Economic Survey 2023 Highlights: Nirmala Sitharaman, the finance minister, presented the annual pre-budget report to the Lok Sabha earlier in the day.
Today, January 31, 2023, at 11 a.m., the Parliament’s budget session officially began. Droupadi Murmu, the president of India, spoke to both houses during a joint session. Economic growth forecasts for the fiscal years 2023–2024 were presented in the Economic Survey. FM The Economic Survey was introduced by Nirmala Sitharaman in Parliament. According to the Economic Survey, India’s GDP would expand by 6.5% in 2023–2024, down from 8.7% in 2021–2022 and 7% in the current fiscal year.
Nirmala Sitharaman, the finance minister, introduced the Economic Survey 2023 into Parliament today to begin the budget session. According to the Economic Survey, which was produced by the Department of Economic Affairs (DEA) under the direction of Chief Economic Advisor V Anantha Nageswaran, India’s GDP growth is anticipated to continue to be strong, and the nation will continue to have the fastest growing major economy in the world due to its success in overcoming the extraordinary range of challenges the world has had to face. The survey did point out that because of ingrained inflation, the tightening cycle may last longer and borrowing costs may continue to be “higher” for a longer time.
Here are the key points of the Economic Survey 2023 Highlights:
1. GDP growth: Covid’s recovery is complete
India will continue to be the world’s fastest-growing major economy. The Indian economy is undergoing a broad-based rebound across sectors as it recovers from the pandemic-induced contraction, the Russian-Ukrainian conflict, and inflation. It is positioned to return to the pre-pandemic growth path in FY23.
It is anticipated that India’s GDP growth will continue strong in FY23, at 7% (in real terms). This comes after a growth of 8.7% in the previous fiscal year.
Depending on the direction of global economic and political developments, GDP is expected to be in the range of 6–6.8% for FY24.
According to the Economic Survey 2022–23, the nominal and real GDP growth rates for FY 24 are projected to be 11% and 6.5%, respectively.
India recovered from the pandemic quite quickly, and growth will be aided in the following year by strong domestic demand and an increase in capital expenditure. A new cycle of private capital creation is beginning to emerge, helped by strong financial conditions. More importantly, the government has increased capital spending significantly in order to make up for the private sector’s conservatism.
India’s economy ranks third in terms of purchasing power parity and fifth in terms of exchange rate.
Private consumption as a percentage of GDP reached 58.5% in Q2 of FY23, the highest second quarter since FY15, thanks to a recovery in contact-intensive sectors including commerce, lodging, and transportation.
Private consumption, higher capital expenditures, a stronger corp0orate balance sheet, more financing to small enterprises, and the return of migrant workers to cities are the main drivers of growth.
The economy has almost “recouped” what it lost, “renewed” what had stopped, and “energised” what had stalled due to the pandemic and the European conflict.
One of the growth drivers of the Indian economy this year is the central government’s capital expenditure and the crowding in of private capex driven by the strengthening of corporate balance sheets.
2. Inflation: Borrowing cost to remain ‘higher’
Although India’s retail inflation rate peaked in April 2022 at 7.8%, exceeding the RBI’s top tolerance limit of 6%, India had one of the lowest overshoots of inflation above the target range in the world.
The RBI expects inflation to be 6.8 percent this fiscal year, which is above the upper goal limit but neither high enough to discourage private consumption or low enough to impair incentives for investment.
The cost of borrowing could be “higher for longer,” and the tightening cycle could be prolonged by ingrained inflation.
India’s successful handling of inflation stands out in comparison to advanced economies that are currently battling high inflation rates.
3. Credit Growth is Remarkably High
From January to November 2022, credit growth for the Micro, Small, and Medium Enterprises (MSME) sector averaged above 30.5 percent.
The Indian economy’s current year’s growth was also fueled by the federal government’s capital expenditures, which rose by 63.4% in the first eight months of FY 23.
