sector, the trade-off between energy security and economic growth, and the need for a skilled workforce.

The report expresses confidence in India’s future economic prospects, highlighting the nation’s commitment to reforms, infrastructure development, and inclusive growth. Despite global challenges like the pandemic and geopolitical tensions, India has shown resilience and positioned itself as a global economic powerhouse. Overall, the past decade showcases India’s economic resilience and potential, setting the stage for sustained growth and development in the coming years.