The Government of India released its annual Economic Survey for the financial year 2022-23 on 31st January 2023. Below are some of the highlights mentioned in the Economic Survey 2022-23 as presented by the Press Information Bureau of the Government of India.
Economic Survey 2022-23
- India’s GDP growth is likely to be around 6.0 to 6.8 percent during the financial year 2023-24 depending on global economic and geopolitical developments.
- The Economic Survey 2022-23 projects a baseline GDP growth of 6.5 per cent in real terms in the financial year 2023-24.
- The India economy is expected to grow at 7 per cent (in real terms) for the year ending march 2023, as compared to an 8.7 per cent growth in the previous financial year.
- Credit growth to the micro, small, and medium enterprises (MSME) sector has been remarkably high, over 30.5 per cent, on average during the period January-November 2022.
- Capital expenditure (capex) of the central government, which increased by 63.4 per cent in the first eight months of the financial year 2022-23, was another growth driver of the Indian economy in the current year.
- The Reserve Bank of India (RBI) projects headline inflation at 6.8 per cent in financial year 2022-23, which is outside its target range. The return of migrant workers to construction activities has helped the housing market witness a significant decline in inventory overhang to 33 months in the third quarter of the financial year 2022-23 from 42 months in the previous year.
- A surge in growth of exports in the financial year 2021-22 and the first half of the financial year 2022-23 induced a shift in the gears of the production processes from mild acceleration to cruise mode.
- Private consumption as a percentage of GDP stood at 58.4 per cent during the second quarter of the financial year 2022-23, the highest among the second quarters of all the years since 2013-14, supported by a rebound in contact-intensive services such as trade, hotel and transport.
- According to Survey, India’s economic growth in FY23 has been principally led by private consumption and capital formation and they have helped generate employment as seen in the declining urban unemployment rate and in the faster net registration in Employee Provident Fund.
- The Economic Survey also points out that the upside to India’s growth outlook arises from
- Limited health and economic fallout for the rest of the world from the current surge in Covid-19 infections in China and, therefore, continued normalisation of supply chains;
- Inflationary impulses from the reopening of China’s economy turning out to be neither significant nor persistent;
- Recessionary tendencies in major Advanced Economies (AEs) triggering a cessation of monetary tightening and a return of capital flows to India amidst a stable domestic inflation rate below 6 per cent; and
- This is likely to lead to providing further impetus to private sector investment.
- The Survey, however, cautions that 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 US Fed. The widening of the Current Account Deficit (CAD) may also continue as global commodity prices remain elevated and the growth momentum of the Indian economy remains strong. The loss of export stimulus is further possible as the slowing world growth and trade shrinks the global market size in the second half of the current year.
- The Economic Survey points to the lower forecast for growth in global trade by the World Trade Organisation, from 3.5 per cent in 2022 to 1.0 per cent in 2023.
- The Survey points out that factors like monetary tightening by the RBI, the widening of the CAD, and the plateauing growth of exports have essentially been the outcome of geopolitical strife in Europe. As these developments posed downside risks to the growth of the Indian economy in FY23, many agencies worldwide have been revising their growth forecast of the Indian economy downwards. These forecasts, including the advance estimates released by the NSO, now broadly lie in the range of 6.5-7.0 per cent.
- Despite the downward revision, the growth estimate for the financial year 2022-23 is higher than for almost all major economies and even slightly above the average growth of the Indian economy in the decade leading up to the pandemic.
- IMF estimates India to be one of the top two fast-growing significant economies in 2022. Despite strong global headwinds and tighter domestic monetary policy, if India is still expected to grow between 6.5 and 7.0 per cent, and that too without the advantage of a base effect, it is a reflection of India’s underlying economic resilience; of its ability to recoup, renew and re-energise the growth drivers of the economy.
References : https://pib.gov.in/PressReleasePage.aspx?PRID=1793829
