Context:

According to the Economic Survey 2023-24 presented by the Finance Minister in Parliament, the Indian economy remains robust and stable, showing resilience despite geopolitical challenges

Overview of the 2023 Economic Survey

State of the Indian Economy

• Global economic growth was 3.2 percent in 2023, as reported in the April World Economic Outlook. 
• Diverging growth patterns among countries were influenced by domestic structural issues, geopolitical conflicts, and monetary policy tightening. 
• Despite external challenges, India’s economy maintained momentum from FY23 into FY24, with real GDP growing by 8.2% and exceeding 8 % in three of four quarters of FY24.
• The government's focus on macroeconomic stability minimized the impact of external challenges. 
• Increased capital expenditure and private investment boosted capital formation growth, with Gross Fixed Capital Formation rising by 9% in real terms in 2023-24. 
• Healthier corporate and bank balance sheets are expected to further strengthen private investment, and positive trends in the residential real estate market indicate significant household sector capital formation.
• The urban employment rate declined to 7.2% in Q2 FY23. 

Fiscal Deficit

• The fiscal deficit decreased to 6.7% in FY22 from 9.2% in FY21 due to the pandemic. Gross tax revenue grew by 15.5% year-on-year from April to November 2022. 
• GST collections rose by 24.8% from April to December 2022. 
• The government earned ₹4.07 lakh crore through strategic disinvestment, and government debt moderated from 59.2% in FY21 to 56.7% in FY22.

Monetary Policy

• Globally, tighter monetary policies were adopted due to inflation. While global capital markets underperformed, Indian markets fared well. 
• The Reserve Bank of India increased the repo rate from 4% to 6.25% between May and December 2022, leading to higher deposit and lending rates. 
• The trading volume of government securities reached a two-year high with 6.3% year-on-year growth. 
• This period also saw the initial public offering of state-run insurer LIC, India's largest IPO.

Inflation

• Inflationary pressures from global issues, supply chain disruptions, and monsoon variability were effectively managed by administrative and monetary policy responses. 
• Consequently, retail inflation declined from an average of 6.7 % in FY23 to 5.4 percent in FY24.
• Domestic inflation reached 7.8%, mainly due to rising food prices, especially in rural areas. 

Social Infrastructure

• The survey reported steady increases in social expenditure, with healthcare sector spending moving towards 2.5% of GDP, as recommended by the National Health Policy. 
• According to the survey, 16.4% of the population was classified as multi-dimensionally poor.

External Sector

• India's external sector remained strong despite geopolitical headwinds and persistent inflation.
• Logistics Performance Index: India improved its rank from 44th in 2018 to 38th in 2023 out of 139 countries.
• Export Diversification: India is adding more export destinations, indicating regional diversification.
• Current Account Deficit: Narrowed to 0.7% in FY24 due to moderation in merchandise imports and rising services exports.
• Services Exports: Grew by 4.9% to USD 341.1 billion in FY24. Growth was driven by IT/software services and 'other' business services.
• Remittances: India is the top remittance recipient globally, reaching USD 120 billion in 2023.
• External Debt: Sustainable with an external debt to GDP ratio of 18.7% at the end of March 2024.
• Challenges: Slowing global GDP growth and rising trade protectionism pose significant risks.

What is the Economic Survey?

• The Economic Survey is a comprehensive annual review of the Indian economy for the previous financial year. 
• It is prepared by the Economics Division of the Department of Economic Affairs under the Finance Ministry, guided by the Chief Economic Advisor (CEA). 
• It is released a day ahead of the Budget announcement. 
• It summarizes the government's economic performance, major developmental programs, and policy initiatives, while also providing an outlook for the upcoming financial year. 

Significance of the Economic Survey

• The Economic Survey reviews India's development over the past financial year, providing statistical data on industry, agriculture, employment, prices, and exports. 
• It highlights priority areas for the next financial year ahead of the Budget, though its recommendations are not binding. 
• Serving as a stock-taking document, it informs citizens about the economy and key government decisions. 
• The Survey consolidates annual reports from various ministries, departments, and regulators into a single authoritative document.

Presentation of the Economic Survey

• Typically, the Economic Survey is presented on January 31. However, this year it was delayed due to the general elections. 
• According to the Parliamentary convention, the incumbent government does not present the Economic Survey with the Interim Budget in an election year. 
• Therefore, the Survey was rescheduled for July to align with the full Budget presentation post-elections.