Union Finance Minister Nirmala Sitharaman tabled the Economic Survey 2022-23 in Parliament ahead of the Union Budget to be presented on February 1.

India’s economy is projected to slow to 6.5 per cent in the fiscal year starting April but will remain the fastest growing major economy in the world as it fared better in dealing with the extraordinary set of challenges the globe has faced, the Economic Survey 2022-23 said.

Economic Survey 

• The Economic Division of the Department of Economic Affairs brings out the Economic Survey annually, which is laid before both the Houses of Parliament one day before the presentation of the Union Budget.

• The Economic Survey provides a comprehensive overview of important developments in the economy in the past one year. It also analyses recent economic trends and provides an in-depth appraisal of policies. 

• Over the years, the Economic Survey has acquired the status of an authentic source and a useful compendium of the annual performance of the Indian economy.

Economic Outlook 2023-24

• At least three shocks have hit the global economy since 2020. It all started with the pandemic-induced contraction of the global output, followed by the Russian-Ukraine conflict leading to a worldwide surge in inflation. Then, the central banks across economies led by the Federal Reserve responded with synchronised policy rate hikes to curb inflation.

• The FY23 so far for India has reinforced the country’s belief in its economic resilience. The economy has withstood the challenge of mitigating external imbalances caused by the Russian-Ukraine conflict without losing growth momentum in the process.

• A relatively higher growth forecast among major economies, projected retail inflation only slightly higher than the tolerance limit, and an estimated current account deficit financeable with normal capital inflows and forex reserves large enough to finance close to a year’s imports are clear evidence of economic resilience amidst a global polycrisis. 

• Strong consumption rebound, robust revenue collections, sustained capex in both the public and the private sector, growing employment levels in the urban as well as the rural areas, and targeted social security measures further underpin the prospects for economic and social stability and sustained growth. 

• India is the third-largest economy in the world in purchasing power parity (PPP) terms and the fifth largest in market exchange rates. 

• As expected of a nation of this size, the Indian economy in FY23 has nearly “recouped” what was lost, “renewed” what had paused, and “re-energised” what had slowed during the pandemic and since the conflict in Europe.

• Even as India’s outlook remains bright, global economic prospects for the next year have been weighed down by the combination of a unique set of challenges expected to impart a few downside risks. 

• Multi-decadal high inflation numbers have compelled central banks across the globe to tighten financial conditions. The impact of monetary tightening is beginning to show in slowing economic activity, especially in Advanced Economies. 

• Besides this, adverse spillovers from the prolonged strains in supply chains and heightened uncertainty due to geo-political conflict have further deteriorated the global outlook.

The upside to India’s growth outlook arises from:

i) 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.

ii) Inflationary impulses from the reopening of China’s economy turning out to be neither significant nor persistent.

iii) Recessionary tendencies in major Advanced Economies triggering a cessation of monetary tightening and a return of capital flows to India amidst a stable domestic inflation rate below 6 per cent.

iv) This leading to an improvement in animal spirits and providing further impetus to private sector investment.

• Against this backdrop, the survey 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 International Monetary Fund (IMF), and the Asian Development Bank (ADB) and by Reserve Bank of India, domestically. 

• The actual outcome for real GDP growth will probably lie in the range of 6.0 per cent to 6.8 per cent, depending on the trajectory of economic and political developments globally.

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