Budget 2024: Economic Survey Expected to Give Clarity on India's Growth Story

The economic survey 2023-24 will be tabled at 1 pm by Finance Minister Nirmala Sitharaman in the parliament today. Details of this survey will be highlighted by the Chief Economic Advisor to the Government of India V. Anantha Nageswaran in a press conference at 2.30 pm.

As per the report’s miniature version tabled before the Interim Budget in January this year, India can aspire to become a $7 trillion economy by 2030. Nageswaran, in that report, said Indian economy can grow at over 7 per cent for the fourth consecutive year if there are not many headwinds.

The country’s gross domestic product (GDP) grew at an impressive 8.2 per cent in 2023-24, 7.2 per cent in 2022-23, and 8.7 per cent in 2021-22, according to official data by the government.

What has been the pain point for one of the world’s fastest growing economy is retail inflation, especially food. Inflation in food almost doubled to 8.36 per cent in June, compared to 4.63 per cent in the same month a year ago.

In a bid to curtail inflation, the Reserve Bank of India (RBI) had to raise the benchmark interest rate or repo-rate by a cumulative 250 basis points (bps) between May 2022 and February 2023. The rate-hike cycle, translating into higher interest rates, has worsened the condition of demand and consumption in the country.

There is a stark contradiction between the GDP and private final consumption expenditure numbers (PFCE), indicating that much of the growth momentum is coming from government’s capital expenditure (capex). By growing at just 4 per cent in the final quarter of the previous financial year, PFCE as a share of GDP dropped to 52.9 per cent – lowest level in the 2011-12 base year series.

Taking these figures into account, there is a debate among experts on whether the current growth momentum is sustainable or not. The economic survey today is expected to give some cues regarding this.