Economic Survey Projects Sustained 7% Growth for Indian Economy

The recent Economic Survey, presented in Parliament by Finance Minister Nirmala Sitharaman, projects that the Indian economy can achieve a medium-term growth rate of over 7% if the country builds on the structural reforms undertaken in the last decade.

The survey emphasizes the need for a tripartite compact between the Union Government, State Governments, and the private sector to realize this potential. The financial sector is undergoing significant changes, with primary capital markets facilitating capital formation of ₹10.9 lakh crore during FY24, accounting for 29% of the gross fixed capital formation of private and public corporates in FY23.

India faces unique opportunities and challenges amid global trends like geo-economic fragmentation, self-reliance, climate change, technological advancements, and limited policy space. The survey suggests a shift in focus to bottom-up reforms and strengthening governance to ensure sustainable, balanced, and inclusive growth.

The growth strategy, termed "Amrit Kaal," focuses on six critical areas: boosting private investment, expanding MSMEs, recognizing agriculture as a growth engine, financing the green transition, bridging the education-employment gap, and building state capacity and capability.

Financial inclusion is emphasized through the usage of direct benefit transfers and promoting digital payments, ensuring flexibility in policy and regulatory interventions to address potential vulnerabilities. India's rank in the World Bank's Logistics Performance Index improved from 44th in 2018 to 38th in 2023, with the current account deficit narrowing to 0.7% in FY24, supported by a moderation in merchandise imports and rising services exports.

The social sector is witnessing significant transformation, driven by the New Education Policy 2020, which focuses on foundational literacy and numeracy, and Ayushman Bharat, which has provided significant healthcare benefits, reducing out-of-pocket expenses for poor families.

Labor market indicators have improved, with the unemployment rate declining to 3.2% in 2022-23. Agriculture is highlighted as a sector with significant growth potential, needing policies aligned with climate imperatives and water security. The MSME sector faces challenges in supply chain management, market access, and formalization, particularly in industries like textiles.

The survey stresses the importance of R&D, vocational education, and upskilling to meet the emerging job demands in the services sector. Infrastructure development, predominantly public sector-led, calls for increased private sector financing and resource mobilization.

The Economic Survey presents a comprehensive roadmap for India's economic growth, focusing on sustainable development, structural reforms, and inclusive growth, aiming to position India as a robust and resilient economy amid global challenges.

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