Economic Survey 2022-23 | Survey presents comprehensive analysis of India’s growth trajectory: PM Modi

India has already become the world’s fifth largest economy in the 75th year of Independence and will reach the $3.5 trillion mark by end-March, said the Economic Survey.

In real terms, the economy is expected to grow at 7% for the year ending March 2023. This follows an 8.7% growth in the previous financial year. “For India, 2022 was special. It marked the 75th year of India’s Independence. India became the world’s fifth largest economy, measured in current dollars. Come March, the nominal GDP of India will be around USD 3.5 trillion,” the Survey said. India’s economy crossed the $3 trillion mark last year.

It further said the fundamentals of the Indian economy are sound as it enters its Amrit Kaal, the 25-year journey towards its centenary as a modern, independent nation. “It is befitting that during India’s Amrit Kaal, it assumed the Presidency of G-20 nations in December 2022,” the survey said. - PTI

Prime Minister Narendra Modi on Tuesday said the Economic Survey 2022-23 presents a comprehensive analysis of India’s growth trajectory, including the global optimism towards the country.

Mr. Modi tweeted, “The Economic Survey presents a comprehensive analysis of India’s growth trajectory including the global optimism towards our nation, focus on infra, growth in agriculture, industries and emphasis on futuristic sectors.”

India’s economy is projected to slow to 6.5% in the fiscal year starting April but will remain the fastest growing major economy in the world as it fared better in dealing with the extraordinary set of challenges the globe has faced, the Economic Survey said. - PTI

Identifying the shipbuilding industry as a strategically important industry due to its role in energy security, national defence, and the development of the heavy engineering industry, the Economic Survey 2022-23 noted that it has the potential to increase the contribution of the industry and the services sector to the national GDP. With its immense direct and indirect linkages with most other leading industries and its huge dependence on the infrastructure and services sectors of the economy, the shipbuilding industry has the potential to strengthen the mission of an ‘Aatmanirbhar Bharat’, the survey said.

The e-commerce sector “witnessed a renewed push and a sharp increase in penetration in the aftermath of the pandemic,” the Economic Survey 2022-23 said. The growth was also fuelled by “growing internet penetration, rise in smartphone adoption, innovation in mobile technologies, and increased adoption of digital payments,” the Survey noted. The sector is projected to grow at 18% annually, according to a Worldpay FIS report cited in the Survey.

The Information Technology-Business Process Management (IT-BPM) industry showed resilience during the COVID-19 pandemic — even growing slightly — and recorded 15.5% growth during the financial year 2021-22, the Economic Survey 2022-23 said. Referring to a NASSCOM report, the Survey said that end-user technology companies benefited from a “rise in investment, more complex technology convergence use-cases, and the prioritisation of [an] enterprise-scale data and cloud strategy.”

Goods and Services Tax collection is showing a higher buoyancy than the pre-GST system, auguring well for future resource mobilisation in the economy, the Economic Survey 2022-23 said.

Giving a 5-year analysis of tax collection pre and post-GST, the survey said the taxes which were subsumed in the Goods and Services Tax had a buoyancy of one. However, the buoyancy improved to 1.1 after the GST implementation on July 1, 2017.

“Improved tax collection efficiency was one of the main arguments in favour of GST. The evidence so far suggests that GST is indeed showing a higher buoyancy than the pre-GST system. This augurs well for future resource mobilisation in the economy,” said the Economic Survey.

Tax buoyancy refers to an increase in tax collections in proportion to a rise in national income. A higher buoyancy reflects the increased efficiency of the tax system. - PTI

The recent collapse of the crypto exchange FTX and the ensuing sell-off in the crypto markets have placed a spotlight on the vulnerabilities in the crypto ecosystem, the Economic Survey 2022-23 said.

Crypto assets are self-referential instruments and do not strictly pass the test of being a financial asset because it has no intrinsic cashflows attached to them. U.S. regulators have disqualified Bitcoin, Ether and various other crypto assets as securities.

