According to the Economic Survey 2022-23, the Indian economy, after surviving, not taming, the pandemic has entered a fairytale phase where the demon has been vanquished and everyone lives happily ever after. Willing to live, but with one qualification: Life will be moderately satisfied, not wildly happy in India’s case.
Medium-term growth has been capped at a modest 6.5-7%, rather than the double-digit rates that pushed China into the superpower league in the two decades since the turn of the millennium and that India dared to dream of in its prime years. first decade of the millennium.
The political downside of this humility on the part of the Economic Survey is that five years from now, the Indian economy will still fall short of the target size of $5 trillion (GDP in 2022-23, as per the first advance estimate, is 2,73,07,751 crore, ($3.342 trillion at today’s exchange rate) to $81.7), growing at 6.5% compounded for five years, would grow to $4.58 trillion, and would grow to $4.69 trillion at a compound growth rate of 7% for five years.
The advance estimate of GDP puts the proportion of fixed capital formation at current prices at 29.2%, which is still below 30% in the current year, below the mid-thirties percentage it was in India’s rapid growth years 2003–08. Not to mention low-value exchange rates, massive export growth and years of double-digit economic growth reaching 50% of China’s GDP.
Nevertheless, the survey is echoing the booming investment in India, both due to the proven trend of capital expenditure rising from budget outlays and the rising trend of bank loans. It also cited ongoing repair of bank balance sheets through recapitalisation, aggressive provisioning and functioning of the Insolvency and Bankruptcy Code, IBC. Hence, it expects the economy to register a growth rate of 6.5% this year.
Addressing a press conference, Chief Economic Advisor V. Ananth Nageswaran, lead author of the Economic Survey, emphasized the potential of India’s digital public infrastructure to boost growth by 0.5 to one full percentage point.
While eloquently speaking on the increase in welfare indicators such as maternal mortality rate and infant mortality rate, increase in expenditure on education and health, and the spread of sanitation and clean drinking water, he did not pay attention to some of the unresolved problems such as mounting arrears of the state. electricity board, continued distress in rural areas, as indicated by the continued strong demand for work under the Mahatma Gandhi National Rural Employment Guarantee Act in November and December, the average growth rate of industrial value addition over the past five years at 3% and so on Other content is at odds with a fairy tale.
While praising the industrial policy embodied by the performance-linked incentive scheme to boost manufacturing, the survey fails to dispel doubts as to how much real value addition it does locally and to what extent PLI-pegged components for manufacturing The import of India contributes to the expansion of current account deficit.
On inflation, the survey is optimistic that the worst is behind us and expects inflation to remain below RBI’s upper limit of 6% in the next fiscal. This is quite realistic. The latest sign of easing recession risks in the US along with easing commodity prices could reverse dollar jitters against all major world currencies, strengthen the rupee and ease imported inflation. While a resurgent China would import more goods and raise their prices, its exports would also help drive down prices around the world.
The section on climate change is a vast improvement on the survey’s treatment of this topic in its previous edition, but still falls short in addressing the importance of carbon dioxide removal, particularly by the rich world, to combat climate change.
The survey is right in saying that India is growing better and better day by day, but it would have been more useful if it had removed the bottlenecks that hold growth to less than optimum potential.
The survey marks the first time in years by not recommending any reforms. It probably doesn’t make sense given the reforms implemented over the past decade, such as the IBC, or in the case of the repealed farm laws, have been rolled back entirely. Lok Sabha elections are to be held in 2024. When there hasn’t been enough political conviction to push through reforms until now, it is unlikely at this late stage in the election cycle.
The Economic Survey does not go beyond noting information already publicly available, e.g., a bloated narrative on notions such as ‘faith-based governance’, substituting optimism for analysis, sidelining important debates Weaves. For India’s economic future: such as how to solve the jobs crisis or when the government will start publishing poverty line data (stalled a decade ago). With this, Nageswaran, or Van as he is known to friends, makes a muted, almost dismal debut.
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