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Economic Survey 2023-24

Last updated: Jul, 2024

Introduction

Union Minister for Finance, Ms. Nirmala Sitharaman, presented the Economic Survey 2023-24 in the Parliament on July 22, 2024. The key highlights of the Economic Survey 2023-24 are as follows:

State of the Economy 2023-24: Steady as She Goes

  • In response to the pandemic, India has responded in three components: first, by focusing on public spending on infrastructure; second, by a natural response of business enterprise and public administration amidst adversities, i.e., digitalisation of service delivery; and third, by ‘Atmanirbhar Bharat Abhiyan’ in terms of targeted relief to different sectors of the economy and sections of the population, and structural reforms that assisted a firm recovery and increased the medium-term growth potential.
  • India’s real GDP grew by 8.2% in FY24, posting growth of over 7% for a third consecutive year, driven by stable consumption demand and steadily improving investment demand.
  • Gross value added (GVA) at 2011-12 prices grew by 7.2% in FY24, with growth remaining broad-based.
  • Net taxes at constant (2011-12) prices grew by 19.1% in FY24, aided by reasonably strong tax growth, both at the centre and state levels and rationalisation of subsidy expenditure. This led to the difference between GDP and GVA growth in FY24.
  • The shares of the agriculture, industry and services sector in overall GVA at current prices were 17.7%, 27.6% and 54.7%, respectively in FY24.
  • Within the industrial sector, manufacturing GVA grew by 9.9% in FY24 as compared to FY23.
  • HSBC India PMI for manufacturing, consistently remained well above the threshold value of 50, indicating sustained expansion and stability in India's manufacturing sector.
  • Construction activities displayed increased momentum and registered a growth of 9.9% in FY24 due to the infrastructure buildout and buoyant commercial and residential real estate demand.
  • Private final consumption expenditure (PFCE) grew by 4.0% in real terms in FY24.
  • Gross Fixed Capital Formation (GFCF) by private non-financial corporations increased by 19.8% in FY23.
  • In 2023, residential real estate sales in India were at their highest since 2013, witnessing a 33% YoY growth, with a total sale of 4.1 lakh units in the top eight cities.
  • New supply witnessed an all-time high, with 5.2 lakh units launched in 2023, as against 4.3 lakh units in 2022. The momentum continued in Q1 of 2024, witnessing record-breaking sales of 1.2 lakh units, clocking a robust 41% YoY growth.
  • Corporate bond issuances in FY24 were up by 70.5%, with private placement remaining the preferred channel for corporates. Outstanding corporate bonds were up by 9.6% (YoY) as of the end of March 2024.
  • The fiscal deficit of the Union Government has been brought down from 6.4% of GDP in FY23 to 5.6% of GDP in FY24.
  • Revenue receipts of the union government consisting of tax revenue (net to centre) and non-tax revenue (NTR) increased YoY by 14.5% in FY24 (PA), with robust growth in both tax and non-tax revenues.
  • Growth in gross tax revenue (GTR) was estimated to be 13.4% in FY24, translating into tax revenue buoyancy of 1.4. The growth was led by a 15.8% growth in direct taxes and a 10.6% increase in indirect taxes over FY23. Broadly, 55% of GTR accrued from direct taxes and the remaining 45% from indirect taxes.
  • The increase in indirect taxes in FY24 was mainly driven by a 12.7% growth in GST collection.
  • In FY24 total government expenditure (as per the provisional actuals) declined to 15.0% of GDP from 17.7% in FY21.
  • The provisional actuals show that capital expenditure for FY24 stood at Rs. 9.5 lakh crore (US$ 113.73 billion), an increase of 28.2% on a YoY basis, and was 2.8x the level of FY20.
  • The gross fiscal deficit of 23 states was 8.6% lower than the budgeted figure of Rs. 9.1 lakh crore (US$ 108.94 billion). This implies that fiscal deficit as a per cent of GDP for these states came in at 2.8% as against a budgeted 3.1%.
  • The weighted average maturity of the outstanding stock of dated securities of the Government has increased from 9.6 years in end-March 2011 to 12.5 years in end-March 2024.
  • For the first time in 13 years, S&P Global Ratings upgraded India's sovereign credit rating outlook from ‘stable’ to ‘positive’ in May 2024 on the back of robust economic growth, sound economic fundamentals and improved composition of government spending.
  • The Gross Non-Performing Assets (GNPA) ratio declined to 2.8% in March 2024, a 12-year low.
  • India's service exports have remained robust, reaching a new high of US$ 341.1 billion in FY24. Exports (merchandise and services) in FY24 grew by 0.15%, while the total imports declined by 4.9% despite a strong domestic market demand.
  • the Current Account Deficit (CAD) stood at 0.7% of the GDP during the year, an improvement from the deficit of 2.0% of GDP in FY23.
  • External debt as a ratio to GDP stood at a low level of 18.7% as of end-March 2024. The ratio of foreign exchange reserves to total debt stood at 97.4% as of March 2024.
  • From the gender perspective, the female labour force participation rate has been rising for six years, i.e., from 23.3% in 2017-18 to 37% in 2022-23, driven mainly by the rising participation of rural women.
  • The fiscal deficit of the government is expected to drop to 4.5% of GDP or lower by FY26.
  • Considering several factors, the survey conservatively projects a real GDP growth of 6.5% to 7%, with risks evenly balanced, cognizant of the fact that the market expectations are on the higher side.

