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| Photo Credit: Reuters
The Indian economy has broadly caught up with pre-pandemic growth trends, averting any permanent losses in demand and output, and is likely to grow in the range of 6.5% to 7% this year with risks evenly balanced, as per the Economic Survey for 2023-24 tabled today in parliament by Finance Minister Nirmala Sitharaman ahead of the Union budget on Tuesday, which acknowledged challenges like inequality and job creation as key priorities.
Arguing that structural reforms such as the GST and the Insolvency and Bankruptcy Code have matured and are delivering envisaged results, the Survey said the economy can grow at over 7% on a sustained basis in the medium term by building on the past decade’s reforms, but this would need a “tripartite compact” between the Centre, States and the private sector.
Read: Economic Survey 2023-24 updates
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.
Identifying job and skill creation a key focus area for policy makers in coming years, the Survey stressed that the “Amrit Kaal” growth strategy must focus on six areas, including bridging the education-employment gap. In the short to medium term, it also called for action on tackling inequality and improving our young population’s quality of health.
Also Read: Economic Survey 2023-24 full document
While global trends like geo-economic fragmentation, a push for self-reliance and climate change would influence medium-term hopes, the Survey has urged the Government to focus on ‘bottom-up reform’ and improving governance “plumbing” to ensure past reforms deliver sustainable, balanced and inclusive growth.
In the immediate term, while improved balance sheets are expected to help India’s private sector pursue strong investment demand, the Survey cautioned that after good growth in the last three years, private capital formation may turn slightly more cautious because of fears of cheaper imports from countries that have excess capacity, in an indirect reference to China.
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“Deftly dealing with the Chinese conundrum” and deepening the corporate bond market are other short-to-medium term deliverables that the government should pursue, the Survey has stressed, adding that the Amrit Kaal agenda must be predicated on growing India’s micro, small and medium enterprises and boosting private investment. Tapping the full potential of agriculture by removing policy impediments. securing green transition financing and building state capacity to sustain and accelerate India’s progress, have been emphasised as other crucial goals.
The Survey acknowledges that the Gross Value Added by the Services sector is yet to reach levels projected by the pre-pandemic trend. “The granular data available until 2022-23 reveals that this is on account of the trade, hotel, road and air transport sectors. These sectors, taken together, contributed about 28.5% to total real GVA in FY23 and were only one per cent above their levels in 2019-20,” it said.