Economic Survey 2022-23: Key Highlights

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• Recently, the Union Minister for Finance tabled the Economic Survey 2022-23 highlighting the outlook for India’s growth, inflation and unemployment in the coming years.

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• The Economic Survey of India suggests that the economy has recovered from the Covid disruption and is poised for sustained robust growth in the rest of the decade.
• The Survey attributes the recovery to wide-ranging structural and governance reforms that have strengthened the economy’s fundamentals and increased its efficiency.
• The Indian economy is expected to grow at its potential similar to the growth experience after 2003, but the growth outlook is unlikely to be much above 6%.
• The growth rate in India has become increasingly capital-intensive, leading to a lower labor force participation rate and widespread joblessness, which acts as a drag on economic growth.
• India’s population is growing with a large youth bulge, high levels of poverty, and malnourished children, which requires faster growth to satisfy the growing population
• The survey cautions that a growth rate of 6% may not create enough jobs to meet the demand from the growing population.

Major Findings of the Survey

• State of the Economy 2022-23:
  • The Indian economy is staging a broad based recovery across sectors after recovering from pandemic-induced contraction, Russian-Ukraine conflict and inflation.
  • India’s GDP growth is expected to remain robust and in the range of 6-6.8 % in Financial Year 2023-24,  but detailed some downside risks, such as low demand for exports, sustained monetary tightening, etc.
• Inflation: 
  • The RBI projects headline inflation at 6.8% in FY23, outside its comfort zone of 2% to 6%, but the Survey is optimistic about the inflation levels and trajectory.
  • Steps taken by government to control inflation included:
    • Phase wise reduction in export duty of petrol and diesel
    • Import duty on major inputs were brought to zero
    • Prohibition on the export of wheat products under HS Code 1101 and 
    • Imposition of export duty on rice.
• External Sector:
  • Merchandise exports were US$ 332.8 billion for April-December 2022.
  • India diversified its markets and increased its exports to Brazil, South Africa and Saudi Arabia.
  • To increase its market size and ensure better penetration, in 2022, Comprehensive Economic Partnership Agreement (CEPA) with UAE.
  • The Economic Cooperation and Trade Agreement (ECTA) with Australia came into force.
  • India is the largest recipient of remittances in the world receiving US$ 100 bn in 2022. 
  • Remittances are the second largest major source of external financing after service export.
• Agriculture & Food Management:
  • Private investment in agriculture has increased to 9.3% in 2020-21.
  • Free foodgrains to about 81.4 crore beneficiaries is being provided under the National Food Security Act for one year from January 1, 2023.
• Services:
  • The services sector is expected to grow at 9.1% in FY23, as against 8.4% (YoY) in FY22.
  • India was among the top ten services exporting countries in 2021, with its share in world commercial services exports increasing from 3 per cent in 2015 to 4 per cent in 2021.
• Digital Infrastructure:
  • Unified Payment Interface (UPI)-based transactions grew in value (121 per cent) and volume (115 per cent) terms, between 2019-22, paving the way for its international adoption.
  • More than 98 per cent of the total telephone subscribers are connected wirelessly.
  • The overall tele-density in India stood at 84.8 per cent in March 2022.
• Physical Infrastructure:
  • National Logistics Policy envisions developing an integrated, cost-efficient, resilient logistics ecosystem in the country for accelerated and inclusive growth.
  • Inland Vessels Act 2021 replaced the 100-year-old Act to ensure hassle free movement of Vessels promoting Inland Water Transport.
• Climate Change and Environment:
  • India declared the Net Zero Pledge to achieve net zero emissions goal by 2070.
  • India achieved its target of 40 per cent installed electric capacity from non-fossil fuels ahead of 2030.
  • A mass movement LIFE (Lifestyle for Environment) was launched.
  • Sovereign Green Bond Framework (SGrBs) was issued in November 2022.
  • National Green Hydrogen Mission launched to enable India to be energy independent by 2047.
• Unemployment: 
  • Employment levels have risen in the current financial year, with job creation appearing to move into a higher orbit. The urban unemployment rate for people aged 15 years and above declined from 9.8% to 7.2%.
• Implications for India’s economy: 
  • The Survey suggests that India’s economy has recovered from the Covid disruption and is poised for sustained robust growth which will be higher than for almost all major economies.
• Reference to 2003: 
  • The Survey argues that the situation in 2023 is similar to 2003, when the Indian economy was poised for growth.
• Likelihood: 
  • India’s potential growth rate is unlikely to rise much above 6% in the next few years.

Importance of Economic Survey

• Provides an overview of the current state of the economy: The Survey gives an overview of the performance of the Indian economy in the current financial year, including GDP growth rate, inflation, the balance of payments, and other key macroeconomic indicators.
• Identifies key economic challenges: The Survey identifies key challenges facing the Indian economy and provides insights into how they can be addressed which is crucial for policymakers, who use this information to formulate their economic policies.
• Offers policy recommendations: The Survey provides policy recommendations to the government on how to address economic challenges and promote economic growth and development. This is important for businesses and investors, who can use these recommendations to plan their investments and strategies.
• Guides future economic policies: It provides a roadmap for future economic policies, including a projection of GDP growth, inflation, and other key macroeconomic indicators. 
• Supports data-driven decision making: The Survey provides a comprehensive and in-depth analysis of the Indian economy, including data and evidence-based insights.

Limitations of Economic survey

• Data Availability: The lack of reliable data sources and the delay in the release of official data can pose challenges for the preparation of the survey.
• Forecasting: Predicting the future state of the economy can be challenging, especially in an environment of economic volatility and uncertainty.
• Representation of Diverse Sectors: The Indian economy is diverse and multi-faceted, and the survey must be comprehensive enough to represent the varying sectors and their interlinkages.
• Balancing Policy Recommendations with Objectivity: The Economic Survey is expected to be both policy-oriented and objective in its analysis which is challenging as it requires a delicate balance between providing policy recommendations and retaining its independence.
• Addressing Political Pressures: The Economic Survey is a political document, and it must be prepared in such a way that it aligns with the government’s political objectives while also remaining credible and objective.
• Managing Expectations: The Survey is widely read and analyzed, and managing public expectations about its contents can be challenging. 

Source: PIB