Economic Survey 2024 Summary

Source: Economic Survey
GS III: Budget

Overview

1. All Chapter
2. Economic Survey 2024 Overview
3. Economic Survey 2024 Chapter Wise Summary

Why in the News?

Finance Minister Nirmala Sitharaman tabled the Economic Survey for the year 2023-24 in Parliament.

• It has 13 Chapters.

All Chapter

1. State of the Economy: Steady as She Goes
2. Monetary Management and Financial Intermediation: Stability Is the Watchword
3. Prices and Inflation: Under Control
4. External Sector: Stability Amid Plenty
5. Medium-Term Outlook: A Growth Vision for New India
6. Climate Change and Energy Transition: Dealing With Trade-Offs
7. Social Sector: Benefits That Empower
8. Employment and Skill Development: Towards Quality
9. Agriculture and Food Management: Plenty Of Upside Left if We Get It Right
10. Industry: Small and Medium Matters
11. Services: Fuelling Growth Opportunities
12. Infrastructure: Lifting Potential Growth
13. Climate Change and India: Why We Must Look At The Problem Through Our Lens

Economic Survey 2024 Overview

• India’s real GDP grew by 8.2 per cent in FY24, exceeding the 8 per cent mark in three out of four quarters of FY24.
• Focus on maintaining macroeconomic stability ensured that external challenges had minimal impact on India’s economy.
• The survey stated that administrative and monetary policy responses have deftly managed
  • Inflationary pressures stoked by global issues
  • Supply chain disruptions
  • Vagaries of monsoons
• After averaging 6.7 per cent in FY23, retail inflation declined to 5.4 per cent in FY24.
  • This is the lowest level since the pandemic.

Economic Survey 2024 Chapter Wise Summary

Economic Survey 2024 all 13 chapters summarized. The Economic Survey 2023-24 covers many of the issues discussed above in its several chapters, apart from informing readers of government policies and their performance, their impacts, innovations, developments and success stories worth emulating. As before, the staple content of the Survey is chapters that provide an assessment of the various sectors such as agriculture, industry, infrastructure and services.

1. State of the Economy: Steady as She Goes

India’s economic response to the pandemic included three key components:

1. Public Spending on Infrastructure: This created a demand for jobs and industrial output, triggering private investment. Stronger balance sheets in the financial and non-financial sectors, supported by government and RBI initiatives, also helped.
2. The digitalisation of Service Delivery: Businesses and public administration embraced digital technology, driven by public policy focus and frameworks, leading to transformational changes.
3. Atmanirbhar Bharat Abhiyan: Targeted relief and structural reforms under this initiative supported economic recovery and increased medium-term growth potential.

Despite global challenges like supply chain disruptions and inflation, India managed these pressures through administrative and monetary policies. Fiscal balances improved due to tax compliance, expenditure restraint, and digitisation. Strong services exports counterbalanced subdued global demand for goods.

The Indian economy recovered and expanded, with real GDP in FY24 being 20% higher than in FY20. This growth was inclusive, reducing unemployment and poverty while increasing labour force participation. Looking forward, India anticipates robust and inclusive growth in FY25.

2. Monetary Management and Financial Intermediation: Stability Is the Watchword

• India’s banking and financial sectors have shown impressive performance in FY24, with double-digit growth in bank credit, low non-performing assets, and improved bank asset quality.
• The capital markets have also played a significant role in India’s growth, driven by technology, innovation, and digitisation.
• The Nifty 50 index rose by 26.8% in FY24, and the market capitalisation to GDP ratio is now the fifth largest globally.
• The insurance sector is set to grow rapidly, aiming for ‘Insurance for all by 2047’, and the pension sector has seen a robust increase in subscribers and assets under management.
• However, the rise in retail investors in the stock market requires careful attention to avoid overconfidence and speculation.
• The financial sector must support the banking sector and align its growth with the economy’s needs, avoiding over-financialisation.
• Firms in banking, insurance, and capital markets should focus on consumer interests, improving service quality, and aligning internal systems with these goals to optimise long-term commercial objectives.

