Indian economy on a strong wicket & stable footing, demonstrating resilience amidst geopolitical challenges: Economic Survey

Economic Survey FY24 News: Finance Minister Nirmala Sitharaman on Monday tabled the Economic Survey for the financial year ended March 2024. Prepared by a team of economists led by the govenrment's Chief Economic Advisor V Anantha Nageswaran, the Economic Survey stated that the economy continues to expand while timely intervention by the central government as well as the RBI has helped contain retail inflation in the country at 5.4 per cent. "The Indian economy is on a strong wicket and stable footing, demonstrating resilience in the face of geopolitical challenges," stated the Economic Survey for FY24. It "has consolidated its post-COVID recovery with policymakers -- fiscal and monetary -- ensuring economic and financial stability. Nonetheless, change is the only constant for a country with high growth aspirations," according to the Survey.

Prime Minister Narendra Modi took to microblogging site X (formerly Twitter) to say that the Economic Survey highlights the prevailing strengths of the economy and showcases the outcomes of the various reforms his government has brought. "It also identifies areas for further growth and progress as we move towards building a 'Viksit Bharat'," he added.

The Economic Survey highlights the prevailing strengths of our economy and also showcases the outcomes of the various reforms our Government has brought.

It also identifies areas for further growth and progress as we move towards building a Viksit Bharat.…

— Narendra Modi (@narendramodi) July 22, 2024

Here are key takeaways from the crucial annual document, which provides a detailed analysis of the economic performance in FY24: 

• Sustained economic growth: The GDP is estimated to have grown 8.2 per cent in real terms in the financial year 2023-24. For the current financial year, which ends on March 31, 2025, the Survey pegs the GDP growth rate at 6.5-7 per cent. 
• Financial sector outlook bright: The outlook for the country's financial sector appears to be bright, but it needs to brace for likely vulnerabilities. The financial sector is at a "turnpike moment" and the dominance of banking support to credit is being reduced while the role of capital markets is rising. "Being reliant on and exposed to the capital market, however, comes with its challenges and trade-offs," the Survey mentions.

• Capital markets becoming more prominent in India growth story: Despite heightened geopolitical risks, rising interest rates and volatility in commodities, the domestic capital markets have been one of the best performing among emerging markets in FY24. The Sensex surged around 25 per cent in FY24, an uptrend that has continued in FY25 so far.

• Inflation under control: Despite the pandemic and geopolitical tensions, the central government's timely policy interventions and the price stability measures undertaken by the RBI helped maintain retail inflation at 5.4 per cent in FY24 - the lowest level since the the COVID-19 period. The global energy price index fell sharply in FY24 and the Centre used the opportunity to announce reductions in the prices of LPG, petrol and diesel, leading to the containment of retail fuel inflation at low levels in FY24. 
• Short-term inflation outlook benign: While the short-term domestic inflation outlook looks benign, expectations of a normal monsoon and moderating global prices of key imported Items give credence to the projections made by the RBI and the IMF, the Survey pointed out.
• Lowest deviation from inflation target among major economies: In comparison to advanced economies like the US, Germany and France, India recorded one of the lowest deviations from its inflation target in the triennial average inflation from 2021 to 2023.

ALSO READ: Finance Minister Nirmala Sitharaman tables Economic Survey FY24 in Lok Sabha

• Slowing farming growth: Agricultural growth decreased by 330 basis points, or 3.3 percentage points, to 4.7 per cent in FY24, owing to a combination of factors, including a lower crop yield on account of El Nino weather patterns. However, several steps undertaken by the government mitigated the impact of the smaller output on farmers who are supported by animal husbandry and pisciculture.

• Need to generate 78.51 lakh non-farm jobs: The economy needs to generate nearly 78.51 lakh jobs annually in the non-farm sector, according to the Survey, which points out that the country's workforce stands at nearly 56.5 crore with more than 45 per cent employed in agriculture, 28.9 per cent in services, 13.0 per cent in construction, and 11.4 per cent in manufacturing.

• Need comprehensive reforms in farming: The Survey highlights several key challenges facing the agriculture sector, including the need to sustain growth while managing food price inflation, improving price discovery mechanisms, and addressing land fragmentation. "Despite its centrality in India's growth trajectory, the agriculture sector continues to face structural issues that have implications for India's economic growth," according to the Survey, which also state that policymakers must strike a delicate balance between incentivising farmers to increase production and keeping food prices within acceptable limits.

• Political & policy continuity: The Narendra Modi 3.0 government took office in June with a historic mandate, with PM Narendra Modi's unprecedented third popular mandate signalling political and policy continuity, according to the Survey. 
• Policy steered through challenges: The country's policy ensured price stability despite global uncertainties, leading to domestic core inflation hitting a four-year low.

• AI becoming more prevalent in various economic activities: Employers must balance deploying technology and labour, states the Survey.

The release of the Economic Survey comes on the eve of the day the Finance Minister is scheduled to present the Union Budget in Parliament. The much-anticipated July 23 Budget assumes significance being the first Union Budget of the Narendra Modi 3.0 administration and the seventh to be presented by Nirmala Sitharaman. 

The Economic Survey is a critical document that informs stakeholders about the state of the economy, guides policy formulation, and supports informed decision-making across various sectors. All in all, it provides a comprehensive overview of India's economic performance and prospects.

With inputs from agencies