A day before the Union Budget, which will be unveiled by Finance Minister Nirmala Sitharaman on Wednesday, February 1, 2023, the Economic Survey for 2023–24 was introduced in Parliament on Tuesday, January 31, 2023. The Economic Survey, which is issued every year a day before the budget and analyses the performance of every area of the economy before making recommendations for the future, is a report card on the state of the economy.
Key Highlights
- India's economy will expand by 6.5% in 2023–2024 compared to this fiscal's 7% growth and 2021–2022's 8.7% expansion. In the upcoming fiscal year, nominal GDP (gross domestic product) is expected to reach 11%.
- Private consumption, more capital expenditures, a better corporate balance sheet, increased financing to small enterprises, and the return of migrant workers to cities all contributed to growth.
- Depending on global economic and political developments, real GDP growth is expected to be between 6 and 8.0% in the upcoming fiscal year.
- The probability of additional interest rate increases by the US Fed presents a challenge to the rupee's decline.
- As long as global commodity prices stay high and the pace of economic expansion is maintained, the current account deficit (CAD) may continue to increase. The rupee may see devaluation pressure if CAD widens much more.
According to the most recent Reserve Bank of India (RBI) figures, the nation's current account deficit increased to 4.4% of GDP in the quarter ending in September from 2.2% of GDP during the April-June period as a result of a larger trade imbalance.
- India has enough foreign exchange reserves to cover CAD and participate in the Forex Trading market to control currency volatility.
- The second half of the current fiscal year has seen a slowing in export growth after the first half of the year and the increase in growth rates in 2021–22 caused production processes to move from "mild acceleration" to "cruise mode."
- The loss of export stimulus in the second part of this year was caused by the slowing global economy and declining worldwide commerce.
- On the strength of low inflation and moderate lending costs, bank credit growth is anticipated to be robust in FY24.
- Over 30.5% more credit was extended to small firms between January and November of 2022.
- In the current fiscal year's April to November, central government capital expenditures increased by 63.4%.
- The stock market generated gains in 2022 despite the removal of FPI.
- In the current fiscal year, private consumption and capital formation have driven economic growth and helped create jobs; urban employment rates have decreased while Employee Provident Fund registration has increased.
- The survey suggested that "entrenched inflation" could prolong the tightening cycle, causing borrowing costs to remain higher for longer.
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