3. Prices and Inflation: Under Control

• Inflation Challenges: The pandemic and geopolitical tensions posed challenges for global inflation management. Supply disruptions due to the pandemic and rising commodity prices impacted India significantly.
• Price Pressures: FY22 and FY23 saw increased inflation in core consumer goods and services, partly influenced by adverse weather conditions affecting food prices.
• Monetary Policy Response: Prudent monetary policies and calibrated trade measures helped reduce core inflation to a four-year low in FY24.
• Mitigating Food Inflation: Administrative actions, such as dynamic stock management and open market operations, played a role in mitigating food inflation.
• Future Outlook: Normal monsoons and moderating global prices are expected to maintain benign and range-bound inflation projections for India. The long-term outlook depends on strengthening price monitoring mechanisms and boosting domestic production of essential food items

4. External Sector: Stability Amid Plenty

• Trade Performance: India’s external sector remained robust despite geopolitical challenges. While merchandise exports moderated, services exports performed well, reducing the overall trade deficit from USD 121.6 billion in FY23 to USD 78.1 billion in FY24.
• Services Exports: Software/IT services drove overall exports, and business services also rose due to India’s emergence as a hub for Global Capability Centres (GCCs).
• Global Value Chains (GVCs): India’s participation in GVC-related trade increased, with a rising share in gross trade. Measures like trade facilitation and logistics cost reduction contributed to this improvement.
• Foreign Portfolio Investment (FPI): Positive FPI inflows of USD 44.1 billion in FY24 supported by economic growth and investor confidence stabilized the Indian Rupee.
• Future Outlook: India’s evolving export composition, improved infrastructure, quality consciousness, and stable policies will drive its global role as a supplier of goods and services.

5. Medium-Term Outlook: A Growth Vision for New India

• Resilient Growth: India’s growth story over the last decade has been marked by resilience. Structural reforms implemented since 2014 have positioned the economy for sustained growth, and India is poised to become the third-largest economy globally.
• Medium-Term Potential: With continued focus on structural reforms, India can achieve sustained growth rates of 7% or more.
• Key Policy Areas: The chapter identifies critical policy areas for achieving this goal.
  • Generating productive employment.
  • Skill gap challenge
  • Tapping the full potential of the agriculture sector
  • Easing the compliance requirements and financing bottlenecks confronting MSMEs
  • Managing India’s green transition
  • The Chinese conundrum
  • Deepening the corporate bond market
  • Tackling inequality
  • Improving the quality of health of India’s young population
• Six-Pronged Growth Strategy: The strategy emphasizes bottom-up reforms to ensure strong, sustainable, balanced, and inclusive growth.

6. Climate Change and Energy Transition: Dealing With Trade-Offs

• India’s Carbon Emissions: Despite rapid economic growth, India’s per capita carbon emissions are only about one-third of the global average.
• Vision for 2047: India aims to become a “Developed India” by 2047.
• Net Zero Emissions Goal: The country is committed to achieving net-zero carbon emissions by 2070, emphasizing both economic growth and environmental sustainability.
• Energy Access: Access to stable energy at a reasonable cost is crucial for development.
• Challenges: Transitioning to cleaner energy sources requires viable battery storage technologies and access to critical minerals.
• Balancing Act: Achieving development goals while following a low-carbon pathway is a delicate balance, especially when relying on domestic resources.

7. Social Sector: Benefits That Empower

• India’s remarkable economic growth is paralleled by social and institutional advancements.
• The government’s transformative and well-executed programs have empowered citizens across various domains, including health, education, sanitation, and rural quality of life.
• Notable achievements include improved access to healthcare and education, women-centric development initiatives, and transparent rural governance.
• To achieve its goal of becoming a developed nation by 2047, India relies on effective government programs and community involvement.

Trends in social services expenditure by general Government (In Crores)

8. Employment and Skill Development: Towards Quality

• India’s labour market indicators have improved over the past six years, with the unemployment rate declining to 3.2% in 2022-23.
• Increased youth and female participation in the workforce offers demographic and gender dividends.
• Organized manufacturing saw a bounce-back in FY22, leading to rising employment and factory upscaling.
• Net payroll additions under EPFO doubled, indicating healthy growth in formal employment.
• Adapting to artificial intelligence is crucial for the job market while prioritizing collective welfare.
• Agro-processing and the care economy are promising for quality employment and gender equality.
• Skilling efforts have made progress, but more needs to be done, as only 4.4% of the young workforce is formally skilled.
• Regulatory reforms, including state-level laws, can further boost employment opportunities

