'Private Capex Recovered From Covid Shock, Export Resilient Due To Logistics Infrastructure': 20 Highlights Of CEA's Speech On Economic Survey

Chief Economic Advisor (CEA) Dr V Anantha Nageswaran presented the Economic Survey 2023-24 Report and emphasised the need for public and private sectors to work together. Here are the key highlights:

1. Global outlook: "In general, global growth and global trade volume growth will be difficult to come by. We can grow our exports by grabbing market shares by competitiveness and quality," he said.

2. Indian economy: "Even high-frequency indicators are telling the economy is carrying the momentum of FY24... Private capex has recovered from Covid shock... Households savings have improved," he said.

He emphasised the growing number of retail investors through Systematic Investment Plans (SIP) and Mutual Fund Investments. There is no sign of distress in household income, he added.

3. Agriculture: Food grain production has declined, Nageswaran said. "We need to encourage crop diversification with our Minimum Support Price (MSP) policies," he said adding that monsoon is not going as expected.

4. Industry: Broad-based acceleration in industrial output and an investment of Rs 1.28 lakh crore in the Production-lInked Incentive (PLI) scheme were highlighted by Nageswaran.

"PLI scheme is gaining momentum and the results are evident in several areas such as electronics, pharma, etc. It is beginning to deliver handsomely in key areas," he added.

5. Logistics: "Merchandise exports went up by around 2 per cent," he said informing about the reduced wait time in toll plazas and container turnaround time and increased length of highways in India.

"There is a clear effect of logistics infrastructure in improving exports resilience and overall economic efficiency and relief of supply cycle strains." he added.

6. Financial system: "NPA ratio has declined. As long as we can keep the financial cycle going for a longer period, we can be reasonable assured of a baseline growth of at least 6.5 per cent," he said.

7. Inflation: "India is one of those countries with least deviation from inflation target of 4 per cent. Retail headline inflation should be below 5 per cent in current financial year," the CEA said.

8. Government expenditure: Nageswaran said that quality of government expenditure is improving as in FY21, capex accounted for 12 per cent of revenue expenditure, it is 21 per cent in FY24.

9. Employment: Factories with more than 100 workers witnessed workforce rise by 13.2 per cent. Nagwaswaran said that this suggests formalisation of Indian manufacturing sector.

10. Policy focus: Generate productive employment, deepen the corporate bond market, navigate the Chinese conundrum, manage India's green transition and address the skill-gap challenge are some focus areas.

11. Potential: Nageswaran believes that agriculture carries "huge potential of driving growth" but we have to make sure that incentives are aligned, allied services are encouraged and land consolidation also happens.

12. Manufacturing: To support Small Medium Enterprises (SME), Nageswaran supports deregulation. He urged local governments to losen Licensing, Inspection and Compliance (LIC) grip.

13. Start-ups: The number of patients filed have increased 17 times in nine years from FY15 to FY24. He emphasised that financing start-ups is being paid attention to and digitalisation is needed.

14. Low-hanging fruit: The CEA said that deregulation is the lowest hanging fruit. He showed that per unit cost of production can go down if land requirements are deregulated.

15. Job creation: India needs to generate an average of 78.5 lakh jobs annually until 2030 in the non-farm sector, he said adding that more youths are pursuing higher education now.

16. Skill: Nageswaran said that once only one-third could pass the employability test, but now that has gone to over half at 51.3 per cent, however, India has still a long way to go.

17. Artificial Intelligence: India may have a slight short-term negative impact and then a positive impact in medium-term, the CEA said urging companies to not hurt labour share for deployment of technology.

18. China challenge: He highlighted that India's exposure to Chinese manufacturing inputs has risen leading to increased trade deficit. He said that this could be one of the risk factors.

19. Energy: "We need to strike the right balance between e-mobility and public transport in transitioning to green energy," he said adding about China's role in Electric Vehicle (EV) supply chain.

20. Tripartite compact: The three pillars of growth are industry, academia and government. He urged private sector to shape the design of our higher education and abandon short-termism.