4 .Current Account Deficit Could Increase
The Economic Survey warns that, despite the rupee performing better than most other currencies, there is still a risk of more US Federal Reserve policy rate hikes.
As long as economic growth momentum is strong and global commodity prices are elevated, the CAD may continue to widen.
If the current account deficit increases, the rupee may experience pressure.
The CAD is exposed to a variety of risks. Despite falling from record highs, commodities prices are still higher than they were prior to the conflict. The current account deficit (CAD), which has already grown due to India’s growing speed, has been further widened.
India has enough foreign exchange reserves for FY 23 to cover the CAD and act in the foreign exchange market to control currency volatility.
5. Exports Expanding
The export sector had explosive growth in FY22 and the first part of FY23, which caused the production processes to move from a modest acceleration to cruising mode.
Exports of electronics increased by almost three times, from $4.4 billion in FY19 to $11.6 billion in FY22.
6. Fiscal position: Revenue Generation is performing resiliently * The recovery in economic activity, as well as the growth in direct tax and GST income, have helped the government’s finances perform well during FY23.
From April to November 2022, the gross tax revenue increased by 15.5% YoY, mostly due to strong growth in direct taxes and GST.
Direct tax revenue growth was significantly greater in the first eight months of the year than the matching longer-term averages.
With the gross GST collections increasing at a YoY rate of 24.8% from April to December 2022, the GST has stabilised as an important source of revenue for the federal government and state governments.
From a long-term average of 1.7% of GDP (FY09 to FY20) to 2.5% of GDP in FY22 PA, the Center’s capex has consistently climbed.
The rise in Capex has significant favourable effects on medium-term growth, with a focus on infrastructure-intensive industries including transportation, housing, and urban affairs.
India will be able to maintain a positive growth-interest rate differential thanks to the government’s capex-led growth strategy, which will result in a medium-term debt-to-GDP ratio that is manageable.
7. Monetary Policy: A Successful Year The repo rate has increased by 225 basis points since the RBI began its monetary tightening cycle in April 2022, which has moderated the conditions of excess liquidity.
Financial institutions increased their lending as a result of cleaner balance sheets.
The increase in loan offtake is anticipated to continue and, when coupled with a rise in private capital expenditures, will start a positive investment cycle.
Since April 2022, scheduled commercial banks’ (SCBs’) offtake of non-food loans has increased by double digits.
Non-banking financial ‘ (NBFCs) issuance of credit by non-banking financial companies (NBFCs) has also increased.
The ratio of gross non-performing assets (GNPA) has decreased to 5, the lowest level in seven years.
At 16.0, the Capital-to-Risk Weighted Assets Ratio (CRAR) is still in good shape.
When compared to other channels, the SCB recovery rate through insolvency and bankruptcy (IBC) was highest in FY22.
8. Social Infrastructure and Employment:
Government spending increased significantly in the social sector.
Budgeted spending on the health sector by the federal government and state governments reached 2.1% of GDP in FY23 (BE) and 2.2% in FY22 (RE), respectively, up from 1.6% in FY21.
Social sector spending rose from Rs. 9.1 lakh crore in FY16 to Rs. 21.3 lakh crore in FY23 (BE).
The Aspirational Districts Program has become a model for effective government, particularly in isolated and challenging places.
By enabling the people, the JAM (Jan-Dhan, Aadhaar, and Mobile) trinity has revolutionised the route to transparent and accountable governance by bringing the underserved segments of society into the official financial system.
The creation of the CO-WIN platform and the transparent distribution of nearly 2 billion vaccination doses were both made possible because of Aadhaar.
9. Falling Unemployment Rate:
Both in urban and rural areas, the labor markets have recovered beyond pre-Covid levels, with unemployment rates dropping from 5.8% in 2018–19 to 4.2% in 2020–21.
Gross Enrolment Ratios (GER) in schools and gender parity both improved in the fiscal year FY22. GER in the primary enrollment in classes I to V as a percentage of the population in the age range of 6 to 10 years has improved in FY22 for both boys and girls.
