The Economic Survey 2022-23 was tabled in the Parliament on Tuesday. The survey has summed up how India’s economy braved all odds in challenging times. The document projects a baseline GDP growth of 6.5 per cent in real terms in FY24.
The projection is broadly comparable to the estimates provided by multilateral agencies such as the World Bank, the IMF, the ADB and by the RBI, domestically. The survey also states that the economy is expected to grow at 7 per cent for the year ending March 2023. This follows an 8.7 per cent growth in the previous financial year.
India’s economy has exhibited tremendous resilience despite lots of challenges faced globally.
The major three challenges included COVID-19 related disruptions in economies, Russian-Ukraine conflict and its adverse impact along with disruption in supply chain, mainly of food, fuel and fertilizer and the Central Banks across economies led by Federal Reserve responding with synchronised policy rate hikes to curb inflation, leading to appreciation of US Dollar and the widening of the Current Account Deficits (CAD) in net importing economies.
However, despite the three jolts, agencies worldwide continue to project India as the fastest-growing major economy at 6.5-7.0 per cent in FY23.The optimistic growth forecasts stem from a number of positives like the rebound of private consumption given a boost to production activity, higher Capital Expenditure (Capex), near-universal vaccination coverage enabling people to spend on contact-based services, such as restaurants, hotels, shopping malls, and cinemas, as well as the return of migrant workers to cities to work in construction sites leading to a significant decline in housing market inventory, the strengthening of the balance sheets of the corporates, a well-capitalised public sector banks ready to increase the credit supply and the credit growth to the Micro, Small, and Medium Enterprises (MSME) sector to name the major ones.
The survey also underlines that inflation and monetary tightening led to a hardening of bond yields across economies and resulted in an outflow of equity capital from most of the economies around the world into the traditionally safe-haven market of the US. The capital flight subsequently led to the strengthening of the US Dollar against other currencies – the US Dollar index strengthened by 16.1 per cent between January and September 2022.
The consequent depreciation of other currencies has been widening the CAD and increasing inflationary pressures in the net importing economies. A major positive that forward in the survey is that it has revealed a significant improvement vis-à-vis 2015-16 in an array of indicators concerning the quality of rural lives, of which most health indicators have registered an impressive uptick.
These outcome-oriented statistics establish tangible medium-run progress in rural living standards, aided by the policy focus on basic amenities and efficient programme implementation. improve the quality of life in rural areas. It is hoped that India’s economy continues to grow at its potential in the medium and long term as well.