Union Budget 2024: 5 challenges that were highlighted in mini Eco Survey before Interim Budget

Ahead of the Interim Budget this year, the Department of Economic Affairs came out with a mini economic survey – The Indian Economy: A Review. As the Centre tabled an Interim Budget this year before the Lok Sabha election, a mini economic survey was published that listed out the challenges confronting the Indian economy.  Ahead of an usual Union Budget, the Finance Ministry tables the annual Economic Survey that gives the real growth rate for the coming fiscal. This year, it is scheduled to come out on July 22, a day before the actual budget presentation.

As per the report, written by V Anantha Nageswaran, Chief Economic Adviser, stated the reform-led growth that is seen in India over the course of the past nine years is not without its accompanying share of challenges.

The report further noted that India can aspire to become a $7 trillion economy by 2030.

Here are the top challenges mentioned in the survey:

1. The report noted that in an increasingly integrated global economy, India’s growth outlook is not only a function of its domestic performance but also a reflection of the spillover effects of global developments.

2. The report noted development is key in building resilience and enabling effective mitigation action as, in the medium to long run, development would generate resources and capacity for effective climate action.

It said: "The current global approach to climate change is set on a course that runs the risk of making the low-income status of several nations permanent. For several of them, access to energy is a more important and immediate concern. Globally, there is a need to strike the right balance between development and emissions mitigation, and that begins with the realisation that wishing away the trade-off is the wrong place to start."

3. The report, which noted that India’s positive growth outlook is riding on the digital revolution, said the Artificial Intelligence (AI) poses a big challenge to governments around the world due to the questions it poses to employment, particularly in services sectors.

It further said that AI may remove the advantage of cost competitiveness that countries exporting digital services enjoy.

4. The Department of Economic Affairs noted that ensuring the availability of a talented and appropriately skilled workforce to the industry, age-appropriate learning outcomes in schools at all levels and a healthy and fit population are important policy priorities in the coming years will remain a challenge. A healthy, educated and skilled population augments the economically productive workforce, highlighted the Department of Economic Affairs.

"The employable percentage of final-year and pre-final-year students increased from 33.9% in 2014 to 51.3% in 2024," it said citing the findings of the online Wheebox National Employability Test.

5. The report further noted that exporting will not be easy in the current times for the country because of persisting geopolitical tensions, including recent events in the Red Sea, that further aggravated slower growth in global trade in 2023.

“This reinforces the need to lower logistics costs and invest in product quality to hold on to and expand market share in areas where India has an advantage”, the review noted.

Growth dynamics

The report started with an assurance that if FY25 turns out to be right, it will be the fourth year after the pandemic that the Indian economy will grow at or over 7 per cent.

“Some predict it will achieve another year of 7 per cent real growth in FY25 as well. If the prognosis for FY25 turns out to be right, that will mark the fourth year post-pandemic that the Indian economy will have grown at or over 7 per cent,” the report stated.

Current scenario: The Reserve Bank of India (RBI) has upgraded its growth forecast for the fiscal year 2024/25 to 7.2%, up from 7%, driven by a resurgence in private consumption, robust investment, and a rebound in exports.

The International Monetary Fund has revised India's growth forecast to 7% for 2024/25 from 6.8%, aligning with recent updates from rating agencies and private economists.

S&P has also pegged India's economic growth to nearly 7% annually over the next three years.