Monetary Management and the Financial Intermediation: Stability is the Watchword

  • The Monetary Policy Committee (MPC) maintained the status quo on the policy repo rate at 6.5% in FY24.
  • Reserve Money (M0) recorded year-on-year (YoY) growth of 6.7% as of 29 March 2024, compared with 9.7% in the previous year. M0, adjusted for the first-round impact of changes in the CRR, recorded a 6.7% growth compared with 7.4% a year ago.
  • The growth in Broad Money (M3), excluding the impact of the merger of HDFC with HDFC Bank (with effect from 1 July 2023), was 11.2% (YoY) as of 22 March 2024, compared with 9% a year ago.
  • As of 22 March 2024, the Money Multiplier (MM) was 5.4 against 5.2 a year ago.
  • Credit disbursal by SCBs stood at Rs. 164.3 lakh crore (US$ 1.96 trillion), growing by 20.2% at the end of March 2024, compared to 15% growth at the end of March 2023. The trend is continuing in FY25, as reflected in a 19% and 19.8% YoY growth in bank credit in April and May 2024.
  • Agricultural credit had increased nearly 1.5 times from Rs. 13.3 lakh crore (US$ 159.22 billion) in FY21 to Rs. 20.7 lakh crore (US$ 247.82 billion) in FY24.
  • Industrial credit growth picked up in H2 of FY24, registering 8.5% growth in March 2024, compared with 5.2% a year ago.
  • The gross non-performing assets (GNPA) ratio of SCBs continued its downward trend, reaching a 12-year low of 2.8% at the end of March 2024 from its peak of 11.2% in FY18.
  • The GNPA ratio shrunk to 2.8% in March 2024.
  • As of the end of March 2024, all banks met the CET-1 ratio requirement of 13.9%, well above the regulatory minimum.
  • The number of adults with an account in a formal financial institution increased from 35% in 2011 to 77% in 2021.
  • During FY23, the microfinance sector bounced back strongly, achieving an aggregate disbursement of Rs. 1.8 lakh crore (US$ 21.55 billion), 55% higher than the previous year.
  • Primary markets remained robust during FY24, facilitating capital formation of Rs. 10.9 lakh crore (US$ 21.55 billion) (which approximates 29% of the gross fixed capital formation of private and public corporates during FY23), compared to Rs. 9.3 lakh crore (US$ 111.34 billion) in FY23.
  • During FY24, the value of corporate bond issuances increased to Rs. 8.6 lakh crore (US$ 102.96 billion) from Rs. 7.6 lakh crore (US$ 90.99 billion) during the previous financial year.
  • India’s market capitalisation to GDP ratio has improved significantly over the last five years to 124% in FY24, compared to 77% in FY19.

