The Economic Survey 2023-24 outlines several reforms and measures aimed at maintaining economic growth momentum. These include addressing the skill gap challenge, generating more productive employment, easing regulatory requirements, and financing bottlenecks for micro, small, and medium enterprises, as well as facilitating the country's green energy transition.
The Survey, tabled by Union Finance Minister Nirmala Sitharaman on Monday, also highlights the need to tap into the full potential of the agricultural sector and develop strategies to boost domestic manufacturing, such as increasing FDI inflows from China.
Traditionally, the Survey sets the tone for the Union Budget, which is presented the following day. This year, analysts and economists expect the Union Budget 2024-25 to pick up on the themes highlighted in the Survey and address the challenges and risks it outlines.
Ranen Banerjee, Partner and Leader Economic Advisory at PwC India, said the Union Budget is eagerly awaited to see how the headwinds highlighted in the Economic Survey are countered by fiscal outlays and policies. “The Chief Economic Advisor has sounded a cautious note by projecting a growth rate of 6.5-7% for FY25, highlighting global uncertainties and domestic challenges. There is a nudge to governments to let go of various regulations,” he said, adding that the private sector is also encouraged to invest in IP, machinery, and equipment.
He acknowledged the challenges faced by exports, manufacturing, and small and medium enterprises. “There is also a hint at lowering our emphasis on manufacturing and adopting the agricultural sector as a generator of jobs, which comes from a statement that our choices cannot be binary,” he said.
Rishi Shah, Economist and Partner at Grant Thornton Bharat, said the Economic Survey clearly shows that the growth story is intact and that the domestic economy is likely to outperform all other major economies in the coming year. “That said, the Survey talks about some key challenges for the economy on the road to development, spanning from global trade and investment (global and domestic),” he said, adding that the government's focus on increasing jobs and reducing the rural-urban divide may take shape in the form of policies throughout the remainder of the year.
Krishan Arora, Partner at Grant Thornton Bharat, noted that the Survey highlighted how the PLI scheme has contributed to overall economic growth by increasing manufacturing output and exports, and the momentum is expected to continue.
“Considering this, it may be expected that the Union Budget tomorrow will provide more clarity on the continuation and expansion of these incentive schemes in various strategically important sectors such as renewable energy and electric vehicles. This would be designed to foster investment and development, aligning with the broader economic and sustainability goals of the nation,” Arora noted.