Prime Minister Narendra Modi on Monday said the Economic Survey highlights the prevailing strengths of the economy and identifies areas for further growth and progress as “we move towards building a Viksit Bharat”.

Finance Minister Nirmala Sitharaman on Monday presented the Economic Survey 2023-24, along with the statistical appendix in the Lok Sabha.

The Economic Survey is an annual document presented by the government ahead of the Union Budget to review the state of the economy. The document also provides an overview of the short-to-medium-term prospects of the economy.

In a post on X, Prime Minister Modi said, “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,” the prime minister said.

(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)

Economic Survey 2023-24 states that India’s workforce is nearly 56.5%, construction accounted for 13% in construction industry.
| Photo Credit: Getty Images/iStockphoto

India’s workforce is nearly 56.5 crore, with more than 45% employed in agriculture, 11.4% in manufacturing, 28.9% in services, and 13.0% in construction, highlights the Economic Survey 2023-24 released by the finance ministry on July 22.

Click here to download Economic Survey 2023-24

The survey also added that female labour force participation has been rising over the last six years, and the unemployment rate is on the decline, the survey highlighted improvements in Indian labour market indicators over the past six years, with the unemployment rate dropping to 3.2% in 2022-23.

Also Read: Economic Survey 2023-24 LIVE updates

The survey noted that employment has recovered from pandemic shocks in both urban and rural areas. It stated, “The female labour force participation rate has been rising for six years, from 23.3% in 2017-18 to 37% in 2022-23, driven mainly by the rising participation of rural women.”

Amid the government’s push for the infrastructure sector, the survey stated that while the services sector remains a major job creator, the construction sector has been rising in prominence lately.

To meet the demands of the employment sector amid a growing population the survey pointed out that the Indian economy needs to generate nearly 78.51 lakh jobs annually in the non-farm sector. The net payroll additions under EPFO have more than doubled in the past five years, signalling healthy growth in formal employment.

Economic Survey 2023-24: India’s growth back to pre-COVID trends, 7%-plus growth possible in medium term 

On AI the survey added as artificial intelligence becomes more prevalent in various economic activities, steering technological choices towards collective welfare is crucial. Employers must balance deploying technology and labour. It suggests that agro-processing and the care economy are promising sectors for generating and sustaining quality employment.

The increase in candidates undergoing skill development through the Government’s flagship programs has highlighted the emphasis on ‘Skill India.’ However, regulatory obstacles such as land use restrictions, building codes, and limits on sectors and hours for women’s employment hinder job creation. Removing these barriers is essential to boost employment and raise women’s labour force participation rate.

The survey states that the 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, tackling inequality and improving our young population’s quality of health.

“The growth strategy for Amrit Kaal is predicated on six key areas. Firstly, there must be a deliberate focus on boosting private investment. Secondly, the growth and expansion of India’s Mittelstand (MSMEs) is a strategic priority. Thirdly, the potential of agriculture as an engine of future growth must be recognised and policy impediments removed. Fourthly, there is a need to secure the financing of green transition in India. Fifthly, the education-employment gap must be bridged. And finally, focused building of state capacity and capability is required for sustaining and accelerating India’s progress.” the document reads. According to the survey, in the medium term, the Indian economy can grow at a rate of 7 per cent plus on a sustained basis if we build on the structural reforms undertaken over the last decade. This requires a tripartite compact between the Union Government, State Governments and the private sector.

New Delhi:

India can become the second largest economy by 2031 and the largest economy in the world by 2060, said Michael Debabrata Patra, Deputy Governor, Reserve Bank of India (RBI) during a program at the Lal Bahadur Shastri National Academy of Administration, Mussoorie.

“It is possible to imagine India striking out into the next decade to become the second largest economy in the world not by 2048, but by 2031 and the largest economy of the world by 2060,” said Mr Patra.

The deputy governor stated during an event of the Mid-Career Training Programme for officials of the Indian Administrative Service on July 9, at the Lal Bahadur Shastri National Academy of Administration.

He also called India’s journey in economic development an eventful and arduous one and added that during the last financial year 2023-24, India became a USD 3.6 trillion-dollar economy.

“India had become a Rs 295.4 lakh crore or USD 3.6 trillion dollars’ economy at current exchange rates. At a per capita income of Rs 2,07,030 or USD 2,500, India belongs in the lower middle-income group of countries. Reaching here has been an eventful and arduous journey, marked by what statisticians call ‘structural breaks” said Mr Patra.