Prices and Inflation: Under Control

  • With the commitment of the Reserve Bank of India (RBI) to the goal of price stability and policy actions by the Central Government, India successfully managed to keep retail inflation at 5.4% in FY24, the lowest level since the Covid-19 pandemic period.
  • In 2023, India's inflation rate was within its target range of 2% to 6%.
  • Core services inflation eased to a nine-year low in FY24; meanwhile, core goods inflation also declined to a four-year low.
  • Food inflation based on the Consumer Food Price Index (CFPI) increased from 3.8% in FY22 to 6.6% in FY23 and further to 7.5% in FY24.
  • The inflation rate was less than 6% in 29 out of the 36 States and Union Territories.
  • The RBI and the IMF have projected that India's consumer price inflation will progressively align towards the inflation target in FY26.
  • Assuming a normal monsoon and no further external or policy shocks, the RBI expects headline inflation to be 4.5% in FY25 and 4.1% in FY26. IMF has projected an inflation rate of 4.6% in 2024 and 4.2% in 2025 for India.

External Sector: Stability Amid Plenty

  • Services exports continued to perform well, paring the overall trade deficit from US$ 121.6 billion in FY23 to US$ 78.1 billion in FY24.
  • India is moving up the global value chains (GVCs), with the share of GVC-related trade in gross trade rising to 40.3% in 2022 from 35.1% in 2019.
  • India’s rank in the World Bank’s Logistics Performance Index improved by six places, from 44th out of 139 countries in 2018 to 38th in 2023.
  • India witnessed positive net foreign portfolio investment (FPI) inflows in FY24 of US$ 44.1 billion.
  • The Rupee emerged as the least volatile currency among its emerging market peers and a few advanced economies in FY24.
  • The trade openness indicator, which rose from 37.5 in FY05 to 45.9 in FY24, has contributed significantly to economic growth as it facilitated an efficient allocation of resources through comparative advantage.
  • The share of trade (excluding petroleum products exports and crude oil imports) in GDP rose from 32.3% in FY05 to 40.8% in FY23.
  • A 42.2% increase in exports in FY24 (on a YoY basis) enabled smartphones to rank among India’s top five export items considered at six-digit HS product categories.
  • India’s services export in US dollar terms expanded at a robust CAGR of more than 14% over the last 30 years (between 1993 and 2022), significantly higher than India’s merchandise export growth (10.7%) and world services export growth (6.8%).
  • During FY24, India’s Foreign Exchange Reserves increased by US$ 68 billion, the highest increase among major foreign exchange reserves-holding countries.

Medium Term Outlook: A Growth Strategy for New India

  • India’s per capita current dollar GDP has increased from US$ 301.5 in 1993 to US$ 2,484.8 in 2023.
  • India’s workforce is estimated to be 56.5 crores, of which more than 45% are employed in agriculture, 11.4% in manufacturing, 28.9% in services, and 13.0% in construction.
  • According to UN population projections, India’s working-age population (15-59 years) will continue to grow until 2044.
  • The government has launched several schemes, such as the Pradhan Mantri Mudra Yojana and the Credit Guarantee Fund Trust for Micro and Small Enterprises, aimed at providing affordable credit to MSMEs.
  • India has committed to reducing its greenhouse gas (GHG) emissions by 33-35% (from 2005 levels), increasing the share of non-fossil fuel-based electricity to 40% and enhancing forest cover to absorb 2.5 to 3 billion tonnes of carbon dioxide by 2030.
  • The Government of India has been proactive in boosting the growth of the MSME sector, through initiatives such as the allocation of Rs. 5 lakh crores (US$ 59.86 billion) Emergency Credit Line Guarantee Scheme (ECLGS) for businesses, including MSMEs; equity infusion of Rs. 50,000 crores (US$ 59.86 billion) through the MSME Self-Reliant India Fund; New revised criteria for the classification of MSMEs; rollout of Raising and Accelerating MSME Performance (RAMP) programme with an outlay of Rs. 6,000 crores (US$ 718.30 million) over 5 years; Launch of Udyam Assist Platform (UAP) on 11.01.2023 to bring the Informal Micro Enterprises (IMEs) under the formal ambit for availing the benefit under Priority Sector Lending (PSL).
  • In its April 2024 World Economic Outlook, the IMF has raised India's growth forecast for 2024-25 to 6.8% from 6.5% on the back of strong domestic demand and a rising working-age population, making India the fastest-growing G20 economy.

