Economic Survey 2024 (GS Paper 3, Economy)
Introduction
- The Economic Survey 2024, released on July 22, 2024, is an essential document for understanding India's economic performance over the past year and the projections for the coming year.
- It was presented by Finance Minister Nirmala Sitharaman and prepared by the Department of Economic Affairs under the guidance of Chief Economic Advisor V. Anantha Nageswaran.
- The survey projects a GDP growth rate of 6.5-7% for FY25 and covers key sectors such as agriculture, industry, and services.
What is the Economic Survey?
- The Economic Survey is an annual report prepared and presented by the Government of India before the Union Budget.
- It reviews the economic developments over the past fiscal year, evaluates the performance of various sectors, and highlights key policy initiatives and their impacts.
- It serves as a critical tool for policymakers, economists, and scholars to understand the economic landscape and make informed decisions.
Highlights of the Economic Survey 2024
- Release Date: The Economic Survey 2024 was released on July 22, 2024, a day before the Union Budget 2024-25.
- Presented By: Finance Minister Nirmala Sitharaman.
- Prepared By: The Department of Economic Affairs, under the guidance of Chief Economic Advisor V. Anantha Nageswaran.
- GDP Growth: The survey projects India’s GDP growth to be between 6.5-7% for FY25, following an 8.2% growth in FY24.
- Inflation: The inflation rate has been reduced from 6.7% in FY23 to 5.4% in FY24.
- Current Account Deficit: The current account deficit improved to 0.7% of GDP in FY24 from 2.0% in FY23.
- Government Spending: Ensured free food grains to 81.4 crore people and progressively enhanced capital spending.
- Banking Sector: The RBI maintained a steady policy rate of 6.5%, and credit disbursal by Scheduled Commercial Banks grew by 20.2%.
- Agricultural Credit: Witnessed double-digit growth.
- External Sector: Improved logistics performance and growth in service exports.
Key Chapters and Insights
State of the Economy
- Real GDP Growth: The economy experienced an 8.2% growth in FY24, with real GDP 20% higher than in FY20. Tax collection saw 55% from direct taxes and 45% from indirect taxes.
- Inflation: Retail inflation fell to 5.4% from 6.7% in FY23, aided by effective administrative and monetary policies.
- Current Account Deficit: Improved to 0.7% of GDP in FY24 from 2.0% in FY23.
Monetary Management and Financial Intermediation
- Banking Sector: Displayed strong performance with the RBI maintaining a policy rate of 6.5%.
- Credit Growth: Credit disbursal by Scheduled Commercial Banks grew by 20.2% to ₹164.3 lakh crore.
- Agricultural Credit: Witnessed significant growth, and industrial credit grew by 8.5%.
Prices and Inflation
- Inflation Management: Retail inflation stayed at 5.4%, aided by price cuts on LPG, petrol, and diesel.
- Food Inflation: Increased to 7.5% in FY24 due to weather and crop issues.
- Future Projections: The RBI projects inflation to fall to 4.5% in FY25, and the IMF forecasts 4.6% in 2024 and 4.2% in 2025.
External Sector
- Performance: India’s rank in the World Bank’s Logistics Performance Index improved to 38th.
- Exports: Services exports grew by 4.9% to USD 341.1 billion. India remains the top remittance recipient with USD 120 billion in 2023.
Medium-Term Outlook
- Policy Focus: Emphasis on boosting private investment, expanding MSMEs, agriculture, financing green transitions, bridging education-employment gaps, and capacity building of states.
- Growth Strategy: Requires collaboration between the Union Government, State Governments, and the private sector to achieve 7% plus growth.
Climate Change and Energy Transition
- Renewable Energy: 45.4% of installed electricity generation capacity comes from non-fossil sources.
- Emission Reduction: Emission intensity of GDP reduced by 33% from 2005 levels.
- Energy Savings: Annual energy savings of 51 million tonnes of oil equivalent, translating to cost savings of ₹1,94,320 crore and emissions reduction of 306 million tonnes.
- Green Bonds: Issued ₹16,000 crore in early 2023 and ₹20,000 crore in late 2023.
Social Sector
- Welfare Expenditure: Increased at a CAGR of 12.8% from FY18 to FY24.
- Ayushman Bharat: More than 34.7 crore cards generated, covering 7.37 crore hospital admissions and 22 mental disorders.
- Education: Initiatives like “Poshan Bhi Padhai Bhi” for preschool education and Vidyanjali benefiting 1.44 crore students.
- Patents: Nearly one lakh patents granted in FY24, indicating rapid progress in R&D.
Employment and Skill Development
- Unemployment: Rate declined to 3.2% overall and 6.7% in urban areas.
- Labour Market: Growth in EPFO memberships with net payroll additions doubling from 61.1 lakh in FY19 to 131.5 lakh in FY24.
- Gig Workforce: Expected to expand to 2.35 crore by 2029–30.
Agriculture and Food Management
- Sector Growth: Average annual growth rate of 4.18% over the last five years.
- Credit Disbursal: Total credit to agriculture amounted to ₹22.84 lakh crore.
- Research Investment: For every rupee invested in agricultural research, the payoff is ₹13.85.
Industry
- Industrial Growth: Supported overall economic growth with 9.5% in FY24.
- Pharma Market: India’s pharmaceutical market is the world’s third largest at USD 50 billion.
- PLI Schemes: Attracted over ₹1.28 lakh crore in investment, leading to production/sales of ₹10.8 lakh crore.
Services
- Sector Contribution: Services sector contributes 55% to Gross Value Added (GVA).
- Export Growth: India’s share in global digitally delivered services exports increased to 6% in 2023.
- Tourism: Witnessed 92 lakh foreign tourist arrivals in 2023, a 43.5% YoY increase.
Infrastructure
- National Highways: Pace of construction increased from 11.7 km/day in FY14 to 34 km/day by FY24.
- Railways Capex: Increased by 77% in the past five years. New terminal buildings operationalised at 21 airports.
- Logistics Performance: India’s rank in the World Bank’s Logistics Performance Index improved to 22nd.
Climate Change and India
- Climate Strategy: Emphasizes a harmonious relationship with nature and mindful consumption through “Mission LiFE.”
- Western Approaches: Criticised for not addressing overconsumption, advocating for a more tailored approach for developing countries.
Conclusion
- The Economic Survey 2024 underscores India’s robust economic performance and strategic focus on growth, stability, and sustainability.
- The government’s policies aim to maintain this positive trajectory while addressing challenges and leveraging opportunities for continued development.
- Thoroughly analyzing the Economic Survey is crucial for gaining a deep understanding of India’s economic outlook and preparing for the UPSC exams.