Observing that crypto assets are new forms of digital assets implemented using cryptographic techniques, the survey said its market has been very volatile, with its total valuation swinging from almost $3 trillion in November 2021 to less than $1 trillion in January 2023.

The volatility of the crypto asset ecosystem has brought to the forefront their fragile backing and governance problems, as well as the increasing complexity and non-transparency, it said.

With related financial stability risks rising, the issue of crypto asset regulation has recently moved up the policy agenda of many nations. International fora like OECD and G20 are discussing a globally coordinated approach to regulating crypto assets, it noted.

Monitoring and regulating cryptocurrencies have been tricky, and regulators across the globe find it challenging to keep track of the new and emerging issues in the fast-moving uncharted field, it said. - PTI

There has been a steady decline in the school dropout rate and increase in enrolment both in school and higher education, the Economic Survey for 2022-23 showed. The gender parity has also improved in this financial year, the survey, tabled by Finance Minister Nirmala Sitharaman, stated.

“The Gross Enrolment Ratios (GER) in the primary-enrolment in Class 1 to 5 as a percentage of the population in age six to 10 years – for girls as well as boys has improved during the financial year (FY)” . This improvement has “reversed the declining trends between FY-17 and FY-19”, it stated, adding that “the GER in upper-primary (enrolment in class 6 to 8 as a per cent of the population in age 11-13 years), which was stagnant between FY-17 and FY-19, improved in FY-22”.

In corresponding age groups in primary and upper-primary levels, the GER for girls is better than that of boys, the Economic Survey for 2022-23 stated. “In FY-22, school enrolment stood at 26.5 crore children with 19.4 lakh additional children enrolled in primary to higher-secondary levels,” it said.

The survey noted that the total enrolment of Children with Special Needs (CWSN) in FY-22 stands at 22.7 lakh as compared to 21.9 lakh in FY-21, an increase of 3.3%.

“The enrolments increased across all levels — primary, upper-primary, secondary, and higher-secondary, except for the pre-primary level. At the pre-primary level, enrolment reduced from 1.1 crore in FY-21 to one crore in FY-22,” it said. - PTI

Green hydrogen will be crucial for India’s economic development, energy security and achieving decarbonisation of harder to abate sectors, according to the Economic Survey 2022-23.

The survey stated that from the emerging global momentum on green hydrogen, India can situate this decarbonisation opportunity not just within the context of a low-carbon economy but also as an enabler of energy security and economic development for the nation.

Green hydrogen will be crucial for achieving decarbonisation of harder-to-abate sectors such as fertilisers, refining, methanol, maritime shipping, iron & steel and long-haul transport, the survey said.

Further, the survey said that green hydrogen is also an important element of India’s Long Term Low Emissions Development Strategy (LT-LEDS).

As per the survey, the energy transition plan is complemented by numerous policies intended to improve the ecosystem to deploy promising technological innovations like green hydrogen. - PTI

Amid expectations of tax relief for middle class in the Budget, Economic Survey on Tuesday suggested that the government should follow the path of fiscal prudence as it will benefit all sections of society by keeping interest rates low.

“As India’s economic recovery advances, amidst the continuing global uncertainties and risks, the fiscal glide path illuminates the path for fiscal policy. That will ensure more significant fiscal space for policy action in uncertain times.

“Further, in reality, fiscal discipline translates into a fiscal stimulus for all sections of the economy through lower interest rates,” the Economic Survey 2022-23 said.

The suggestion comes on the backdrop of increasing expectations of the middle class that the Budget, to be unveiled on February 1, will have some tax sops to tide over the impact of inflation.

The Survey further said that fiscal prudence will ensure lower interest rates for educational loans, housing loans, car loans and business loans, thereby putting more money in the hands of people.

A higher fiscal deficit translates to larger government borrowings, which in turn push interest rates. In the past couple of years, the government has been pushing capital expenditure to drive economic growth. - PTI

The synergy between physical and digital infrastructure will be a defining feature of India’s future growth, the Economic Survey 2022-23 said, noting that the “powerful” story scripted by the country’s expanding digital public infrastructure has won global acclaim.