Climate Change and Energy Transition: Dealing with Trade-offs

  • India envisions a 'Viksit Bharat' by 2047, which translates to 'Developed India'.
  • The National Action Plan on Climate Change (NAPCC) outlines the strategy to enhance the sustainability of the country’s development path.
  • India has made noteworthy progress on climate action. The addition to the installed solar power capacity was 15.03 GW in 2023-24, reaching a cumulative of 82.64 GW on 30 April 2024.
  • Under the National Mission on Enhanced Energy Efficiency, the eighth cycle of the Perform Achieve and Trade (PAT) scheme13 was notified in June 2023 for the period 2023- 24 to 2025-26 and covers sectors like aluminium, cement, chlor-alkali, iron & steel, pulp & paper, and textile with a total energy saving target of 0.3370 MTOE (million tonnes of oil equivalent).
  • The country achieved 40% cumulative electrical power installed capacity from non-fossil fuel-based energy sources in 2021 and reduced the emission intensity of India’s GDP from 2005 levels by 33% in 2019– nine and eleven years before the target year of 2030, respectively.
  • India is on track to make an additional carbon sink of 2.5 to 3.0 billion tonnes through tree and forest cover by 2030, with a carbon sink of 1.97 billion tonnes of CO2 equivalent having already been created from 2005 to 2019.
  • As per the NITI’s IESS 2047 model, India’s total investment cost until 2047 is conservatively estimated at ~ USD 250 billion per year to prepare its energy systems for Net-Zero pathways.
  • The Government undertook the issue of sovereign green bonds amounting to Rs. 16,000 crores (US$ 2.39 billion) in January-February 2023 to raise proceeds for public sector projects that would contribute to the efforts to reduce the intensity of the economy's emissions, followed by Rs. 20,000 crores raised (US$ 2.39 billion) through sovereign green bonds in October-December 2023.
  • The global voluntary carbon market is worth over US$ 1.2 billion, and India is the second-largest supplier of carbon offsets.

Employment and Skill Development: Towards Quality

  • India’s unemployment rate declined to 3.2% in 2022-23, reflecting improvements in the labour market.
  • The youth unemployment rate decreased from 17.8% in 2017-18 to 10% in 2022-23.
  • The quarterly urban unemployment rate for people aged 15 years and above declined to 6.7% in the quarter ending March 2024 from 6.8% in the corresponding quarter of the previous year.
  • The female labour force participation rate (FLFPR) rose significantly, particularly in rural areas, indicating increased contributions of women to the workforce.
  • By 2029-30, gig workers are expected to number 2.35 crore (23.5 million), forming 6.7% of the non-agricultural workforce as compared with 2.6% in 2020-21.
  • The Government of India has allocated a budget of Rs. 10,300 crore (US$ 1.24 billion) for the India AI Mission in 2024.
  • Clean energy initiatives in India are projected to create about 3.4 million jobs by 2030 through renewable energy capacity installation.
  • Net payroll additions under the Employees’ Provident Fund Organisation (EPFO) more than doubled in the past five years, signalling healthy growth in formal employment reaching 131.5 lakh in FY24.
  • During FY15-FY22, the wages per worker in rural areas grew at 6.9% CAGR vis-à-vis a corresponding 6.1% CAGR in urban areas.
  • There are approximately 5.4 million formal contract staff or flexi workers in India, representing 1% of the total workforce.
  • Over 32.38 lakh apprentices have been engaged under the National Apprenticeship Promotion Scheme (NAPS) from FY17 to FY24, indicating a growing focus on practical training.

