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Economic Survey 2022- 23
Context
The government tabled the Economic Survey 2022-23 which laid out the outlook for India’s growth, inflation and unemployment in the coming years.
What is the Economic Survey?
- The Survey provides a detailed report of the national economy for the year along with forecasts.
- It touches upon everything from agriculture to unemployment to infrastructure.
- It is prepared by the Economic Division of the Department of Economic Affairs (DEA).
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The comments or policy solutions contained in the Survey are not binding on the government. |
Key takeaways of the survey:
- GDP growth: India’s growth estimate for FY23 is higher than for almost all major economies.
- Despite strong global headwinds and tighter domestic monetary policy, India is still expected to grow between 6.5 and 7.0 per cent.
- India’s underlying economic resilience; of its ability to recoup, renew and re-energise the growth drivers of the economy.
- Inflation:
- The RBI has projected headline inflation at 6.8% in FY23, outside its comfort zone of 2% to 6%.
- High inflation is seen as one big factor holding back demand among consumers.
- However, there is an optimistic view about the inflation levels and trajectory, as a private investment can help to recoup.
- Unemployment:
- The employment levels have risen in the current financial year.
- The job creation appears to have moved higher with the initial surge in exports, a strong release of the “pent-up” demand, and a swift rollout of the capex.
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The Periodic Labour Force Survey (PLFS), showed that the urban unemployment rate for people aged 15 years and above declined from 9.8% in the quarter ending September 2021 to 7.2% one year later. |
- Outlook for 2023-24:
- It projected a baseline GDP growth of 6.5% in real terms in FY24.
- Poor global growth may widen India’s trade deficit and make the rupee depreciate.
- Similarly, sustained monetary tightening (higher interest rates) may drag down economic activity in FY24.
What does it mean to India?
- A decadal growth: India’s economy has recovered from the Covid disruption and, at long last, is poised to see sustained robust growth in the rest of the decade.
- Reduction in Non-performing assets and banking activities: Indian economy is thus well placed to grow at its potential in the coming decade, similar to the growth experience of the economy after 2003.
Challenges:
- India’s potential growth rate without inflation became a problem which had fallen to just 6%.
- The unemployment rates underestimate the alarming stress in the labour market because the labour force participation rate (or the proportion of people demanding jobs) is itself quite low.
- India is the world’s most populous country with a growing youth bulge.
- It has the world’s largest pool of poor people and the largest pool of malnourished children.
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