As the digital space widens with newer services, the need for appropriate regulations becomes “paramount”, the Economic Survey said, asserting ‘techno-smart’ regulations are the future for digital societies.

In an entire chapter dedicated to ‘Physical and Digital Infrastructure: Lifting Potential Growth’, the survey captured the scorching pace of digital and communications development in the country, and its great multiplier effect on social and economic growth. The synergy between physical and digital infrastructure will be one of the defining features of India’s future growth story, it emphasised. - PTI

Global economic factors such as inflationary pressures, monetary tightening by central banks, and recessionary fears in advanced economies exerted pressure on FPIs to sell in Indian markets, Economic Survey 2022-23 said on January 31, 2023.

Housing prices have started to firm up after a two-year COVID lull and unsold inventories have declined on the rise in demand, the ​Economic Survey​ said on January 31, as it anticipated a decline in prices on the back of a cut in import duties on many construction materials.

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The International Monetary Fund (IMF) on Tuesday said it is expecting some slowdown in the Indian economy next fiscal year and projected the growth to 6.1 % from 6.8% during the current fiscal ending March 31.

“Our growth projections actually for India are unchanged from our October Outlook. We have 6.8% growth for this current fiscal year, which runs until March, and then we’re expecting some slowdown to 6.1% in fiscal year 2023. And that is largely driven by external factors,” Pierre-Olivier Gourinchas, Chief Economist and Director, Research Department of the IMF told reporters here.

“Growth in India is set to decline from 6.8% in 2022 to 6.1% in 2023 before picking up to 6.8% in 2024, with resilient domestic demand despite external headwinds,” said the IMF’s World Economic Outlook update.

“Another relevant point here is that if we look at both China and India together, they account for about 50% of world growth in 2023. So a very significant contribution,” he said.

“I want to say, we had a positive view on India in our October forecast. That positive view is largely unchanged,” Gourinchas said in response to a question.

In a blog post he wrote that India remains a bright spot. Together with China, it will account for half of global growth this year, versus just a 10th for the US and euro area combined, he added.- PTI

The Indian rupee may remain under depreciation pressure on account of plateauing of exports and subsequent widening of the current account deficit, said the Economic Survey 2022-23 tabled in Parliament on January 31.

It said the “risks to the current account balance stem from multiple sources.”

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Buoyancy in the real estate sector along with improved construction activities created jobs and facilitated the return of migrant workers to cities, the Economic Survey for 2022-23 tabled in Parliament on Tuesday said.

This assumes significance in view of loss of jobs due to lockdown restrictions imposed in various parts of the country from time to time amid different waves of pandemic since March 2020.

The Economic Survey tabled by Union Finance Minister Nirmala Sitharaman on January 31 has noted that the Gross Non-performing Advances (GNPA) of the Scheduled Commercial Banks (SCBs) has fallen to a seven-year low of 5.0% in the year 2022.

The survey further said the Capital-to-Risk Weighted Assets Ratio (CRAR) remains healthy at 16.0 and well above the regulatory requirement of 11.5. The health of NBFCs has continued to improve as well, the survey has noted.

The recovery of India’s micro, small and medium enterprises is advancing swiftly, with the Emergency Credit Linked Guarantee Scheme (ECLGS) offsetting the impact of the COVID-19 shock on the units through robust credit disbursement, as per the Economic Survey 2022-23 tabled in Parliament on January 31.

India has more than six crore micro, small and medium enterprises that employ close to 12 crore workers across sectors and industries while contributing nearly 35% to the country’s gross domestic product (GDP).

Foreign direct investment into the country is expected to rebound in the coming months on account of India’s high economic growth, and steps to further improve the business environment of India, the Economic Survey said on January 31.

The rise in global uncertainty in the wake of the Russia-Ukraine conflict, FDI equity inflows in the manufacturing sector in the first half of the current fiscal (April-September) fell below its corresponding level in the first half of 2021-22, the document, which was tabled in Parliament, said.

The Economic Survey 2022-23 on Tuesday underlined the need for close monitoring of the current account deficit (CAD) which may continue to widen because of elevated global commodity prices.

