Finance Minister Nirmala Sitharaman tabled the Economic Survey 2022-23 in Parliament today, which outlines the country's FY 2023-24 GDP growth at 6-6.8%, making it the slowest annual GDP growth in the past three years.
The Economic Survey, however, expects India’s growth outlook to be better than it was in the pre-pandemic years. Notably, the government earlier estimated India's GDP growth at 7% in the current financial year 2022-23, down from the economic growth of 8.7% in the last fiscal year ending March 31, 2022.
The Economic Survey comes in the backdrop of the global multinational agency IMF (International Monetary Fund) downgrading India's economic growth forecast for 2023 to 6.1%, but emphasising the country's GDP growth will pick up the pace at 6.8% in 2024.
The Economic Survey highlights the transformative reforms undertaken by the government had lagged growth returns due to temporary shocks in the economy. However, in the present decade, "once these global shocks of the pandemic and the spike in commodity prices in 2022 fade away, the Indian economy is well placed to grow faster in the coming decade", says the survey.
According to the Survey, private consumption in H1 is the highest since FY15, and this has led to a boost to production activity, resulting in enhanced capacity utilisation across sectors. The capital expenditure of the central government and crowding in the private Capex led by the strengthening of the balance sheets of the corporates is one of the growth drivers of the Indian economy in the current year. "The credit growth to the MSME sector was over 30.6 per cent on average during Jan-Nov 2022. Retail inflation is back within RBI's target range in November 2022. Indian rupee performed well compared to other Emerging Market Economies in Apr-Dec 2022."
The Economic Survey states the Indian economy is well placed to grow at its potential in the coming decade, similar to the growth experience of the economy after 2003. "With improved and healthier balance sheets of the banking, non-banking and corporate sectors, a fresh credit cycle has already begun, evident from the double-digit growth in bank credit over the past months."
The Survey states the digitalisation reforms and the resulting efficiency gains in terms of greater formalisation, higher financial inclusion, and more economic opportunities will be the second most important driver of India’s economic growth in the medium term. "These productivity-enhancing reforms along with the Government's Skilling initiatives will also help unleash the benefits of the demographic dividend in the coming years."
“The Economic Survey 2023 reflects the phenomenal growth of mobile payments with UPI. As the pioneer and leader of QR code payments, we are taking UPI to every nook & corner of India. Our associate Paytm Payments Bank is the leader in UPI being the largest beneficiary & acquiring bank with over 40% market share. Over the next few years, UPI will lead the way by bringing more people into the digital world, driving financial inclusion,” says a Paytm spokesperson.
India’s growth outlook seems better than in the pre-pandemic years, and the Indian economy is prepared to grow at its potential in the medium term, says the Survey. Considering the evolving geo-political situation, the Survey notes India has an opportunity to benefit from the diversification of global supply chains.
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