Highlights of Economic Survey 2023-2024 (India) PDF

DEAR Highlights of Economic Survey 2023-24 ---------------------------------------------------------------------- Economic surveys, prepared annually by the Department of Economic Affairs, Government of India, act as the Union government's official report card. These documents provide a roadmap fo...

DEAR Highlights of Economic Survey 2023-24 ---------------------------------------------------------------------- Economic surveys, prepared annually by the Department of Economic Affairs, Government of India, act as the Union government's official report card. These documents provide a roadmap for the country's economy, summarizing economic development over the financial year, particularly on agriculture and rural development. This year's Economic Survey conservatively estimates real GDP growth at 6.5-7 percent for FY25, recognizing that market expectations are higher but noting that risks are evenly balanced. Despite numerous external challenges, India's economy maintained its momentum from FY23 into FY24, mainly due to a focus on preserving macroeconomic stability, which minimized the impact of these challenges. In FY24, India's real GDP grew by 8.2 percent, exceeding the 8 percent mark in three quarters. Key findings and insights from the Economic Survey 2023-24 State of the economy in 2023-24 On the supply side, Gross Value Added (GVA) grew by 7.2 percent in FY24 (at 2011-12 prices), while net taxes at constant prices increased by 19.1 percent. Through adept management of administrative and monetary policies, retail inflation decreased from 6.7 percent in FY23 to 5.4 percent in FY24. The Current Account Deficit (CAD) was 0.7 percent of GDP in FY24, improving from 2.0 percent in FY23. Monetary Management and Financial Intermediation The Monetary Policy Committee (MPC) held the policy repo rate at 6.5 percent in FY24, gradually aligning inflation with its target while supporting growth. Credit disbursal by Scheduled Commercial Banks (SCBs) reached ₹164.3 lakh crore, growing by 20.2 percent by the end of March 2024. Credit growth to agriculture and allied activities was in double digits during FY24. Agricultural credit increased nearly 1.5 times, from ₹13.3 lakh crore in FY21 to ₹20.7 lakh crore in FY24. Industrial credit growth was 8.5 percent, up from 5.2 percent the previous year. Prices and Inflation The agriculture sector faced challenges due to extreme weather events, depleted reservoirs, and crop damage, which affected farm output and food prices. Food inflation rose from 6.6 percent in FY23 to 7.5 percent in FY24. The RBI projects inflation to decrease to 4.5 percent in FY25 and 4.1 percent in FY26, assuming normal monsoons and no external or policy shocks. The IMF forecasts inflation for India at 4.6 percent in 2024 and 4.2 percent in 2025. In August 2023, the price of domestic LPG cylinders was reduced by ₹200 per cylinder across all markets in India, leading to LPG inflation entering the deflationary zone. 1 DEAR External Sector and Medium-Term Outlook India's rank in the World Bank’s Logistics Performance Index improved from 44th in 2018 to 38th in 2023, out of 139 countries. India's services exports grew by 4.9 percent to USD 341.1 billion in FY24, primarily driven by IT/software services and other business services. India's external debt has remained sustainable, with the external debt to GDP ratio at 18.7 percent as of the end of March 2024. Key policy focus areas in the short to medium term include job and skill creation, maximizing the potential of the agriculture sector, addressing MSME bottlenecks, managing India's green transition, the corporate bond market, tackling inequality, and improving the health quality of the young population. Amrit Kaal’s growth strategy is based on six key areas: boosting private investment, expanding MSMEs, leveraging agriculture as a growth engine, financing the green transition, bridging the education-employment gap, and building state capacity. A collaborative effort between the Union government, state governments, and the private sector is required for the Indian economy to grow at over 7 percent. Social Sector, Employment and Skill Development The new welfare approach aims to enhance the impact per rupee spent. Digitization in healthcare, education, and governance has significantly amplified the effectiveness of every rupee spent on welfare programs. Between FY18 and FY24, nominal GDP grew at a Compound Annual Growth Rate (CAGR) of about 9.5 percent, while welfare expenditure increased by 12.8 percent. The Gini coefficient, a measure of inequality, has decreased from 0.283 to 0.266 in the rural sector and from 0.363 to 0.314 in the urban sector. Indian labour market indicators have improved in the last six years, with the unemployment rate. The quarterly urban unemployment rate for individuals aged 15 and above fell to 6.7 percent in the quarter ending March 2024, down from 6.8 percent in the same quarter of the previous year. According to the Periodic Labour Force Survey (PLFS), over 45 percent of the workforce is employed in agriculture, 