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).

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.

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.