The Survey acknowledges that public sector investment has “sustained” capital formation in the country and says that the private sector now has to take the baton.
The Economic Survey 2023-24, the annual flagship document of the finance ministry, is remarkably realistic and forthright in its assessment of the state of the Indian economy and its growth prospects. The Survey has carefully documented economic progress over the years, especially the rebound from the depths of the pandemic, and analysed in detail the challenges that lie ahead. It captures the paradox of the Indian corporate sector “swimming in excess profits” and banks interest margins rising to a “multi-year high”, while the economy witnesses subdued private sector investments, limited growth in more productive employment opportunities, and private consumption grows at just 4 per cent.
The Survey acknowledges that public sector investment has “sustained” capital formation in the country and says that the private sector now has to take the baton. The latter has invested more in “dwellings, other buildings and structures” but not in “machinery and equipment and intellectual property”. This needs to change. There are some encouraging trends too. The corporate sector data indicates that capital formation continues to expand, even though “at a slower rate”. The jobs crisis, which formed the backdrop of the national elections, and was seen to have shaped, in part, the electoral outcome, has also been explored in great detail. The challenge confronting the country has been captured succinctly by a single statistic — 78.5 lakh jobs in the non-farm sector need to be created each year to not only absorb those entering the labour market each year, but also those exiting agriculture. Existing schemes such as the production linked incentive scheme (PLI) and Mudra are unlikely to be sufficient to facilitate employment generation at this scale and therefore need to be supplemented. There is also the skill challenge to contend with — roughly half of the youth straight out of college are “deemed employable”.
It is difficult to miss the Survey’s pessimism on the external front. It notes that India’s journey to become Viksit Bharat by 2047 will be more challenging than that of China. China benefited from a benign geopolitical environment and the high noon of globalisation. Both conditions no longer exist. Alongside, there is the threat from climate change and global warming and the advent of Artificial Intelligence. The Survey notes that these forces “will create barriers and hurdles” for India to sustain high growth rates “in the coming years and decades”. It says that “overcoming these requires a grand alliance of Union and state governments and the private sector”, underlining the criticality of states in India’s development trajectory. The Survey puts forth a host of policy measures and strategies to tackle pressing issues. But the question is whether the issues raised and the policy prescriptions given will translate into actual policy making in the Union Budget that will be presented by the finance minister today.
