(Image source from: Twitter.com/nsitharamanoffc)

Unveiling the Economic Survey 2023-24 on Monday, a day before the seventh Union Budget, Finance Minister Nirmala Sitharaman said India's economy is on a "strong base and on a stable foundation", a challenge she described as flexible to geopolitical to meet challenges. The Indian economy is on a strong and stable footing and fiscal and monetary policy makers should ensure its economic and financial stability,” the report said. Sitharaman pointed out that the growth rate in FY24 is estimated at 8.2 percent and the economy has crossed the 8 per cent mark in three out of four quarters, adding that the momentum achieved between FY23 and Fiscal 24 arose, and will continue in fiscal 25 from 2023 to 2024. 6.5% and 7%. “The prospects for continued strong growth beyond FY25 look good... subject to geopolitical, financial market and weather risks,” the finance minister told MPs.

This compares favorably with global economic growth of 3.2 percent in 2023 (April data from the World Economic Forum). “The apparent differences in growth performance between countries are due to domestic structural problems (and) their uneven impact on geopolitical conflicts,” the report said. Core inflation is “under control”, with the central bank forecasting 4.5 per cent in FY25 and 4.1 per cent next year. This is for a normal monsoon without any external or political shocks. However, the report states that the inflation rate of some food products is increasing. According to this report, food inflation has reached 7.5% in FY2023 from 6.6%. The increase was due to adverse weather conditions that limited production. The report said farmers are facing challenges due to the severe weather and the draining of reservoirs. Retail inflation, which averaged 6.7% in FY23, declined to 5.4% in FY24 due to "timely government policy interventions and RBI's price stability measures". According to the economic survey, this is the lowest level since the pandemic. The economic survey also highlighted that capital formation growth increased by 9 percent in real terms in fiscal 2024, reflecting "movement in government capital investment and continued movement in private investment."

Regarding the budget balance, the study said that "procedural reforms, cost containment and gains in taxation brought about by increased digitalisation" helped offset "expansive public investment". The current account deficit was 0.7 percent of GDP in FY24, a significant improvement over the 2 percent deficit in FY23. "The external balance was pressured by lower global demand for goods, but this was largely offset by strong services exports..." it said. But "for a country with high growth ambitions, change is the only sustainable thing," the report said, pointing out that "a long lift on the domestic front" will be needed for the strong recovery phase to continue. This is because the complex global environment makes it difficult to reach agreements on key issues such as trade, investment and climate change, the government said. According to the Economic Survey, the short-term outlook is positive (but a clearer vision is needed in the longer term).