• UGI USER
  • Feb 01, 2023
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Economic Survey 2023: Key Takeaways

Context: On Tuesday, the government tabled the Economic Survey 2022-23. The Survey laid out the outlook for India’s growth, inflation and unemployment in the coming years.

 

About Economic Survey

  • The Survey provides a detailed report of the national economy for the year along with forecasts.
  • It touches upon everything from agriculture to unemployment to infrastructure.
  • It is prepared by the Economic Division of the Department of Economic Affairs (DEA).
  • The comments or policy solutions contained in the Survey are not binding on the government.

 

MAIN TAKEAWAYS

 

  • GDP growth
    • The Survey said India’s growth estimate for FY23 is higher than for almost all major economies.
    • The survey stated that despite strong global headwinds and tighter domestic monetary policy, if India is still expected to grow between 6.5 and 7.0 per cent, and that too without the advantage of a base effect, it is a reflection of India’s underlying economic resilience; of its ability to recoup, renew and re-energise the growth drivers of the economy
  • Inflation
    • The RBI has projected headline inflation at 6.8% in FY23, outside its comfort zone of 2% to 6%.
    • High inflation is seen as one big factor holding back demand among consumers.
    • However, the Survey sounded optimistic about the inflation levels and trajectory, saying it is not high enough to deter private consumption and also not so low as to weaken the inducement to invest.
  • Unemployment
    • The Survey said employment levels have risen in the current financial year and that job creation appears to have increased with the initial surge in exports.
    • It pointed to the Periodic Labour Force Survey (PLFS), which showed that urban unemployment rate for people aged 15 years and above declined from8% in the quarter ending September 2021 to 7.2% one year later.
    • The Survey also underlined that the fall in unemployment rate is accompanied by an improvement in the labour force participation rate.

 

Expectation from 2023-24

 

  • The Survey projected a baseline GDP growth of 6.5% in real terms in FY24.
  • Low demand for Indian exports due to poor global growth, may widen India’s trade deficit and make the rupee depreciate.
  • Similarly, sustained monetary tightening (higher interest rates) may drag down economic activity in FY24.

 

What does it mean for India’s economy?

  • The central thrust of this year’s Survey is that India’s economy has recovered from the Covid disruption and is assured to see sustained robust growth in the rest of the decade.

 

Chief Economic Advisor’s opinion

  • CEA V Anantha Nageswaran said the phase between 2014 and 2022 has witnessed wide-ranging structural and governance reforms that strengthened the economy’s fundamentals by enhancing its overall efficiency.
  • He also clarified that these reforms had not yielded the desired results because banks were getting rid of their non-performing assets (NPAs) and business firms were deleveraging.
  • Shocks such as the Covid pandemic and the Ukraine war made matters worse.
  • As the health and economic shocks of the pandemic and the spike in commodity prices in 2022 wear off, the Indian economy is thus well placed to grow at its potential in the coming decade.