Economic survey projects sustained 7% growth for Indian economy

The recent economic survey, presented in Parliament by Finance Minister Nirmala Sitharaman, shows that the Indian economy can achieve a growth rate of over 7% in the medium term if the country builds on the structural reforms implemented over the past decade.

The study highlights the need for a tripartite compact between the Union government, state governments and the private sector to realise this potential. The financial sector is undergoing significant transformation, with primary capital markets facilitating capital formation of ₹10.9 lakh crore during FY24, accounting for 29% of gross fixed capital formation of private and public sector enterprises in FY23.

India faces unique opportunities and challenges amid global trends such as geo-economic fragmentation, self-reliance, climate change, technological advancement and limited policy space. The study suggests a shift in focus to bottom-up reforms and strengthening of governance to ensure sustainable, balanced and inclusive growth.

The growth strategy, called ‘Amrit Kaal’, focuses on six key areas: boosting private investment, expanding SMEs, recognising agriculture as a growth engine, financing the green transition, closing the education-employment gap, and building state capacity and capability.

Financial inclusion is emphasized through the use of direct benefit transfers and promotion of digital payments, which allows for flexibility in policy and regulatory interventions to address potential vulnerabilities. India’s ranking in the World Bank’s Logistics Performance Index improved from 44th in 2018 to 38th in 2023, with the current account deficit narrowing to 0.7% in FY24, supported by moderation in goods imports and rising services exports.

The social sector is currently undergoing significant transformation, driven by the new Education Policy of 2020, which focuses on basic literacy and numeracy, and Ayushman Bharat, which has provided significant healthcare benefits and reduced out-of-pocket costs for poor families.

Labour market indicators have improved, with the unemployment rate falling to 3.2% in 2022-23. Agriculture is seen as a sector with significant growth potential, requiring policies that are aligned with climate imperatives and water security. The MSME sector faces challenges in supply chain management, market access and formalisation, particularly in sectors such as textiles.

The study highlights the importance of R&D, vocational education and training to meet the emerging demand for service sector jobs. Infrastructure development, led mainly by the public sector, calls for more private sector financing and resource mobilization.

The Economic Survey presents a comprehensive roadmap for India’s economic growth, focusing on sustainable development, structural reforms and inclusive growth. The aim is to position India as a robust and resilient economy amid global challenges.