On Monday, July 22, 2024, Finance Minister Nirmala Sitharaman presented the Economic Survey 2023-2024, providing insights into the upcoming budget preparations. On Tuesday, she will present the first budget of the Modi government’s third term in Parliament.
The Economic Survey revealed that inflation is largely under control, although the prices of certain food items have increased. The fiscal deficit for FY2023-24 was lower compared to the previous year, and the current account deficit stood at approximately 0.7% of GDP.
Let’s delve into the main highlights of the Economic Survey 2023-24
Slowing GDP Growth: The Economic Survey 2023-24 does not take an overly optimistic stance on India’s growth rate. It estimates a growth rate of 6.5% to 7% for this financial year. This is significantly lower than the 8.2% growth rate achieved last year and also falls short of the 6.8% to 7.2% range projected by private economists and the Reserve Bank of India’s (RBI) 7.2% estimate.
Post-COVID GDP: Economic advisors note that India’s GDP has grown by 20% compared to pre-COVID-19 pandemic levels, indicating positive economic reforms.
Disappointing Monsoon: This year’s monsoon rainfall has not met expectations so far. Uneven rainfall could impact the agricultural sector, which in turn could affect the overall economy.
Strong External Debt Position: India’s external debt-to-GDP ratio is lower compared to many other countries. Chief Economic Advisor Nageswaran stated that a weak currency would not harm the country’s position.
Investment Trends: There is also good news on the investment front. Savings in Indian households are increasing. Savings in physical assets as a percentage of GDP rose from 10.8% in FY21 to 12.9% in FY23. Over the past four years, there has been a notable increase in investment in the stock market through SIPs.
Rising Foreign Exchange Reserves: In the last financial year, India recorded the highest increase in foreign exchange reserves. The reserves grew by USD 68 billion over the year. As of June 21, 2024, the reserves stood at USD 653.7 billion. This amount is sufficient to cover more than 10 months of estimated imports in 2024-25 and to repay over 98% of the total foreign debt by the end of March 2024.
Increasing Capital Expenditure: There has been significant growth in capital expenditure. Private companies’ capital expenditure increased by 19.8% to Rs 8.7 lakh crore. Meanwhile, the capital expenditure of the central and state governments also grew by 22.9% in FY24.
That’s it for today. We hope you’ve found this article informative. Remember to spread the word among your friends. Until we meet again, stay curious!
*This article is for informational purposes only. This is not investment advice.
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