Following President Droupadi Murmu’s address to the joint sitting of the two Houses, Union Finance Minister Nirmala Sitharaman on Tuesday introduced the pre-Budget Economic Survey 2022-23 in Parliament.
Under the direction of chief economic adviser V Anantha Nageswaran, the Economic Division of the Department of Economic Affairs in the Ministry of Finance developed the Economic Survey document. It provides information on the status of the economy, numerous indicators, and the outlook for the upcoming fiscal year 2022-2023 (April-March).
According to reports, the first economic survey was created in 1950-1951, when it was still a component of the Budget. It was split off from the Budget in the 1960s.
The prime highlights of the Economic Survey are as follows:
- According to the Economic Survey, although India’s economic growth is expected to decelerate to 6.5% in the fiscal year beginning in April, it would still be the world’s fastest-growing major country. In comparison to the predicted 7% growth in the current fiscal year (April 2022 to March 2023) and the 8.7% growth in the prior year, India’s GDP is expected to expand by 6.5% from 2023-2024.
- According to the poll, India has the third-largest purchasing power parity (PPP) economy in the world and the fifth-largest exchange rate economy. “Economy has renewed what had stalled, revived what had slowed down during the pandemic and since the conflict in Europe,” the report stated.
- The research claims that the RBI’s prediction of 6.8% for retail inflation in the current fiscal year is neither too high nor too low to undermine incentives for investment. According to the report, ongoing inflation may lengthen the cycle of fiscal tightening and lead borrowing costs to stay “higher for longer.” Retail inflation in India dropped below 6% in November after exceeding the RBI’s upper tolerance level for 10 consecutive months beginning in January 2022.
- The current account deficit (CAD), which may continue to worsen due to rising global commodity prices, was also called for in the poll. According to the most recent Reserve Bank data, a larger trade gap caused the CAD to increase from 2.2% of GDP in the April-June period to 4.4% of GDP in the third quarter ending in September.
- “Commodity prices have fallen from record highs, but they are still higher than before the conflict. India’s total import bill would increase due to high commodity prices and strong local demand, which will also contribute to unfavorable developments in the current account balance. These could be made worse by stagnant export growth as a result of slowing global demand. The currency may face pressure to depreciate if the current account deficit widens more”, it warned.
- According to the Economic Survey, the Indian rupee may continue to face depreciation pressure as a result of exports plateauing and the ensuing widening of the current account deficit. “Risks to the current account balance originate from many sources,” the statement read.
- The report said that improving building activity and a booming real estate market helped to create jobs and made it easier for migrant workers to return to the cities. Given the loss of jobs brought on by lockdown limitations during various pandemic waves since March 2020, this assumes significance.
- According to the Economic Survey, loan growth for MSMEs is anticipated to be rapid in the fiscal years 2023-2024, assuming that inflation is low and credit costs are reasonable. Between January and November 2022, the Micro, Small, and Medium Enterprises sector saw credit grow by roughly 31%.
- According to the Economic Survey 2022-23, capital spending has started to encourage private investment, and it is anticipated that the current fiscal year’s budget goal of Rs. 7.5 lakh crore would be achieved. Capital expenditures (capex) by the federal government, which increased by 63.4% year over year in the first eight months of FY23 and have been surpassing private capex since the quarter of January-March 2022, was another growth driver for the Indian economy, according to the research.
- The Economic Survey predicted that due to India’s strong economic development and efforts to further enhance the business environment, FDI in the nation will increase in the upcoming months. The increase in global unease following the Russia-Ukraine war and the fact that FDI equity inflows into the manufacturing sector fell below their level in the first half of 2021-22 were among the factors cited in the document.
- The Economic Survey said on Tuesday that housing prices have begun to firm up following a two-year Covid slump and that unsold inventories have decreased on rising demand. The Economic Survey projected a dip in prices as a result of a reduction in import taxes on various building supplies.
- According to the report, the country’s civil aviation industry has “huge potential” due to rising middle-class demand, increased disposable incomes, and favorable demographics, and air travel has recovered since the relaxation of restrictions connected to the coronavirus outbreak.
- The poll found that agriculture has done well overall but that it needs to “re-orient” itself in light of the current challenges, which include the adverse effects of climate change and rising input costs, among others. Dispersed landholdings, insufficient farm mechanization, low productivity, concealed unemployment, and rising input costs are further challenges.