As a result of many government initiatives, the out-of-pocket portion of overall health spending decreased from 64.2% in FY14 to 48.2% in FY19.
There has been a consistent drop in the infant mortality rate (IMR), under-five mortality rate (U5MR), and neonatal mortality rate (NMR).
As of January 6, 2023, more than 220 crore COVID vaccination doses had been given.
As of January 4th, 2023, around 22 crore beneficiaries of the Ayushman Bharat Scheme had been confirmed. Under Ayushman Bharat, more than 1.54 lakh Health and Wellness Centers have been operationalized nationwide.
12. Agricultural and related sectors’ performance has been strong:
* Since 2018, the MSP for all mandatory crops has been set at 1.5 times the weighted average cost of production for all of India.
Institutional credit to the agricultural sector grew to 18.6 lakh crore in 2021–2022 as growth persisted.
The production of food grains in India increased steadily and reached 315.7 million metric tons in 2021–22.
The National Food Security Act provides free foodgrains to approximately 81.4 crore beneficiaries for one year beginning January 1, 2023.
The scheme covered around 11.3 crore farmers during its April–July 2022–23 payout cycle.
Post-Harvest Support and Community Farms were approved for Rs 13,681 crores under the Agriculture Infrastructure Fund.
Online, competitive, transparent bidding system established under the National Agriculture Market (e-NAM) Scheme, with 1.74 crore farmers and 2.39 lakh traders.
The Paramparagat Krishi Vikas Yojana (PKVY) promotes organic farming through Farmer Producer Organizations (FPOs).
India is at the forefront of the International Year of Millets effort, which seeks to promote millets.
13. Industry: Steady Recovery
For the first half of FY 22–23, the industrial sector’s overall Gross Value Added (GVA) increased by 3.7%, exceeding the 2.8% average growth seen in the first half of the previous decade.
A demand stimulus for industrial growth has been created by the robust growth in private final consumption expenditure, the export stimulus year, an increase in investment demand, and strengthened bank and company balance sheets.
The industry’s supply response to the demand stimulus has been strong.
Since July 2021, the PMI manufacturing has stayed in the expansion zone for 18 months, and the Index of Industrial Production (IIP) is expanding at a solid rate.
Since January 2022, lending to micro, small, and medium-sized enterprises has increased by an average of about 30%, and credit to big industries has increased by double digits since October 2022.
India is now the second-largest producer of mobile phones in the world, with 29 crore units produced in FY21 compared to 6 crore units in FY15.
FDI flows into the pharmaceutical industry have increased by a factor of four, from US $180 million in FY19 to US $699 million in FY22.
The Production Linked Incentive (PLI) programmes, with an expected expenditure of 4 lakh crore over the next five years, were established across 14 categories, tying India into international supply chains. In the FY22, investments under PLI schemes totaled Rs. 47,500 crore, or 106% of the year’s authorised objective. Due to PLI initiatives, production/sales worth 3.85 lakh crore and the creation of 3.0 lakh jobs have been registered.
As of January 2023, more than 3500 requirements have been legalised and over 39,000 compliances have been decreased.
14. Services: Source of Strength
The services industry is anticipated to grow at a 9.1% annual rate in FY23 compared to an 8.4% annual rate in FY22.
Since July 2022, there has been a strong expansion in PMI services, a sign of activity in the services sector.
With its share of global commercial services exports rising from 3% in 2015 to 4% in 2021, India was one of the top ten countries exporting services.
Since July 2022, credit to the services sector has increased by more than 16%.
FDI equity inflows of US$7.1 billion in the services sector in FY22.
In FY23, growth rates for contact-intensive services are expected to reach levels prior to the pandemic.
With a 50% increase between 2021 and 2022, real estate sector growth is bringing housing sales to pre-pandemic levels.