Agriculture and food management: Plenty of upside left if we get it right

  • The agriculture sector in India has demonstrated a robust average growth rate of 4.18% per year over the last five years, indicating a positive trend in agricultural productivity and output.
  • India maintains a substantial stock of foodgrains, with approximately 40% of this stock being distributed free of charge to two-thirds of the population, ensuring food security for vulnerable groups.
  • India exports more than 7% of its total food grains, contributing to its position as a significant player in the global agricultural market.
  • The Government of India has implemented various initiatives aimed at enhancing investment and productivity in agriculture, including the establishment of the Minimum Support Price (MSP) to ensure fair compensation for farmers.
  • The agriculture sector provides essential livelihood support to about 42.3% of the Indian population, highlighting its critical role in the economy and society.
  • In the fiscal year 2022-23, India achieved an all-time high in foodgrain production, reaching 329.7 million tonnes, showcasing the sector's potential for growth and sustainability.
  • Agriculture accounts for 18.2% of India's Gross Domestic Product (GDP) at current prices, underscoring its importance in the national economy.
  • The contribution of the livestock sector to the Gross Value Added (GVA) in agriculture has risen from 24.32% in 2014-15 to 30.38% in 2022-23, reflecting its growing significance in the agricultural landscape.
  • The fisheries sector has experienced impressive growth, with a compound annual growth rate (CAGR) of 8.9% between 2014-15 and 2022-23, making it a vital component of the agricultural economy.
  • As of January 31, 2024, a total of 7.5 crore Kisan Credit Cards (KCCs) have been issued, greatly facilitating farmers' access to affordable credit for their agricultural needs.
  • The total value of agri-food exports, including processed food, reached US$ 46.44 billion in 2022-23, accounting for approximately 11.7% of India's total exports, highlighting the sector's global competitiveness.

Industry: Small and Medium Matters

  • Industrial growth accelerated in FY24, with manufacturing and construction leading the way, resulting in a 25% increase in industrial Gross Value Added (GVA) compared to pre-COVID levels in FY20.
  • The growth was supported by greater credit offtake and a focus on capital formation, particularly in infrastructure-oriented sectors, alongside a favourable policy framework.
  • The economic growth rate of 8.2% in FY24 was significantly supported by industrial growth of 9.5%, particularly in manufacturing and construction.
  • In FY23, manufacturing contributed 14.3% to total GVA, with a substantial share of 35.2% in output, highlighting its critical role in the economy.
  • Coal remains vital for energy, accounting for over 55% of primary commercial energy, with significant production increases reducing import dependence.
  • India’s pharmaceutical market, valued at US$ 50 billion, is the third largest globally, with a strong presence in generic drugs and active pharmaceutical ingredients.
  • The textile sector generated a GVA of Rs. 3.77 lakh crore (US$ 45.20 billion) in FY23 and is a significant contributor to non-corporate manufacturing GVA.
  • The electronics sector has grown significantly, contributing 4% to India's GDP, with domestic production increasing to Rs. 8.22 lakh crore (US$ 98.56 billion).
  • MSMEs accounted for 35.4% of all-India manufacturing output in FY22, playing a crucial role in employment generation and economic growth.