The deputy governor also added that if India wants to become a developed economy it will have to grow at a rate of 9.6 per cent per annum for the next ten years.

“If India can grow at the rate of 9.6 per cent per annum over the next ten years, it will break free of the shackles of the lower middle-income trap and become a developed economy,” he said.

The Organisation for Economic Cooperation and Development (OECD) projects that in PPP (purchasing power parity) terms, India will overtake the US by 2048 to become the second-largest economy in the world.

For rising inflation in the Indian economy, the deputy governor stated that RBI is committed to aligning inflation with the target and the inflation will ease to 4.1 per cent in 2025-26.

“RBI has anchored expectations by remaining committed to aligning inflation with the target and regards the recent easing of price pressures as work in progress. It projects inflation to average 4.5 per cent in 2024-25 and 4.1 per cent in 2025-26. The taming of inflation lays the foundations of sustained high growth in the future” said the deputy governor.

He also shared that the Gross non-performing assets (GNPAs) in the banking system have steadily fallen from their peak in March 2018 to 2.8 per cent of total assets by March 2024. The adjusted for provisions, net NPAs are just 0.6 per cent. The capital and liquidity buffers of the country are well above the regulatory norms.
 

(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)

Arvind Virmani, NITI Ayog member. File
| Photo Credit: Special arrangement

“The Indian economy will grow around 7% in the current fiscal year and is on track to maintain a similar growth rate for several years,” NITI Aayog member Arvind Virmani said on July 12.

Mr. Virmani said there are new challenges facing the country and they will have to be dealt with. “Indian economy will grow at 7% plus minus point 0.5%… I expect that we are on track to grow at 7% for several years from today,” he told PTI in an interview.

Last month, the Reserve Bank of India (RBI) pegged the FY25 gross domestic product (GDP)growth rate at 7.2%. Responding to a question on the decline in private consumption expenditures in the last fiscal year, Mr. Virmani said it is actually recovering now.

“The effect of the pandemic was to draw down savings… and very different from previous financial shocks,” he said. Explaining further, Mr. Virmani said it is like what he calls a double drought situation.

“We also had, of course, El Nino last year, but what the pandemic did was that it resulted in people having to draw down their savings… So, the obvious reaction is to rebuild your savings, which tend to reduce current consumption,” he noted.

“If people were buying branded goods, they will buy less branded or ordinary goods and save part of that money,” he said, explaining that this shows a slide in consumption.

Mr. Virmani said history shows that coalition partners can slow privatisation in States in which the regional ally is in power, but that is not a big issue.

“I see no reason why privatisation cannot happen in the other States and it may also happen in these States (where coalition parties are in power). I am just giving you a historical example,” he said.

With support from N. Chandrababu Naidu’s Telugu Desam Party (TDP) and Nitish Kumar-led JD(U), along with other alliance partners, the NDA crossed the halfway mark in the recently held Lok Sabha elections to form the government at the Centre.

On the decline in foreign direct investments (FDI) to India, despite it being the fastest growing economy, Mr. Virmani said riskless return of investment is much higher in the U.S. and other developed countries than in emerging markets.

“As soon as interest rates begin to come down in the U.S., I expect the FDI into emerging markets, including India, to increase,” he said.

Headline inflation has slowed in India mainly because of lower food prices, but the volatility of these prices remains an issue, Moody’s Ratings said.
| Photo Credit: PTI

Volatile and high food prices remain a concern, but base effects may help temper India’s retail inflation pace in June and possibly even cool it below 4% over July and August, rating agencies and economists reckon.

Retail price rise had touched a 12-month low of 4.75% in May, even though food inflation stayed stuck at 8.7% for a second straight month. The National Statistical Office will likely release the Consumer Price Index data for June on Friday.

Headline inflation has slowed in India mainly because of lower food prices, but the volatility of these prices remains an issue, Moody’s Ratings said in a report this week. The agency also flagged stronger wage gains of more than 5% year-on-year.

The prolonged heatwave and the delayed start to the southwest monsoon was likely to have pushed June’s inflation to 5%, said Radhika Rao, executive director and senior economist at DBS Bank. Vegetable prices began to rise sharply as the month progressed, while telecom tariffs were also raised, she pointed out. 

With the monsoon regaining ground this month, vegetable prices were expected to moderate, and base effects would also push July-August inflation to sub-4%, she estimated. Ms. Rao, however, expects no interest rate cuts this year in light of the RBI’s signal that they would look through base effect-driven swings in readings and focus on sticky food pressures. 