The percentage of hotels that were occupied increased from 30–32% in April 2021 to 68–70% in November 2022.
The tourism industry is exhibiting signs of recovery, with the number of foreign visitors to India in FY23 increasing month over month thanks to the restart of regularly scheduled international flights and the relaxation of COVID-19 requirements.
Through 2025, the e-commerce market in India is expected to increase at an average rate of 18%.
15. External Sector
From April to December 2022, merchandise exports totaled $332.8 billion.
India expanded its exports to Saudi Arabia, South Africa, and Brazil while diversifying its markets.
In 2022, CEPA with the UAE and ECTA with Australia go into effect in an effort to broaden the market and guarantee better penetration.
In 2022, India will receive US$ 100 billion in remittances, making it the largest recipient in the world. After service export, remittances are the second-largest main source of external financing.
The Forex Reserves were $563 billion as of December 2022, representing 9.3 months’ worth of imports.
India holds the sixth-largest amount of foreign exchange reserves in the world as of the end of November 2022.
The existing level of foreign exchange reserves provides enough protection against the current stock of external debt.
Both short-term debt as a percentage of total debt and total debt as a percentage of GDP are at comparatively low levels in India.
16. National Infrastructure Pipeline
1009 projects worth 5.5 lakh crore, totaling 89,151 projects costing 141.4 lakh crore, are complete.
17. National Monetization Pipeline
0.9 lakh crore monetisation target attained vs 0.8 lakh crore projected in FY22
A target of 1.6 lakh crore is anticipated for FY23 (27 per cent of overall NMP Target)
* Renewable Energy and the Electricity Sector As of September 30, 2022, the government has authorised the construction of 59 solar parks throughout 16 states, totaling the 40 GW target capacity.
17.2 lakh GWh of electricity were produced in FY22 versus 15.9 lakh GWh in FY21.
From 460.7 GW on March 31, 2021, to 482.2 GW on March 31, 2022, the total installed power capacity (for industries with demand of 1 megawatt (MW) and above) grew.
19. Making Indian Logistics Globally Competitive
Rapid expansion of national highways (NHs) and roads, with 10457 km built in FY22 compared to 6061 km in FY16
Budget spending jumped from Rs. 1.4 lakh crore in FY20 to Rs. 2.4 lakh crore in FY23, giving capital expenditures a significant boost.
Since its inception in 2016, the UDAN program has benefited over one crore air travellers.
Major port capacity nearly doubling in 8 years
20. India’s Digital Growth
Between 2019 and 22, UPI-based transactions increased in value (by 121%) and volume (by 115%), paving the way for global adoption.
As of September 22, there were 117.8 crore telephone subscribers in India, with 44.3% of them living in rural areas.
A whopping 98% of all telephone subscribers are wirelessly linked. In India, the overall tele-density was 84.8% as of March 22.
Between 2015 and 2021, the number of rural internet subscribers will climb by 200%.
Economic Survey 2023 Highlights FAQs-
1. When will the 2023 economic survey be released?
The publication date is January 31, 2023. The bill will be introduced in Parliament by Finance Minister Nirmala Sitharaman. What exactly does the survey cover? The survey covers the economic situation in India for the current fiscal year, 2022–2023
2. Which economic survey from that year is significant for UPSC 2023?
Budget for 2023–2024 and the Economic Survey for 2022–2023.
3. Do economic surveys take place annually?
Every year at the budget session in Parliament, the Economic Survey is presented. The Finance Minister typically presents the Economic Survey one day prior to the Union Budget’s introduction in Parliament. The information above will aid candidates in getting ready for UPSC 2023.
4. What is the 2022–2023 Economic Survey’s main theme?
The government believed that broad vaccination coverage, benefits from supply-side reforms and regulatory liberalisation, robust export growth, and the availability of fiscal headroom to ramp up capital spending would sustain India’s expected GDP growth of 8.0 — 8.5% in 2022–2023.