9. Agriculture and Food Management: Plenty Of Upside Left if We Get It Right

• Over the past five years, India’s agriculture sector has grown at an average rate of 4.18% annually.
• The country maintains a substantial stock of food grains, with 40% distributed free to two-thirds of the population, and exports over 7% of its food grains.
• Despite this growth, challenges such as low productivity, weather variability, fragmented land holdings, and inadequate marketing infrastructure persist.
• Government interventions aim to enhance investment, productivity, and farmer returns through measures like the minimum support price (MSP) and improved access to high-quality inputs.
• Digitalisation initiatives are expected to empower farmers with better decision-making tools.
• Welfare schemes like PM Gareeb Kalyan Yojana (PMGKAY) and the National Food Security Act (NFSA) are also discussed, focusing on food procurement and allocation.

10. Industry: Small and Medium Matters

• FY24 Industrial Growth:
  • Manufacturing and construction drove industrial growth in FY24.
  • Industrial GVA (Gross Value Added) at constant prices was 25% higher than pre-Covid FY20 levels.
  • Supported by increased credit offtake, capital formation, and a favourable policy framework.
• Sectoral Changes:
  • Consumer-oriented industries (e.g., automobiles, wood products, pharmaceuticals) gained output share.
  • Production-oriented sectors (machinery, chemicals, rubber/plastic products) also saw growth.
  • Decline in output share observed in petroleum products, textiles, beverages, and tobacco.
• Future Prospects:
  • Focus on labour-intensive segments (textiles, food processing, MSMEs) for balanced industrial expansion.
  • Encourage R&D investment, formalization of smaller manufacturers, and supply chain improvements.
  • Reducing the compliance burden for MSMEs will enhance growth prospects.
• Domestic Demand and Outlook:
  • Strong consumption and investment conditions support industrial output expansion.
  • RBI’s forward-looking survey indicates a positive outlook.
  • Challenges include global demand uncertainty and import-dependent input prices.

11. Services: Fuelling Growth Opportunities

• Services Sector in India:
  • The services sector has been crucial for India’s economic growth over the past three decades.
  • Post-pandemic trends during FY24 reveal ongoing transformations in domestic service delivery systems and demands.
  • Policy reforms, infrastructure improvements, and logistics have strengthened significant services (business, personal, financial, and infrastructure-based).
• Digital Transformation:
  • The rapid adoption of digital services (online payments, e-commerce, entertainment platforms) is a key shift.
  • High-tech services are increasingly in demand as inputs for other productive activities.
• Opportunities Ahead:
  • India’s young and tech-savvy population can enhance vocational and educational ecosystems.
  • Equipping the labour force with digital and high-tech skills will maximize India’s potential. 

12. Infrastructure: Lifting Potential Growth

• Capital Expenditure and Infrastructure:
  • To counter the pandemic-induced economic slowdown, the Union Government increased capital expenditure.
  • Over the last five years, capital expenditure tripled relative to FY20 levels.
  • Key beneficiaries include foundational assets like roads and railways.
• Reforms and Complementary Measures:
  • Institutional and procedural reforms facilitated project execution.
  • Initiatives like PPPs, National Infrastructure Pipeline, and PM-GatiShakti supported private sector participation.
  • REITs and InvITs eased long-term financing constraints for infrastructure investments.
• Impact and Challenges:
  • Increased public investment improved physical and digital connectivity and social infrastructure (sanitation, water supply).
  • Fiscal constraints require viable public-private projects.
  • Regular data collection and assessment are crucial for course corrections.

13. Climate Change and India: Why We Must Look At The Problem Through Our Lens

• India, despite making significant strides in addressing climate change, is often criticized for being one of the largest polluters globally.
• However, this criticism overlooks two crucial points.
• First, India faces the challenge of balancing economic development and climate action. Second, sustainable living is ingrained in Indian ethos, emphasizing harmony with nature.
• Unlike overconsumption prevalent in developed countries, India’s approach focuses on individual responsibility and pro-planet choices.
• Mission LiFE, based on ancient Indian philosophy, aims to empower citizens while safeguarding the environment.

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