11.4 percent in manufacturing, 28.9 percent in services, and 13.0 percent in construction. According to the Annual Survey of Industries (ASI) 2021-22, employment in the organized manufacturing sector has surpassed pre-pandemic levels, with employment per factory continuing its pre-pandemic growth. From FY15 to FY22, wages per worker in rural areas grew at a Compound Annual Growth Rate (CAGR) of 6.9 percent, compared to a 6.1 percent CAGR in urban areas. Direct public investment equivalent to 2 percent of GDP could generate 11 million jobs, of which nearly 70 percent would go to women. Agriculture and Food Management Over the past five years, agriculture and related sectors have achieved an average 2 DEAR annual growth rate of 4.18 percent at constant prices. Allied sectors within Indian agriculture are increasingly becoming significant contributors to enhancing farm incomes and driving growth. As of January 31, 2024, total credit extended to agriculture amounted to ₹22.84 lakh crore. By January 31, 2024, banks had issued 7.5 crore Kisan Credit Cards (KCC), with an aggregate limit of ₹9.4 lakh crore. The Per Drop More Crop (PDMC) scheme implemented micro irrigation on 90 lakh hectares from 2015-16 to 2023-24. It is estimated that every rupee invested in agricultural research (including education) generates a return of ₹13.85. Growth of Agriculture and Allied Sectors According to provisional estimates for 2023-24, the agriculture sector's growth rate was 1.4 percent. The allied activities—livestock and fisheries—have performed better than traditional crops such as cereals, which is evident from an increase in their share in agriculture Gross Value Added (GVA) at current prices from 24.38 percent and 4.44 percent in 2014-15 to 30.23 percent and 7.25 percent in 2022-23, respectively. Figure 1: Growth of agriculture and allied sectors1 Investment in Agriculture and Allied Sectors The average annual growth in GCF from 2016-17 to 2022-23 was 9.70 percent. The agriculture sector's GCF grew at a rate of 19.04 percent in 2022-23, and the GCF as a percentage of GVA rose from 17.7 percent in 2021-22 to 19.9 percent in 2022-23, suggesting an increase in investment in agriculture. From 2014-15 to 2022-23, the livestock sector grew at an impressive Compound Annual Growth Rate (CAGR) of 7.38 percent at constant prices. 1 Source: Economic Survey of India, 2023-24 3 DEAR Figure 2: GCF of agriculture and allied sector and GCF as a per cent of Agri GVA2 The contribution of livestock to the total GVA (at constant prices) in agriculture and allied sectors increased from 24.32 percent in 2014-15 to 30.38 percent in 2022-23. Agricultural Production In 2022-23, foodgrain production reached a record high of 329.7 million tonnes, while oilseed production amounted to 41.4 million tonnes. Production of other crops, including Shree Anna/nutri-cereals and total oilseeds, slightly increased. Nutri-cereals saw a marginal rise of 1 percent compared to the previous year. Tur production was estimated at 33.85 lakh tonnes, up from 33.12 lakh tonnes last year. Lentil (Masur) production was estimated at 17.54 lakh tonnes, an increase of 1.95 lakh tonnes from the previous year’s 15.59 lakh tonnes. Figure 3: Growth of cereals and poultry products3 2 Source: Economic Survey of India, 2023-24 3 Source: Economic Survey of India, 2023-24 4 DEAR Focus on crop diversification The government’s initiative to promote crop diversification is supported by significantly higher Minimum Support Prices (MSP) above the average production cost for oilseeds and pulses. Domestic availability of edible oil has risen from 86.30 lakh tonnes in 2015-16 to 121.33 lakh tonnes in 2023-24. In 2023-24, lentils (Masur) received the highest MSP, set at 89 percent above the cost of production, followed by tur with a 58 percent increase. Coarse cereals/millets, such as bajra, saw an MSP that was 82 percent above production costs. The total area dedicated to oilseeds has grown substantially, increasing from 25.60 million hectares in 2014-15 to 30.08 million hectares in 2023-24, marking a 17.5 percent growth. Figure 4: Production of major crops4 Agriculture Credit As of January 31, 2024, the total credit disbursed to agriculture reached ₹22.84 lakh crore. Of this, ₹13.67 lakh crore was allocated for short-term crop loans, and ₹9.17 lakh crore was designated for term loans. By January 31, 2024, banks had issued 7.5 crore Kisan Credit Cards (KCC), with a total credit limit of ₹9.4 lakh crores. By March 31, 2024, a total of 3.49 lakh KCCs were issued for fisheries, and 34.5 lakh KCCs were issued for animal husbandry activities. Joint Liability Groups (JLGs) have experienced a compound annual growth rate (CAGR) of 43.76 percent over the past five years, becoming an essential credit source for tenant farmers and marginalized groups. Under the Pradhan Mantri Fasal Bima Yojana (PMFBY), the insured area for 2023-24 expanded to 610 lakh hectares, up from 500.2 lakh hectares in 2022-23. 