The Economic Survey 2024 has been tabled in both houses of the Parliament just ahead of the Budget announcement on Tuesday. The key document which precedes the Union Budget presentation provides a comprehensive review of the Indian economy's performance in the previous financial year and serves as an official report card on the government’s financial performance, while also offering an outlook on future policy changes.
GDP growth
The Economic Survey has forecasted a real GDP growth of 6.5–7 per cent for FY25. It notes that this projection is conservative, acknowledging that market expectations are higher. This estimated growth, in line with the International Monetary Fund’s 7 per cent estimate, sets the stage ahead of the Union Budget.
The survey highlighted that the Indian economy has swiftly recovered from the pandemic, with FY24 real GDP 20 per cent higher than FY20. The current GDP is near pre-pandemic levels as of Q4 FY24.
Employment
The survey indicates a declining unemployment rate for individuals aged 15 and above since the pandemic, with increased labour force participation and worker-to-population ratios. Female labour force participation has risen from 23.3 per cent in 2017-18 to 37 per cent in 2022-23, driven by rural women. The employable rate for youths is however only at 51.25 per cent, which means only one in two graduates are readily employable. However, this is also an improvement from 34 per cent a decade ago.
Issues include formalising the growing workforce, creating non-agricultural jobs, and ensuring social security for wage employees. To address the employment needs of a growing population, the survey highlighted that the Indian economy must create approximately 78.51 lakh jobs annually in the non-farm sector.
The survey suggests state governments can support job creation by reducing compliance burdens and reforming laws. The agro-processing sector can create large-scale jobs, especially for rural youth and women. Investment in AI research and improving care infrastructure can enhance female workforce participation.
Inflation
The Economic Survey suggested that to maintain long-term price stability, the government should improve its response to sudden price increases by enhancing price monitoring systems and creating a producer price index for goods and services. It also recommended updating the consumer price index based on the latest household spending data.
In 2023, India's inflation rate stayed within its target range of 2 to 6 per cent. Compared to advanced economies like the USA, Germany, and France, India had one of the lowest deviations from its inflation target between 2021 and 2023, according to the Survey.
The retail inflation rate declined to 5.4 per cent in FY24, the lowest since the Covid-19 pandemic.
Growth strategy
The survey found that the Central government's reforms over the past decade have advanced India from a low-income to a low-middle-income country.
The growth strategy for the Amrit Kaal focused on six areas: boosting private investment, expanding MSMEs, leveraging agriculture for future growth, financing the green transition, bridging the education-employment gap, and enhancing state capacity.
Agriculture
Agriculture remains a key focus for the government, which aims to double farm incomes and revive the rural economy. The Economic Survey emphasises the need for a nationwide discussion to tackle agricultural challenges.
While farmers receive substantial support through subsidies, MSP, and schemes like PM-KISAN, the survey suggests that smallholder farmers should transition to high-value crops and livestock. It also highlights challenges such as sustaining growth, managing food price inflation, and improving price discovery and land use.
Healthcare and Education
The Economic Survey highlights India's progress with a reformed welfare approach that emphasises empowerment, universal access to necessities, efficiency, and increased involvement of the private sector and civil society.
In education, the NEP 2020 is transforming the sector, focusing on foundational literacy and numeracy for children up to the third grade and expanding early childhood education through the ‘Poshan bhi Padhai bhi’ program.
In healthcare, Ayushman Bharat is making a significant impact, with over 34.7 crore cards issued and 7.37 crore hospital admissions covered, saving more than 1.25 lakh crore in out-of-pocket expenses for low-income families.
