Economic Analysis of India FY2020-FY2024

Questions and Answers

What was the budgeted Gross Fiscal Deficit (GFD) for FY2025 as a percentage of GDP?

4.9%

How has the share of capital expenditure (capex) changed in FY2025 compared to previous estimates?

It has increased to 3.4% of GDP.

What was the trend in consumer price index inflation in India from FY2020 to FY2024?

Inflation decreased from 6.7% in FY2020 to 5.4% in FY2023, with a slight increase expected in FY2024.

What was the current account deficit as a percentage of GDP for FY2024?

0.9% Signup and view all the answers

By what percentage of GDP is the government committed to lowering the GFD by FY2026?

Lower than 4.5%. Signup and view all the answers

What percentage did the gross fiscal deficit of the central government reach in FY2021?

The gross fiscal deficit reached 9.2% of GDP in FY2021. Signup and view all the answers

How did the consolidated fiscal deficit of both the centre and states compare in FY2021?

The consolidated fiscal deficit of the centre and states reached 13.3% of GDP in FY2021. Signup and view all the answers

What contributed to India's manageable external vulnerabilities despite global economic challenges?

A lower trade deficit, higher service exports, and remittances. Signup and view all the answers

What was the consolidated deficit as a percentage of GDP in FY2024?

8.7% Signup and view all the answers

What was identified as a necessary response for managing the macroeconomic impact of the pandemic?

A fiscal policy response was deemed necessary to address the pandemic's severe macroeconomic impact. Signup and view all the answers

Based on the content, what is likely needed to foster growth alongside macro stability in India?

Fiscal consolidation and higher public sector capital expenditure (capex) are needed to foster growth with macro stability. Signup and view all the answers

What was the GFD percentage for FY2024 based on provisional estimates?

5.6% Signup and view all the answers

Compare the consumer price index inflation rates between FY2021 and FY2022.

Inflation decreased from 6.2% in FY2021 to 5.5% in FY2022. Signup and view all the answers

Which advanced economies' monetary policy stance has created spill-over risks for India?

Tight monetary policy stance. Signup and view all the answers

Which year recorded a current account deficit of -1.2% in relation to GDP?

FY2022. Signup and view all the answers

What role did the Reserve Bank of India play in relation to fiscal policies according to the provided content?

The Reserve Bank of India monitored and reported on monetary policy statements impacting fiscal policies. Signup and view all the answers

What implication does a high gross fiscal deficit have for India’s economic health?

A high gross fiscal deficit can indicate unsustainable public spending and potential economic instability. Signup and view all the answers

What changes were observed in the GFD of states from FY2021 to FY2024?

It moderated from 4.1% to 3.1% of GDP. Signup and view all the answers

How has public-sector capital expenditure contributed to private-sector investment in India?

Public-sector capital expenditure has enhanced growth, leading to increased attractiveness for private-sector investment. Signup and view all the answers

What role does rural demand play in the overall consumption momentum in India?

Rural demand is improving and is becoming a broad-based source of consumption momentum in India. Signup and view all the answers

In what way has fiscal consolidation affected the cost of capital for the private sector?

The pace of fiscal consolidation has eased pressures on the cost of capital, making it cheaper for the private sector to borrow. Signup and view all the answers

How has the moderation in inflation influenced inflation risk premiums?

Moderation in inflation has helped contain the inflation risk premium by aligning inflation closer to target levels. Signup and view all the answers

What is the significance of healthy balance sheets for corporates and banks regarding risk aversion?

Healthy balance sheets have mitigated risk aversion by demonstrating financial stability and lowering perceived risks. Signup and view all the answers

What are the targeted sectors for the production-linked incentive scheme in India?

The production-linked incentive scheme targets 14 key sectors to boost manufacturing and growth. Signup and view all the answers

How do improvements in logistics and ease of doing business impact economic growth?

Enhancements in logistics and ease of doing business facilitate trade, attract investments, and drive economic growth. Signup and view all the answers

What opportunities are being harnessed by India in the context of global supply chains?

India is focusing on renewables, semiconductors, and digitalisation as opportunities in global supply chains. Signup and view all the answers

What factor has helped maintain buoyant services exports in India despite global challenges?

Despite an unfavorable global environment, services exports have remained buoyant due to India's growing capabilities. Signup and view all the answers

How do geopolitical factors influence India’s role in global supply chains?

Geopolitical factors have led to a realignment of global supply chains, enhancing India's attractiveness as a low-cost production source. Signup and view all the answers

What was the surplus percentage of India’s current account in the balance of payments during January–March 2024?

0.6% of GDP Signup and view all the answers

What are the primary objectives of increasing agricultural productivity as outlined in the Union Budget 2024–25?