4 Source: Economic Survey of India, 2023-24 5 DEAR Food Management As of March 14, 2024, over 1.77 crore farmers and 2.56 lakh traders have registered on the e-NAM portal. By February 29, 2024, 8,195 Farmer Producer Organizations (FPOs) had registered under the new FPO scheme. Equity grants totalling ₹157.4 crores were disbursed to 3,325 FPOs, and credit guarantees worth ₹278.2 crores were issued to 1,185 FPOs. Assured Remunerative Prices and Other Income Support Measures As of July 10, 2024, over ₹3.24 lakh crore has been disbursed to more than 11 crore farmers under the PM-KISAN scheme, launched on February 24, 2019. According to the Ministry of Agriculture, 23.41 lakh farmers had enrolled in the Pradhan Mantri Kisan Maandhan Yojana (PMKMY) by July 7, 2024. Figure 5: MSP of major crops from 2021-22 to 2023-245 Farm Mechanization From 2014-15 to 2023-24, a total of ₹7.26 thousand crore was allocated under the Sub Mission on Agricultural Mechanization (SMAM), with an allocation of ₹859.45 crore for 2023-24. Between 2014-15 and 2023-24, 25,527 Custom Hiring Centres (CHCs) were established under the scheme, including 607 CHCs set up in 2023-24. Under the Paramparagat Krishi Vikas Yojana (PKVY) Scheme, by 2022-23, 48,144 clusters covering 13.98 lakh hectares and benefiting 24.22 lakh farmers have been developed. 5 Source: Economic Survey of India, 2023-24 6 DEAR Cooperative Societies In 2023, the government approved a scheme to establish Primary Agriculture Credit Societies (PACS) in Panchayats and villages that have not yet been covered, with a target for the next five years. The number of cooperatives has also grown. As of March 2024, there were 8.03 lakh single-state cooperatives and 1,614 multi-state cooperatives. Figure 6: Number of single-state and multi-state cooperatives registered by major states6 Food Processing Sector (FPI) In 2022-23, the value of agri-food exports, including processed food, was USD 46.44 billion, representing approximately 11.7 percent of India’s total exports. The proportion of processed food exports increased from 14.9 percent in 2017-18 to 23.4 percent in 2022-23. Over the past eight years, ending in 2022-23, the food processing industry has experienced an average annual growth rate (AAGR) of about 5.35 percent at 2011-12 prices. Figure 7: Share of FPI in manufacturing GVA and growth of FPI in per cent 6 Source: Economic Survey of India, 2023-24 7 DEAR Industry, Services and Infrastructure The economic growth of 8.2 percent in FY24 was bolstered by an industrial growth rate of 9.5 percent. Despite various disruptions, the manufacturing sector achieved an average annual growth rate of 5.2 percent over the past decade, with major contributors being chemicals, wood products and furniture, transport equipment, pharmaceuticals, machinery, and equipment. Production-linked incentive (PLI) schemes attracted investments totaling over ₹1.28 lakh crore by May 2024, leading to production/sales of ₹10.8 lakh crore and creating over 8.5 lakh direct and indirect jobs. Industry must lead in incentivizing R&D and innovation while enhancing workforce skills through active collaboration with academia. The services sector’s contribution to overall Gross Value Added (GVA) has returned to around 55 percent pre-pandemic levels. Strong public sector investment has played a crucial role in funding large-scale infrastructure projects in recent years. Between 2014 and 2023, the clean energy sector in India attracted new investments of ₹8.5 lakh crore (USD 102.4 billion). Climate Change, Sustainable Agriculture and Energy Transition India has made significant progress in climate action, notably increasing its renewable energy capacity and improving energy efficiency. The country has reduced the emission intensity of its GDP from 2005 levels by 33 percent in 2019. As of 31 May 2024, non-fossil sources constitute 45.4 percent of the installed electricity generation capacity. The installed solar power capacity increased by 15.03 GW in 2023-24, reaching a cumulative total of 82.64 GW, as on 30 April, 2024. Total annual energy savings amount to 51 million tonnes of oil equivalent, translating to annual cost savings of ₹1,94,320 crores and an emissions reduction of approximately 306 million tonnes. Expanding renewable energy and clean fuels will increase the demand for land and water. National Action Plan on Climate Change (NAPCC) aims to develop and implement strategies to enhance Indian agriculture's resilience to climate change. A critical intervention to address climate change is ensuring assured irrigation for farmland. The Rainfed Area Development (RAD) program, under the National Mission for Sustainable Agriculture (NMSA), seeks to improve productivity and reduce risks from climatic variability. To date, ₹1.74 thousand crore has been allocated, covering 7.33 lakh hectares under the RAD program. Irrigation area coverage increased from 49.3 percent of the gross cropped area (GCA) in 2015-16 to 55 percent in 2020-21. Irrigation intensity (the ratio of gross irrigated area to net irrigated area) rose by 10.3 percentage points, from 144.2 percent in 2015- 16 to approximately 154.5 percent in 2021-22. Cropping intensity also increased by 12.8 percentage points over this period. 8