Finance Minister Nirmala Sitharaman, while presenting the economic survey during the budget session on Tuesday, claimed that the country’s economy has now come out of the pandemic and will now grow rapidly. The survey has estimated the GDP growth rate for the financial year 2023-24 to be 6.5 percent.
The Finance Minister said that this would be the slowest growth in the last three years, yet India would remain the fastest-growing major economy in the world.
According to the survey, India is the world’s third-largest economy in terms of PPP (Purchasing Power Parity) and the fifth-largest economy in terms of the exchange rate.
The Survey says the economy will grow at seven percent for the year ending March 2023. The growth rate during the last financial year was 8.7 percent.
According to the Survey, the mainstay of India’s economic growth during FY2023 has been private consumption and capital formation, which has helped in job creation.
This is reflected through a reduction in the urban unemployment rate and a spurt in the total enrollment of the Employees’ Provident Fund. The unemployment rate has come down to 7.2 percent.
In addition, the world’s second-largest vaccination campaign, in which more than two billion doses have been given. Which has strengthened the sentiment of consumers, which will increase consumption.
Private capital investment needs to lead so employment opportunities can be created rapidly. The pace of recovery in the MSME sector has picked up, which is reflected in the amount of Goods and Services Tax (GST) they pay.
Their Emergency Credit Linked Guarantee Scheme (ECLGS) is easing credit-related concerns. The government’s capital expenditure increased by 63.4 percent in the first eight months of FY2023, which has been a significant driver of growth for the Indian economy in the current financial year. There has been an increase in private capital expenditure from the January-March quarter of 2022.
The review highlights the constraints faced by construction activities due to the pandemic. Vaccination has facilitated migrant workers to come back to the cities.
This has strengthened the housing market. This is reflected in the fact that a significant shortfall has been registered in the stock of manufacturing materials.
The National Family Health Survey (NFHS) has also shown that rural well-being indicators have improved from FY 2016 to FY 2020, covering themes such as gender, fertility rate, household facilities, and women empowerment.
The review states that the Indian economy has been freed from the effects of the pandemic and has recovered faster than other countries in FY2022. The Indian economy is now set to move forward on the pre-pandemic growth path in FY2023.
In the current year, however, India faces the challenge of containing the rise in inflation caused by the European conflict. Measures taken by the government and the RBI and moderation in global commodity prices helped bring down retail inflation below the RBI’s target range from November 2022.
Thus, global growth is projected to decelerate in 2023 and is expected to remain generally weak in the following years. Slower demand will bring down global commodity prices and India’s CAD will improve in FY24.
Inflation in India is likely to slip below five percent in the next financial year as compared to 6.8 percent in the current financial year. In the year 2024, it may come down to four percent.
The International Monetary Fund said this on Tuesday. Daniel Leigh, Division Chief of the IMF’s Research Department, said that the reduction in the rate of inflation is possible due to the steps taken by the central bank and its effect will continue even further.