The primary objectives are to raise the income of farmers and keep food prices reasonable for consumers. Signup and view all the answers

By the end of FY2024, how much did India’s foreign exchange reserves rise to?

$646.4 billion Signup and view all the answers

Which areas have been prioritized to transform the agricultural sector according to the Union Budget?

The prioritized areas include agricultural research, new crop varieties, natural farming, and the development of digital public infrastructure. Signup and view all the answers

What was the deficit percentage of the Southwest monsoon rainfall for the year?

5.6% Signup and view all the answers

How much funding has been allocated to the agriculture and allied sectors and rural development in the Union Budget?

₹1.5 lakh crore has been allocated to agriculture and allied sectors, and ₹2.7 lakh crore to rural development. Signup and view all the answers

What was the percentage lower of the first advance estimates of kharif foodgrains production for FY2024 compared to the previous year?

0.9% lower Signup and view all the answers

What initiative is proposed to link farmers to natural farming, and what is the expected outcome?

The initiative aims to link one crore farmers to natural farming over the next two years to increase productivity and reduce input costs. Signup and view all the answers

How much was the growth in agricultural gross value added (GVA) pegged lower at for FY2024 according to the first advance estimates?

1.8% Signup and view all the answers

What is the purpose of creating large-scale production clusters near major consumption centers?

The purpose is to bolster vegetable supply chains and enhance production and distribution efficiency. Signup and view all the answers

What was the rainfall percentage below normal during October–December 2023?

9% below normal Signup and view all the answers

What was the percentage below normal for rainfall during January–February 2024?

33% below normal Signup and view all the answers

What concerns were posed due to low reservoir levels during the rabi cropping season?

Concerns about rabi output Signup and view all the answers

Which regions of India experienced larger rainfall deficits as per the given climate data?

East and north-east and the southern peninsula Signup and view all the answers

What were the rainfall experiences in June and August 2023 compared to July and September 2023?

June and August had large deficits while July and September encountered surpluses. Signup and view all the answers

Study Notes

Consumer Price Index Inflation in India

CPI inflation percentages for FY2020 to FY2024 show annual averages of 4.8%, 6.2%, 5.5%, 5.4%, and 6.7% respectively.

Fiscal Response and Government Deficits

Gross fiscal deficit (GFD) surged to 9.2% of GDP in FY2021 due to pandemic impacts; consolidated deficit was 13.3% of GDP.
Provisional GFD for FY2024 is projected at 5.6%, down from 5.9% estimate; FY2025 budgeted at 4.9%, aiming for under 4.5% by FY2026.
Capital expenditure share expected to rise to 3.4% of GDP for FY2025 to support growth and recovery.

External Balance and Current Account Deficit

Current account deficit (CAD) for FY2024 is moderate at -0.7% of GDP, showing improvement and sustainability.
Surplus recorded in Q1 2024 equivalent to 0.6% of GDP, attributed to lower trade deficits and higher services exports and remittances.
Foreign exchange reserves reached $646.4 billion by end of FY2024.

Resilience of Agriculture to Climate Variability

Southwest monsoon rainfall saw a 5.6% deficit; uneven distribution caused regional disparities in crop production.
Kharif foodgrains production estimated down by 0.9% for FY2024; growth in agricultural gross value added (GVA) pegged at 1.8%-0.7%.
Rainfall below normal during recent months leads to concerns about rabi crop output.

Investment Climate and Economic Growth

Public-sector capex and improved private-sector investment are expected to drive economic growth, with rising consumption demand.
Fiscal consolidation and proactive monetary policy aim to stabilize inflation, lowering costs for private investors.
Corporate and financial institutions exhibit strong balance sheets, reducing risk aversion.

Agricultural Sector Priorities and Budget Allocation

Union Budget 2024–25 focuses on productivity improvements in agriculture, allocating ₹1.5 lakh crore for agricultural and allied sectors, and ₹2.7 lakh crore for rural development.
Initiatives include innovative agricultural research, new crop varieties, natural farming promotion, digital infrastructure, and shrimp production enhancement.
Plans to connect 1 crore farmers to natural farming and establish bio-input resource centers to lower input costs.

Agriculture Productivity Enhancements

Emphasis on sustainable practices aimed at producing more efficiently while balancing farmer income and consumer food prices.
Proposed creation of large-scale vegetable production clusters to improve supply chain efficiency and distribution.

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Description

This quiz explores key economic indicators in India from FY2020 to FY2024, focusing on inflation rates, fiscal responses to government deficits, external balance, and agricultural resilience. Dive into the statistics and trends that shape the Indian economy during this period.