The country’s current account deficit widened to 4.4% of the GDP in the quarter ending September, from 2.2% of the GDP during the April-June period due to a higher trade gap, according to the latest Reserve Bank data.

Sounding a note of caution, the key government document, which was tabled in Parliament by Finance Minister Nirmala Sitharaman, said the challenge of the depreciating rupee, although better performing than most other currencies, persists with the likelihood of further increases in policy rates by the U.S. Federal Reserve.

As long as oil prices remain below $100 a barrel, growth trajectory should not be affected, he the CEA in response to a query on the oil prices assumed by the Survey.

India has the potential to enhance GDP growth by addressing domestic challenges like Dismantling LIC (Licence, Inspection and Compliance), affordable, reliable and economically viable power supply, make the switch to renewable energy.

No country that has developed today has managed to grow without a vibrant MSME sector so we have to continue to ensure that it gets more and more formalised.

A new skilling and education approach is needed, and we have to make sure that women are able to contribute as much to economic activity as they are capable of.

Whatever is feasible legislatively, in terms of law and order, physical security, work from home, whatever governments can do, must be done to ensure that woman are not in a position to choose between home and work.

Industry and services are growing at a steady pace as per data for the first two quarters of this year. Credit growth is picking up across different sectors. Even Non Banking Finance Companies’ credit disbursals are rising.

Therefore, the Survey projects the economic growth to be 6.5% for the coming year, with a range of 6% to 6.8%.

Some of you may think the range is asymmetric in nature and that is deliberate, says the CEA adding “because there is still uncertainty. We have many known unknowns and unknown unknowns.”

China is reopening quicker than expected, the US economy is holding up and may not yet see a full-fledged recession. In order to make sure that we fully accommodate the downside risks, we have kept a range of 6% to 6.8%.

Reforms for micro and small businesses have yielded results, with modifications in definitions of Micro, Small and Medium Enterprises. The GST paid by MSMEs didn’t flag through the pandemic.

Ultimately, the various investments - domestic or foreign - have to translate into employment.

EPFO payroll data that tracks new workers joining the scheme - are seeing levels in 2022-23 well above the last three years.

The employment scenario will pick up as it did in the first decade when capital expenditure helped job creation.

The tax cuts for corporates in 2019 played a big role in helping the private sector to be repaired quickly and the Production Linked Incentive scheme has helped further.

Today, India sees an opening in the global supply chain. Companies are looking for alternatives not just to diversify but also for political reasons. The physical infrastructure upgrade and the PLI scheme ensure that India can now target global scale in manufacturing.

Payment of incentives under the PLI after the units performs. So it is a payment against performance not in anticipation of performance.

The social sector chapter is the largest in this year’s Economic Survey, ranging from electricity, food security, health care, drinking water and sanitation, outlays have become outcomes and are covered in detail.

Digital public infrastructure has set the stage for the next stage of reforms so that low income vendors and micro enterprises are able to access national and international markets.

Formal study of how much digital infrastructure adds to growth is yet to be evaluated, but I believe that combined with healthier balance sheets, can elevate India’s potential growth by upto 50 to 100 basis points to the trend growth of 6% pegged by many agencies, says Dr. Anantha Nageswaran.

India is one of the few countries to see a modest growth in government debt to GDP ratio, relative to peers over the last 16 years.

There is enough scope for fiscal parameters to improve in the coming years once we sustain a steady growth.

Our export competitiveness is hampered by logistics costs of 14% to 15%. The National Logistics policy is an important cog in the wheel and aims to halve these costs.

There is an improvement in the quality of expenditure. But it’s not just about the quality of spending, the government has been transparent about budget calculations and expenditure management and ensuring that public procurement is transparent so that every one has a shot to becoming a supplier to the government, have all helped.

There is a pick up in private sector investment in agriculture, facilitated by the creation of the Agriculture Infrastructure Fund, National Agriculture Market, the FPOs, income support and crop insurance for farmers.

The Insolvency and Bankruptcy Code restores trust between the borrower and the lender. More than 7 lakh cases, even before they came into the IBC process, have been resolved. The usefulness of the IBC is in ensuring borrower payment culture even before they enter the resolution process.