In June 2023, retail inflation stood at 4.9%, before it surged to 7.4% and 6.8% in July and August, respectively.

India Ratings and Research expects retail inflation to have moderated to a 13-month low of 4.5% in June, due to a combination of the favourable base effect and a moderation in inflation of key items. But wholesale prices are projected to quicken at a 3.5% pace, from May’s 15-month high of 2.6% due to an unfavourable base.

“Prices of food items such as onion and potato continues to be high, despite softening of inflation in items such as tomato, pulses, milk and sugar,” the agency noted. Tomato inflation was at a six-month low of 29% as per Department of Consumer Affairs data for last month, it added.

The Reserve Bank Of India said on Monday that India added 46.7 million jobs in the fiscal year ended March, far exceeding numbers in private surveys that point to high unemployment rates.

The employment growth rate was 6% in 2023/24 versus 3.2% in 2022/23, the RBI data on measuring industry level productivity and employment showed.

Analysts linked the lack of jobs and high inflation with PM Modi’s failure in polls last month to win a majority in the directly elected house of the parliament, meaning he had to rely on allies to return to power for a third term.

India’s total employment stood at 643.3 million in 2023/24 versus 596.7 million in FY23, RBI data showed. The central bank uses data from the government’s National Accounts and Ministry of Labour to extrapolate the country’s productivity and employment levels.

The report, a routine release from the central bank, has traditionally only shown historic numbers. On Monday, however, the central bank said it is attempting a provisional estimate of productivity for the total economy for the first time for the financial year 2023/24 based on available information.

The release of the data follows a Citibank report last week that said growth of close to 7% will only create 8 million to 9 million jobs in India, short of the 11 million to 12 million needed.

“Even 7% GDP growth might not be able to fulfil the job requirement over the next decade,” Citi’s chief India economist Samiran Chakraborty wrote in the note.

In a separate statement, the federal labour department countered Citi’s report to say its estimates suggest an average of over 20 million employment opportunities per year were created between 2017-18 to 2021-22.

Another private think tank that tracks joblessness in the country, the Centre for Monitoring Indian Economy, had estimated the unemployment rate in India rose to 8% in fiscal year 2023-24 from 7.5% and 7.7% in the preceding two years.

(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)

Image used for representational purpose.
| Photo Credit: Getty Images/

In an exceptionally slow start to private capex in this financial year, new investment plans in the country slumped to a 20-year low in the April to June quarter, with just ₹44,300 crore of fresh outlays announced by corporates.

The first quarter of 2023-24 had recorded new investment announcements of nearly ₹7.9 lakh crore, while outlays worth ₹12.35 lakh crore were announced in the preceding January to March 2024 quarter. In all, last year had seen investment announcements worth ₹27.1 lakh crore, the second highest in 10 years.

While a part of the tepid investment levels in the first quarter (Q1) of 2024-25 could be explained by investors adopting a wait-and-watch approach amid the Lok Sabha elections, this tally is far lower than the same quarter over the past two general elections held in 2014 and 2019. New investment plans in Q1 of 2014-15 were at ₹2.9 lakh crore, while they added up to ₹2.1 lakh crore in Q1 of 2019-20.

“Since the economy has been growing steadily, the only reason to explain the sluggish investment plans in the last quarter could be that the industry has been in a wait and watch mode,” said Bank of Baroda chief economist Madan Sabnavis, who hoped that investments should pick up in the coming quarters.

While the April-June quarter tends to have lower investment announcements, it has been exceptionally low this year, the bank’s economic research department said in a note based on data from the Centre for Monitoring Indian Economy (CMIE), adding that this had not been the trend in the past when elections were held. Another factor for the slowdown could be that the last two years have seen high investment announcements that are yet to run their course.

“It would need to be seen whether there is any major pick-up in the second quarter considering that the Budget will be announced only towards the end of July. A good monsoon and steady demand during the festival season which starts from the end of August and lasts till December would be the time when investment could increase at a faster pace,” the Bank of Baroda report concluded.

Data on corporate bond issuances as well as bank credit flows for Q1 seem to corroborate the trend of slowing investment plans, the report noted. Corporate bond issues fell sharply from ₹2.86 lakh crore in the first quarter of 2023-24 to ₹1.73 lakh crore in Q1 this year, with over three-quarters raised by financial services players. Between April 1 and June 14, incremental bank credit was ₹2.78 lakh crore as against ₹3.78 lakh crore last year, with growth slipping to 1.7% from 2.5% last year.

