The Economic Survey for 2023-24 tabled in the Parliament on Monday has identified six key policy focus areas for the government to achieve a sustained economic growth.
Those six areas where the government would focus are generating productive employment; skill gap, tapping the full potential of the agriculture sector, easing the compliance requirements and financing bottlenecks confronting MSMEs, managing India’s green transition, and the persistent China challenge.
The structural reforms undertaken by the Government of India since 2014 have put the economy firmly on a growth path, and India is soon set to become the third-largest economy in the world.
In the medium term, the Indian economy can grow at a rate of 7 per cent plus on a sustained basis if the government can build on the structural reforms undertaken over the last decade, the Economic Survey said.
Stressing on generating productive employment, the Survey document asserted productive jobs are vital for growth and inclusion.
India’s workforce is estimated to be nearly 56.5 Crore, of which more than 45 per cent are employed in agriculture, 11.4 per cent in manufacturing, 28.9 per cent in services, and 13.0 per cent in construction
However, to create these many jobs, there is a need to create the conditions for faster growth of productive jobs outside of agriculture, especially in organized manufacturing and services, even while improving productivity in agriculture.
Skill gap challenge:
“Sixty-five per cent of India’s fast-growing population is under 35, and many lack the skills needed by a modern economy,” the survey said citing a 2023 World Bank report.
“Estimates show that about 51.25 per cent of the youth is deemed employable. In other words, about one in two are not yet readily employable, straight out of college. However, it must be noted that the percentage has improved from around 34 per cent to 51.3 per cent in the last decade.”
Tapping the full potential of the agriculture sector:
The Economic Survey document noted the agriculture sector continues to face structural issues that have implications for India’s economic growth, despite its centrality in India’s growth trajectory.
“The foremost concern confronting the sector pertains to sustaining agriculture growth without letting food price inflation rise beyond acceptable limits while incentivising farmers to raise production.”
There is also a need to improve price discovery mechanisms for agriculture products, increase efficiency, reduce disguised unemployment, address the fragmentation of landholding, and increase crop diversification, among a host of other issues, the Survey suggested.
On MSMEs, a critical sector of Indian economy, the Economic Survey noted the sector continues to face extensive regulation and compliance requirements and faces significant bottlenecks with access to affordable and timely funding being one of the core concerns.
“Licensing, Inspection, and Compliance requirements that MSMEs have to deal with, imposed particularly by sub-national governments, hold them back from growing to their potential and being job creators of substance.”
Managing India’s green transition:
The path of green transition in India needs to ensure the consistency of the E-Mobility policy with the required and optimal energy mix between traditional and renewable source; ensure grid stability for E-Mobility to become pervasive; develop or acquire storage technology at affordable costs for the share of renewable energy in power generation to rise.
At COP26 held in 2021, India as a whole committed to an ambitious five-part “Panchamrit” pledge. They included reaching 500 GW of non-fossil electricity capacity, generating half of all energy requirements from renewables, to reducing emissions by 1 billion tonnes by 2030.
India also aims to reduce the emissions intensity of GDP by 45 per cent. Finally, India commits to net-zero emissions by 2070.
Among others, the Economic Survey suggested to recognise and deal with challenges posed by dependence on China for critical minerals, which are crucial raw materials needed for E-Mobility and renewable energy generation.
“Last but not least, India not only has to deal with climate change and undertake energy transition but also deal with the protectionism of the developed countries[p1] ,” the Survey read.
On the Chinese conundrum, it said the domination over the global supply chains
across product categories is a key global concern, especially in the wake of supply disruption
accompanying the war in Ukraine.
China’s near-monopoly over the production and processing of critical and rare earth minerals has already been a cause of global concern, it added.
“Against this background, it may not be the most prudent approach to think that India can take up the slack from China vacating certain spaces in manufacturing. Indeed, recent data cast doubt on whether China is even vacating light manufacturing. The questions that India faces are: (a) Is it possible to plug India into the global supply chain without plugging itself into the China supply chain? and (b) what is the right balance between importing goods and importing capital from China? As countries attempt to reshore and friendshore, India’s policy choices concerning China are exacting.”
Union Finance Minister Nirmala Sitharaman tabled the Economic Survey 2023-24 in Parliament today. The Economic Survey document, prepared by the Economic Division of the Department of Economic Affairs in the Ministry of Finance and formulated under the supervision of the chief economic adviser, gives insights into the state of the economy and various indicators of 2023-24 (April-March) and some outlook for the current year.
Sitharaman is set to present the Union Budget for 2024-25 in Parliament tomorrow. With this Budget presentation, Sitharaman is set to surpass the record set by former Prime Minister Morarji Desai, who presented five annual budgets and one interim budget between 1959 and 1964 as finance minister. Sitharaman’s upcoming budget speech will be her seventh. (ANI)
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