Decriminalisation of several provisions in economic laws restores trust between the governing and the governed.

I am reminded of what the economist Joan Robinson said in the 1960s. Whatever you say about India, the opposite is equally true, says Anantha Nageswaran.

The lagged effects of the reforms in 2014-22 will push growth as the full effect of the reforms could not be seen in the data in recent years due to successive shocks. Now, it is not about just the government doing things for the people, but bringing the people in as partners. Which is why we say Sabka Saath Sabka Vikas.

The reforms of the last eight years span multiple dimensions - not just economic growth, elaborates the CEA.

It was also about financial inclusion, ease of living, ease of doing business, farmers’ welfare. These reforms were happening even as the banking clean up was going on.

This episode between 2014 and 2022 has a lot of parallels between what happened between 1998 and 2002, he says.

India faced sanctions due to the Pokhran test, bank NPAs were rising, there were two successive droughts at the time. Reforms were undertaken across the board but there was a lag in their results showing on growth.

The pandemic recovery phase is over, Dr. Anantha Nageswaran says. The leverage ratio rose sharply in the first decade of the millennium. Naturally, this led to excess borrowing and the second decade was pay back.

Now, that has been resolved and bank balance sheets are repaired which is why you see credit growth picking up now. Credit growth in agriculture, industry, services and personal sectors is now in double digits.

India went through a classic circle of boom and bust, he says.

CEA V. Anantha Nageswaran during his press meet on Economic Survey, begins his presentation citing the IMF growth forecast. He says the report has also emphasised that the decade will be better than the previous one.

India’s GDP growth poised to do better, says Chief Economic Advisor, Dr. V. Anantha Nageswaran, in his presentation of the Economic Survey.The survey looks ahead to medium-term because the pandemic response and recovery phase is over, he says.

India’s forex reserves, at $563 billion in December 2022, cover 9.3 months of imports, and make it the sixth largest foreign exchange reserves holder in the world, the Survey said. “The current stock of external debt is well shielded by the comfortable level of foreign exchange reserves,” it emphasised.

The Economic Survey said India achieved its target of 40% installed electric capacity from non-fossil fuels ahead of 2030.At the same time, it set a target of reducing emissions intensity of its GDP by 45% by 2030 from 2005 levels. “India is becoming a favored destination for renewables; investments in 7 years stand at $78.1 billion,” it said.

The Economic Survey said that the social sector expenditure increased to ₹21.3 lakh crore in FY-23 (BE) from ₹9.1 lakh crore seven years ago.The Economic Suvey also highlighted a recovery of the labour market beyond pre-COVID levels. “With unemployment rates falling from 5.8% in 2018-19 to 4.2% in 2020-21,” it added.

While India’s retail inflation rate peaked at 7.8% in April 2022, above the RBI’s upper tolerance limit of 6%, the overshoot of inflation above the upper end of the target range in India was however one of the lowest in the world, the Economic Survey said.“India’s inflation management has been particularly noteworthy and can be contrasted with advanced economies that are still grappling with sticky inflation rates,” it added.

“The growth in credit offtake is expected to sustain, and combined with a pick-up in private capex, will usher in a virtuous investment cycle,” the Economic Survey.

Non-food credit offtake by scheduled Commercial Banks (SCBs) has been growing in double digits since April 2022, it added.

The Gross Tax Revenue registered a Year-on-Year growth of 15.5% from April to November 2022, according to the Economic Survey. It was driven by robust growth in the direct taxes and Goods and Services Tax (GST), the survey said.

Citing the Russia-Ukraine conflict, the Economic Survey said that recovering from pandemic-induced contraction, Russian-Ukraine conflict and inflation, Indian economy is staging a broad-based recovery across sectors, positioning to ascend to the pre-pandemic growth path in this fiscal year.

“The Indian economy is well placed to grow faster in the coming decade once the global shocks of the pandemic and the spike in commodity prices in 2022 fade away,” it said.