Within the ₹44,000-odd crore investments announced over Q1, manufacturing outlays dominated with a 46.4% share followed almost evenly by electricity and services.

“Interestingly, over the period between June 2023 and June 2024, the fall in value of investment announcements was ₹7.4 lakh crore. Of this, the major dip was accounted for by the transport services sector at 61%,” the report said, linking this to the airline industry’s plans to buy new aircraft announced last year.

This pattern would be observed in the coming quarters too as these plans are unlikely to be restored until the earlier orders are executed fully, the bank’s economists noted. “Another 20% of the decline of the order of around ₹1.5 lakh crore was in the electricity sector. In the past, most of the additions have been in the renewable space and here too a slowdown may be expected,” the report reckoned.

Image used for representational purpose.
| Photo Credit: Reuters

Business activity in India expanded at a faster clip this month from May thanks to gains in manufacturing and services, according to a business survey that also showed the pace of job creation was at its strongest in over 18 years.

Robust gains in both sectors at the end of the first fiscal quarter meant a strong start to India’s economy this financial year after it expanded by 8.2% last year – the fastest expansion among major countries – partly led by buoyant manufacturing.

HSBC’s flash India Composite Purchasing Managers’ Index , compiled by S&P Global, rose to 60.9 in June from last month’s final reading of 60.5.

That marked nearly three years above the 50-level separating growth from contraction on a monthly basis.

“The composite flash PMI ticked up in June, supported by rises in both the manufacturing and service sectors, with the former recording a faster pace of growth,” noted Maitreyi Das, global economist at HSBC.

The manufacturing index showed bigger gains to 58.5 from 57.5 in May while the dominant services industry’s reading rose slightly to 60.4 this month from 60.2, adding to the continued expansion in India even as the global economy slows.

That was backed by a strong expansion in both manufacturing output and orders as well as business gains among services firms.

New export orders expanded for a 22nd consecutive month in June and remained robust, though the pace eased slightly after record growth last month.

Robust demand prompted companies to hire more people, with overall employment generation rising at the fastest pace since April 2006. Job creation among manufacturers was higher than in the services sector.

Boosting jobs will remain the biggest challenge for the Narendra Modi government which got elected for a rare third term earlier this month, a Reuters poll showed.

Meanwhile, price increases at firms have eased since May, boding well for the outlook on retail inflation. Rises in services input costs eased to a four-month low, while the pace of increases in prices charged to clients was broadly unchanged.

“Input cost inflation eased slightly in June, but remained elevated with panellists citing increases in labour and material costs. The output price index suggests manufacturing firms were able to pass on higher costs to customers,” added Ms. Das.

“Optimism about future output weakened in June, but remained above the historical average.”

Even though business optimism weakened to a three-month low, the outlook for the coming year remained positive as companies expect output gains based on proposals in the pipeline, efficiency gains and forecasts for favourable exchange rates.

Mumbai:

RBI Governor Shaktikanta Das on Thursday said that the Indian financial system is in a “much stronger position,” characterised by robust capital adequacy, low levels of non-performing assets, and healthy profitability of banks and non-banking lenders.

Underscoring the imperative of fostering a future-ready ethos within the financial sector, Das also stressed the critical role of timely supervisory intervention in mitigating systemic risks.

The RBI Governor said this while delivering an address at the inaugural Global Conference on Financial Resilience organised by the College of Supervisors at the IGIDR Campus in Mumbai.

“India’s domestic financial system is now in a much stronger position than it was before we entered the period of the COVID crisis. Indian financial system is now in a much stronger position, characterised by robust capital adequacy, low levels of non-performing assets, and healthy profitability of banks and non-banking lenders, that is NBFCs,” he said.

He added, “I would like to compliment the banks and other financial sector entities for such a stellar performance in the year which has just ended on March 31. There is absolutely no room for complacency because the world is changing, challenges are coming, complexities are growing, and problems can originate from any corner of the financial system within the country, or the world because of something which may be completely unrelated to you and me…”

Governor Shaktikanta Das began by referencing to global banking failures, including those in the United States, and the challenges faced by institutions like Credit Suisse, emphasizing the lessons learned from such incidents.

He acknowledged the detailed analysis conducted by the US Federal Reserve on bank failures and stressed the importance of proactive regulatory measures to prevent crises.

Highlighting RBI’s proactive approach, Governor Shaktikanta Das cited the intervention in the Yes Bank crisis as a testament to the central bank’s ability to preemptively address financial instability.