Services: Fuelling Growth Opportunities

  • The services sector has been a cornerstone of India's economic growth, contributing about 55% to the economy in FY24.
  • The services sector witnessed a real growth rate of over 6% annually for most years in the last decade, with a 7.6% growth rate in FY24.
  • India ranked fifth in global services exports, accounting for 44% of total exports in FY24, with services exports growing at 4.8% YoY despite global trade challenges.
  • The services sector saw a robust increase in bank credit, with a 22.9% YoY growth, reaching Rs. 45.9 lakh crore (US$ 550.3 billion) in March 2024.
  • Global Capability Centres (GCCs) employed over 16.6 lakh individuals in FY23, with revenues increasing from US$ 19.4 billion in FY15 to US$ 46 billion in FY23.
  • The overall tele-density rose from 75.2% in March 2014 to 85.7% in March 2024, with internet subscribers increasing from 25.1 crores to 95.4 crores.
  • The Indian e-commerce market is projected to exceed US$ 350 billion by 2030, with modern retail (including e-commerce) expected to grow to 30-35% of total retail in the next 3 to 5 years.
  • The tourism sector saw over 92 lakh foreign tourist arrivals in 2023, a 43.5% YoY increase, generating over Rs. 2.3 lakh crore (US$ 27.58 billion) in foreign exchange earnings.
  • Residential real estate sales reached 4.1 lakh units in 2023, marking a 33% YoY growth, with new supply hitting 5.2 lakh units.
  • Gross GST collection reached Rs. 20.18 lakh crore (US$ 241.97 billion) in FY24, marking an 11.7% increase from the previous year, indicating robust domestic trading activity.

Infrastructure: Lifting Potential Growth

  • The Union Government's capital expenditure has nearly tripled in FY24 compared to FY20, significantly benefiting foundational assets like roads and railways.
  • Despite innovations, government capital expenditure remains central to funding large-scale infrastructure projects. The gross budgetary support (GBS) for railways and highways rose from 36.4% in FY21 to 42.9% in FY24.
  • The Government of India achieved its highest-ever asset monetisation revenue of Rs. 40,314 crores (US$ 4.83 billion) in FY24, with over Rs. 1 lakh crores (US$ 12 billion) raised through asset monetisation since FY19.
  • Capital investment in road transport rose to about 1.0% of GDP to around Rs. 3.01 lakh crores (US$ 36.09 billion) in FY24, with significant private investment attracting a conducive policy environment.
  • The national highway network increased by 1.6 times from 2014 to 2024, with the construction pace improving from 11.7 km/day in FY14 to ~34 km/day in FY24.
  • Capital expenditure on Indian Railways increased by 77% over five years, reaching Rs. 2.62 lakh crores (US$ 31.41 billion) in FY24, with over 68,584 route km and 12.54 lakh employees.
  • Major port capacity has nearly doubled since 2014, with India’s rank improving to 22nd in the World Bank Logistics Performance Index for international shipments.
  • Under the Sagarmala programme, 839 projects worth Rs. 5.8 lakh crores (US$ 69.54 billion) have been initiated, with 262 projects completed and 217 under implementation.
  • The airport sector saw a capital expenditure of around Rs. 72,000 crores (US$ 8.63 billion) in the last five years, with 21 new Greenfield airports approved and 62 million additional passenger capacity added.
  • India aims for 500 GW of installed renewable energy capacity by 2030, with 190.57 GW installed as of March 2024, accounting for 43.12% of total generation capacity.
  • The gross inflow of external commercial borrowings to infrastructure sectors reached US$ 9.05 billion in FY24, with domestic capital market resource mobilisation exceeding Rs. 1,00,000 crores (US$ 12 billion).

Climate Change and India: A Look Through Our Lens

  • India faces the dual challenge of pursuing economic development while implementing meaningful climate action, like other developing nations.
  • Developing countries require approximately US$ 6 trillion by 2030 to meet NDC targets, but only US$ 100 billion was pledged by developed nations.
  • India reduced emission intensity by 33% from 2005 to 2019, achieving its initial NDC target for 2030 eleven years early.
  • India achieved its goal of having 40% of electric installed capacity from non-fossil fuel sources, nine years ahead of the 2030 target.
  • India’s per capita emissions remain low at 2.5-2.8 tonnes CO2eq/year, compared with 8 tonnes for EU nations, indicating disparities in global emissions.
  • India’s traditional practices, such as integrated farming systems, offer sustainable solutions that avoid the pitfalls of Western industrial agriculture.
  • Governments must encourage sustainable lifestyles through policies that promote individual actions, such as reducing plastic use and energy consumption.

Click here for the complete Economic Survey 2023-24.

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