| What will you learn from this article? |
1. What is the Economic Survey?
2. What is the Economic Survey’s significance?
3. What are the key highlights of the Economic Survey 2023-24?
4. What are the main challenges highlighted in the Economic Survey and recommended solutions? |
Question 1: What is the Economic Survey?
The Economic Survey is a detailed report of the state of the national economy in the financial year that is coming to a close. It is prepared by the Economic Division of the Department of Economic Affairs (DEA) in the Union Finance Ministry, under the guidance of the Chief Economic Adviser. Once prepared, the Survey is approved by the Finance Minister.
The first Economic Survey was presented for 1950-51 and until 1964, it was presented along with the Budget.
Similarly, for the longest time, the survey was presented in just one volume, with specific chapters dedicated to different key sectors of the economy such as services, agriculture, and manufacturing, as well as key policy areas like fiscal developments, state of employment and inflation, etc. This volume carries a detailed statistical abstract as well. However, between 2010-11 and 2020-21, the survey was presented in two volumes. The additional volume carried the intellectual imprint of the CEA and often dealt with some of the major issues and debates facing the economy.
From 2022-23, the survey reverted to a single volume format, presumably because it was prepared and presented while there was a change in guard in the CEA’s office and the current CEA – V Anantha Nageswaran – took charge when the survey was released.
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Points to Ponder:
— What is the difference between the Union Budget and the Economic Survey?
— Is there any constitutional mandate concerning the economic survey?
Question 2: What is the Economic Survey’s significance?
The Economic Survey is the most authoritative and comprehensive analysis of the economy that is conducted from within the Union government. Its observations and details provide an official framework for analysing the Indian economy.
The survey is a crucial document as it highlights some key concerns or areas of focus—for example, in 2018, the survey presented by the then CEA Arvind Subramanian was pink in colour to stress gender equality.
Is the economic survey binding on the government?
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The government is not constitutionally bound to present the Economic Survey or to follow the recommendations that are made in it. If the government so chooses, it can reject all suggestions laid out in the document. But while the Centre is not obliged to present the survey at all, it is tabled because of the significance it holds.
Points to Ponder:
— How can understanding the economy help policymakers?
Question 3: What are the key highlights of the Economic Survey?
The Economic Survey 2023-24 has 13 chapters. The key highlights of the economic survey are:
1. Status of India’s economy
The Economic Survey 2023-24 conservatively projects a real GDP growth of 6.5 to 7 per cent. “The Indian economy is on a strong wicket and stable footing, demonstrating resilience in the face of geopolitical challenges,” the survey states. It adds that the headline inflation rate is “largely under control”, however, the “inflation rate of some specific food items is elevated”. India’s real GDP grew by 8.2 per cent in FY24.
The survey states that for recovery to be sustained, there has to be “heavy lifting on the domestic front” as the “environment has become extraordinarily difficult to reach agreements on key global issues such as trade, investment and climate”.
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| Key Areas of Policy Focus in the Short to Medium Term |
1. Job and skill creation
2. Tapping the full potential of the agriculture sector
3. Addressing MSME bottlenecks
4. Managing India’s green transition
5. Dealing with the Chinese challenge
6. Deepening the corporate bond market
7. Tackling inequality
8. Improving our young population’s quality of health. |
The survey also pointed out the RBI data on India’s balance of payments, which shows a slight decline in investment interest of external investors from FY23 to FY24.
According to the Economic Survey, 55% of the tax collected accrued from direct taxes and the remaining 45% from indirect taxes. The current account deficit for FY24 is around 0.7% of GDP.
2. Inflation
The survey highlights that the inflation rate was stable, reflecting effective monetary policy management. The dynamics of core inflation in the post-pandemic world, indicate that while overall inflation is managed, certain sectors may still face upward pressures.
Food inflation remains a concern, with variations across states. The survey emphasizes the need for targeted interventions to manage food prices effectively, and makes a case for changing the inflation targeting framework of the central bank by excluding food inflation.
3. Agriculture & MSMEs
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The survey highlights the potential for growth in agriculture, emphasizing the need for crop diversification and improved productivity through technological adoption.
The agriculture sector has been challenged by extreme weather events, depleted reservoirs, and crop damage, leading to impacts on farm output and food prices.
MSMEs are identified as crucial for economic growth, contributing significantly to employment and innovation. The survey points out the challenges they face, including access to finance and markets.
Various government initiatives aimed at supporting agriculture and MSMEs are discussed, including financial assistance and capacity-building programs.
4. Services and Infrastructure
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The services sector continues to be a major driver of economic growth, contributing significantly to GDP. The survey notes the need for improving service quality and efficiency.
The survey discusses the critical role of infrastructure in facilitating economic growth and highlights ongoing public investment initiatives to enhance infrastructure.
Key challenges include financing, project execution, and addressing bottlenecks in infrastructure development that need strategic solutions.
5. India and World Trade
India’s trade has stood tall amidst global turmoil, with a favorable current account balance, according to the survey. It indicates a reduction in the trade deficit compared to previous years.
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The survey discusses how geopolitical changes and global trade dynamics are affecting India’s trade strategies and emphasises the need for diversification of trade partners.
India has moved up six places in the World Bank’s Logistics Performance Index, from 44th in 2018 to 38th in 2023, out of 139 countries.
Indian exporters face challenges related to tariff and non-tariff barriers. The survey calls for enhancing competitiveness to navigate these challenges effectively.
India received a record $83 billion in remittances in 2023, making it the top recipient globally.
6. Employment and Skill Development
The Periodic Labour Force Survey indicates a surge in agricultural employment, attributed to reverse migration and increased female participation in the labor force.
The survey estimates that India will require significant job creation until 2036 to accommodate its growing workforce, emphasising the need for strategic planning in employment generation.
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