Growth returns from those reforms, undertaken by a previous NDA government, ‘lagged’ due to temporary shocks in the economy, it said. “Once these shocks faded, the structural reforms paid growth dividends from 2003,” it pointed out.

The Economic Survey said that capital expenditure of Central Government and crowding in the private Capex led by strengthening of the balance sheets of the “Corporates is one of the growth driver of the Indian economy in the current year,” it said.

The thrust of the Government on rural development is discernable from the emphasis it gets in the Economic Survey 2022-23 tabled by the Union Minister for Finance Nirmala Sitharaman in Parliament today.

The Survey notes that 65% (2021 data) of the country’s population lives in the rural areas and 47% of the population is dependent on agriculture for livelihood.

The Government’s emphasis has been on improving the quality of life in rural areas to ensure more equitable and inclusive development, the Ministry of Finance said in a press release. The aim of engagement of the government in the rural economy has been “transforming lives and livelihoods through proactive socio-economic inclusion, integration, and empowerment of rural India,” it said.

The Economic Survey said that India remains the fastest growing major economy in the world

GDP in nominal terms has been projected at 11% in next fiscal.

Meanwhile, RBI projects 6.8% inflation this fiscal outside the upper target limit, which the Economic Survey says is “not high enough to deter private consumption, also not too low to weaken inducement to invest.”

India’s economic recovery from the pandemic is complete and the economy is expected to grow in the range of 6% to 6.8% in the coming financial year 2023-24, the Economic Survey of 2022-23 said. This is in comparision to 7% this fiscal and 8.7% in 2021-22.

Union Finance Minister in Lok Sabha on January 31, 2023 tabled the Economic Survey 2022-23.

Lok Sabha speaker begins the first day of the Parliament session of the Union Budget. Finance Minister Nirmala Sitharaman will table the Economic Survey

Ahead of the Union Budget Session 2023-24, President of India Droupadi Murmu addressed a joint-sitting of the Parliament.In her first address to the joint sitting of Parliament as the Budget session began, she said ‘Amrit Kaal’, described by the government as the 25-year period culminating in the centenary of India’s independence, is the time to build an India which is ‘aatmanirbhar’ (self reliant) and also fulfils its humanitarian obligations.

It will be an India with no poverty and a prosperous middle class and whose youth and women are at the vanguard of guiding the nation, the president said, amid frequent thumping of desks by lawmakers at the Central Hall of Parliament.

Under the nearly nine years of the Prime Minister Narendra Modi-led government, the country has seen many positive changes, she said, adding that the biggest change is that the self-confidence of every Indian is at its peak and the world has changed the way it looks at India.

While India used to depend on others to solve its problems, it is now working to solve global problems, Ms. Murmu, India’s first tribal president, said.

Equity benchmarks declined in initial trade on January 31 amid an overall weak trend in the global markets as investors adopted a cautious approach ahead of the Union Budget presentation and interest-rate decision from the Federal Reserve.

Also, continuous foreign funds outflow played spoilsport for the markets.

The 30-share BSE benchmark Sensex declined 203.74 points to 59,296.67. The broader NSE Nifty dipped 52.8 points to 17,596.15.Meanwhile, the rupee depreciated 12 paise to 81.64 against the U.S. dollar in early trade weighed down by significant foreign fund outflows and a muted trend in domestic equities.

At the interbank foreign exchange, the domestic unit opened weak at 81.61 against the dollar, then lost ground and fell to 81.64, registering a decline of 12 paise over its last close.- PTI

Inflation in India is expected to come down from 6.8% in the current fiscal year ending March 31 to 5% the next fiscal, and then drop further to 4% in 2024, the International Monetary Fund (IMF) said on Tuesday.

“Inflation in India as in other countries is expected to come down from 6.8% in 2022 to 5% in 2023 and then 4% coming towards the target in 2024,” Daniel Leigh, Division Chief, Research Department of the IMF told reporters here.

“That partly reflects the central bank’s actions,” he added, According to the World Economic Outlook update released by the IMF on Tuesday, about 84% of countries are expected to have lower headline (consumer price index) inflation in 2023 than in 2022.- PTI