The Economic Survey tabled by Finance Minister Nirmala Sitharaman in Parliament today projects India’s GDP growth rate at 6.5% to 7% for 2024-25 as it sees the economy on a strong wicket.

The survey states that global economic growth will be 3.2% in 2023 as per the April World Economic Outlook.

India’s economy carried forward the momentum it built in FY23 into FY24 despite a gamut of external challenges. India’s real GDP grew by 8.2% in FY24, exceeding the 8% mark in three out of four quarters of FY24.

The Government’s thrust on capex and sustained momentum in private investment has boosted capital formation growth. Gross Fixed Capital Formation increased by 9 per cent in real terms in 2023-24.

Moving forward, healthier corporate and bank balance sheets will further strengthen private investment. The positive trends in the residential real estate market indicate that the household sector capital formation is increasing significantly, the survey states.

Inflationary pressures stoked by global troubles, supply chain disruptions, and vagaries of monsoons have been deftly managed by administrative and monetary policy responses. As a result, after averaging 6.7% in FY23, retail inflation declined to 5.4% in FY24, it adds.

Retail inflation at 5.4%, lowest since pandemic

Timely policy interventions by the government and the Reserve Bank of India’s (RBI) price stability measures helped retail inflation stand at 5.4%–the lowest since the pandemic, said the Economic Survey.

During FY22 and FY23, the COVID-19 pandemic, geopolitical tensions, and supply disruptions contributed to rising inflationary pressures globally.

According to the Economic Survey, consumer goods and services faced price hikes in India due to international conflicts and adverse weather conditions impacting food costs.

The survey says that the headline inflation rate is largely under control, although the inflation rate of some specific food items is elevated.

Unemployment rate declines, job & skill creation top priority

The labour market indicators have improved in the last six years, with the unemployment rate declining to 3.2% in 2022-23.

India’s workforce is estimated to be nearly 56.5 crore, of which more than 45% are employed in agriculture, 11.4% in manufacturing, 28.9% in services, and 13% in construction.

The Indian economy needs to generate nearly 78.51 lakh jobs annually in the non-farm sector to cater to the rising workforce, the Survey projected.

“The government has implemented measures to boost employment, foster self-employment, and promote worker welfare. Rising youth and female participation in the workforce presents an opportunity to tap the demographic and gender dividend,” according to the Survey tabled in Parliament ahead of the Union Budget 2024-2025.

While the services sector remains a major job creator, the construction sector has been rising in prominence lately, driven by the government’s push for infrastructure.

“However, since construction jobs are largely informal and low-paid, there is a need for avenues for the labour force leaving agriculture,” the Survey suggested.

According to UN population projections, India’s working-age population (15-59 years) will continue to grow until 2044.

Estimates show that about 51.25 per cent of the youth is deemed employable.

“In other words, about one in two are not yet readily employable, straight out of college. However, it must be noted that the percentage has improved from around 34 per cent to 51.3 per cent in the last decade,” the Survey noted.

The rise in the number of candidates undergoing skill development through the government’s flagship programmes has underlined the thrust to ‘Skill India’.

According to the Survey, key areas of policy focus in the short to medium term include job and skill creation, tapping the full potential of the agriculture sector, addressing MSME bottlenecks, managing India’s green transition, deftly dealing with the Chinese conundrum, deepening the corporate bond market and tackling inequality and improving our young population’s quality of health.

India’s telecom, FDI renewable infrastructure

India has a well-established infrastructure to attract foreign direct investment (FDI) in sectors like greenfield projects such as renewables, digital services such as telecommunications, software and hardware, and consultancy services.

The Survey said this strategy is being pursued through agreements such as the Australia-India Free Trade Agreement and the US-India Clean Energy Initiative.

“As a result, the trading patterns within these sectors are starting to develop. For example, the tariff classifications for environmentally friendly technology, such as solar water heaters, waste recycling devices, and wind turbines, show an increase in exports to the USA from $199.2 m in FY20 to $326.9 m in FY24,” according to the Survey.

Keeping in view India’s vision, Production Linked Incentive (PLI) schemes for 14 key sectors were announced with an outlay of ₹1.97 lakh crore to enhance India’s manufacturing capabilities and exports.

Over ₹1.28 lakh crore of investment was reported until May 2024, which has led to production/sales of ₹10.8 lakh crore and employment generation (direct & indirect) of over 8.5 lakh.

Exports were boosted by ₹4 lakh crore, with significant contributions from sectors such as large-scale electronics manufacturing, pharmaceuticals, food processing, and telecom & networking products.

Private capex picks up in FY24

Increased spending in sectors such as road transport and highways, railways, defence services, and telecommunications will deliver higher and longer impetuses to growth by addressing logistical bottlenecks and expanding productive capacities.

The government’s capital expenditure for FY24 stood at ₹9.5 lakh crore, an increase of 28.2% on a YoY basis, and was 2.8 times the level of FY20.

“States to pitch in for rapid infra growth”

The Survey states that buoyant investment by the Centre has played a pivotal role in funding large-scale infrastructure projects in recent years in highways, seaports, railways and airports but the state governments and private sector need to pitch in to accelerate development.

It highlights that National Highways construction increased by three times from 11.7 km per day in FY14 to 34 km per day by FY24 while capital expenditure on Railways has increased by 77% in the past five years, with significant investments in the construction of new lines, gauge conversion and doubling.

Similarly, in FY24, new terminal buildings at 21 airports have been operationalised, which has led to an overall increase in passenger handling capacity by approximately 62 m passengers per annum.

Over 34.7 cr Ayushman Bharat cards generated

More than 34.7 crore Ayushman Bharat cards have been generated, and the scheme has also “covered 7.37 crore hospital admissions in India,” said FM Sitharaman.

“Considering the multiplier effect of low costs, the scheme saves more than 1.25 lakh crore of out-of-pocket expenditure for poor and deprived families,” Sitharaman said.

She also stressed the challenge of ensuring mental health which is “intrinsically and economically valuable.”

She also called out against overusing smartphones and the Internet which “are associated with the great rewiring of childhood.”

26.52 cr students in schools, 4.33 cr in higher education

India has 26.52 crore students in schools and 4.33 crore in higher education institutions.

According to the Survey, India also has “more than 11 crore learners in skilling institutions”.

Further, the survey showed that the rise in enrolment in higher education has been driven by underprivileged sections such as SC, ST, and OBC, with a faster growth in female enrolment across sections.

“Female enrolment in higher education increased to 2.07 crore in FY22 from 1.57 crore in FY15, that is., a 31.6% increase since FY15. The growing equity in higher education implies better employment opportunities for the hitherto backward sections,” it added.

(Compiled from syndicated feed)