He noted the advantages of RBI’s integrated approach in leveraging various facets of banking operations to manage crises effectively.

Addressing the diverse origins of financial crises, Governor Shaktikanta Das identified internal deficiencies within organizations, external factors like climate change, technological disruptions, and undetected fraud as potential catalysts.

He emphasized the need for supervisors to enhance their methods and align them with evolving stress scenarios over time.

Governor Shaktikanta Das outlined RBI’s recent supervisory initiatives, including the moderation of unsecured lending and reduction in bank exposure to Non-Banking Financial Companies (NBFCs), aimed at preempting future risks.

Das said, “Fortunately, all stakeholders in India, namely, the Reserve Bank, the Banks and Non-banking financial companies (NBFCs), and the government have made tangible efforts in this direction. India’s domestic financial system is now in a much stronger position, characterised by robust capital adequacy, low levels of nonperforming assets, and healthy profitability of banks and NBFCs.”

He stressed the importance of continuous vigilance despite current sectoral stability, urging financial institutions to embrace technological advancements while maintaining robust governance and ethical standards.

He highlighted the pivotal role of AI and machine learning in fraud prevention and operational efficiencies, underscoring the need for secure technological integrations aligned with business goals.

Das stated, “AI and ML can enhance predictive analytics and enable banks and NBFCs to identify potential risks and trends more accurately. These technologies can improve fraud detection by recognising unusual patterns and transactions in realtime. Thus, they can protect the institutions and their customers from financial crimes and frauds.”

He further added, “Operational efficiency can be improved through automation of routine tasks, which reduces human error and frees up resources for more strategic activities. Robotic process automation (RPA) can handle high-volume and repetitive tasks, such as data entry and transaction processing, more quickly and accurately than humans.”

Looking ahead, Governor Shaktikanta Das outlined RBI’s commitment to regulatory stability, emphasizing a thematic and activity-based supervisory approach.

He highlighted RBI’s efforts to establish a unified supervision department and engage senior officers to foster closer collaboration with bank boards.

Governor Shaktikanta Das expressed RBI’s ambition to position itself as a model for emerging economies, advocating for a holistic, customer-centric regulatory framework as RBI approaches its centenary.

Governor Shaktikanta Das emphasized RBI’s ongoing initiatives, including the creation of a unified supervision department and the adoption of unconventional methods to enhance regulatory effectiveness.

He highlighted the proactive engagement of senior officers at Executive Director levels with bank boards to reinforce RBI’s oversight priorities.

Governor Shaktikanta Das reiterated RBI’s vision for its centenary, aiming to position the institution as a benchmark for the Global South through a holistic, customer-centric regulatory framework.

These initiatives underscore RBI’s commitment to fostering financial resilience and maintaining high standards of governance in the dynamic global financial landscape.

(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)

The latest Fitch Ratings has cited a recovery in consumer spending and increased investment. File photo
| Photo Credit: The Hindu

Fitch Ratings on Tuesday, June 18, 2024, raised India’s growth forecast for current fiscal to 7.2 per cent, from 7 per cent projected in March, citing a recovery in consumer spending and increased investment.

For the fiscal years 2025-26 and 2026-27, Fitch projected growth rates of 6.5 per cent and 6.2 per cent, respectively.

“We expect the Indian economy to expand by a strong 7.2 per cent in FY24/25 (an upward revision of 0.2 pp from the March GEO),” Fitch said in its global economic outlook report.

Fitch’s estimates are in line with that of RBI which earlier this month projected Indian economy to expand 7.2 per cent in the current fiscal on the back of improving rural demand and moderating inflation.

Investment to continue, consumer spending to pick up

Investments will continue to rise but more slowly than in recent quarters, while consumer spending will recover with elevated consumer confidence, it said.

Fitch said purchasing managers survey data point to continued growth at the start of the current financial year.

It said signs of the coming monsoon season being more normal should support growth and make inflation less volatile, though a recent heatwave poses a risk.

“We expect growth in later years to slow and approach our medium-term trend estimate,” it said, adding growth will be driven by consumer spending and investment.

The Indian economy grew 8.2 per cent in the last fiscal (2023-24), with a 7.8 per cent expansion in March quarter.

Inflation, Fitch expects, will decline to 4.5 per cent by end 2024 and average 4.3 per cent in 2025 and 2026.

Fitch said it expects the RBI to cut policy interest rates by 25 basis points this year to 6.25 per cent.