Promise of growth

In the run-up to the Union Budget, it was time for stock-taking on the national economy based on multiple parameters including the performances by various sectors. The Economic Survey 2023 prepared by chief economic adviser Anantha Nageswaran and presented by finance minister Nirmala Sitharaman in Parliament on Tuesday forecast India’s growth for the next fiscal to be 6.5 per cent – a slight fall from the seven per cent this fiscal. Compared to a global average of 3 per cent, this pace of growth in the post-Covid19 phase is perhaps a reassurance that the national economy is performing well.
On the positive side, the number of SMEs coming up with IPOs almost doubled while the total funds raised by them were three times the receipts of the previous fiscal. The post-Covid economic recovery is “complete” and non-banking and corporate sectors have healthy balance sheets. India is the largest recipient of remittances in the world, it receiving $100billon in 2022, a “major source of external financing after service export.” The automobile sector is now a key driver of economic growth, the nation being the third largest automobile market, surpassing Japan and Germany in terms of sales. This is reflective of the purchasing power of the middle and higher income groups. Annual FDI equity inflows in the manufacturing sector have doubled over a year to $21 billion. The budgeted expenditure on the health sector reached 2.1 per cent of the GDP against 1.6 per cent the previous fiscal. The Centre’s capital expenditure for roads and highways at more than Rs1.49 lakh crore meant a rise of 102 per cent year-on-year. The capital expenditure for Defence services this fiscal was more than Rs1.52 lakh crore — a marginal rise of 0.88 per cent year-on-year. On the Welfare front, the Centre has spent Rs3.5 lakh crore on the free food programme as part of its poverty alleviation programmes. In the health care sector too, there was a substantial jump in governmental spending.
On the negative side, industrial output faced constraints this fiscal because of “high rainfall” affecting output in sectors like real estate and construction. Manufacturing output was hit by “inventory build-up and uneven growth.” Automobile and electronics sectors did well while sectors like textiles did not due to “poor global demand.” Export growth, hit this fiscal year, may slow further and “remain weak in view of the global recession.” To sum up, India rated as the world’s fifth largest economy, registers the “fastest growth” among major economies. The document also stresses that the fiscal parameters would continue to improve even as the advanced economies faced recessionary trends.