Kotak Insights | Date 02/02/2024
Every year, a day before the Union Budget announcement, the Ministry of Finance of India releases a report called the Economic Survey.
It offers insights into India's economic trends and aids resource allocation for the Union Budget.
But 2024 stood out as an exception.
Instead of the usual Economic Survey, the Centre released a shorter version of the report titled 'Indian Economy – A Review'. And guess what? - It brings good news for the Indian economy.
The report projects India's growth into a $5 trillion economy within the next 3 years, with aspirations to reach $7 trillion by 2030.
What gives? To find out, let us look at some of the key highlights from this report and understand its significance in the context of the Interim Budget announcements.
Let’s first start with the Economic Survey and why it is prepared.
Typically, the Economic Survey outlines economic trends in India, assisting in the allocation of resources for the Union Budget.
It analyses various economic aspects like agricultural and industrial production, employment, infrastructure, money supply, prices, imports, exports, foreign exchange reserves, and other similar factors that have a bearing on the Budget.
It is presented in Parliament before the budget for economic planning.
However, the government didn’t present the Economic Survey this time because 2024 is an election year. In these cases, the regular Budget process may be disrupted if there is a change in the government after elections.
It is this same reason why 2024 is going to see two budgets – an Interim Budget and a detailed Union Budget which will be announced after the elections.
So, to inform the Interim Budget, the government released 'Indian Economy – A Review', a comprehensive report reviewing India's economic journey over the past decade.
Here are the key points from the 74-pager document:
At its core, the report focuses on India’s overall growth in the last decade and how it is set to grow in the next fiscal year.
What did the report find out?
Well, over the last 10 years, the Indian economy has demonstrated remarkable resilience and growth.
In 2014, India faced numerous economic challenges, including high inflation and fiscal deficits. However, the decade that followed marked a transformative era.
The government's strategic reforms and policies led to stable, sustainable growth, transforming the nation's economic landscape.
Here are a few important factors behind this growth:
Here are a few other key highlights to note…
All that says that India is on its way to achieve the Amrit Kaal vision laid by Prime Minister Narendra Modi where the nation will move forward towards attaining resolutions made for Aatmanirbhar Bharat in the next 25 years.
Here’s what the report states, ‘India embarks on her ‘Amrit Kaal’ with confidence and the attitude that challenges to growth and inclusive development are stepping stones and not obstacles.’
As we step into the future, India's economy is poised for sustained growth, backed by a robust digital foundation and continued focus on reforms. The government's commitment to building infrastructure and fostering inclusive development ensures that the growth is balanced and sustainable.
All that states that India has come along a long way growing in the last 10 years and the coming decade seems promising.
India has invested significantly in infrastructure in the last decade, leading to a 3.3X increase in public sector capital investment.
The financial sector is healthy, with strong non-food credit growth. The pursuit of inclusive development is evident in improved household financial health, job creation, declining unemployment rates, and progress in education and healthcare indicators.
Despite global challenges like the COVID-19 pandemic and geopolitical tensions, the Indian economy showcased its inherent resilience. The government's efficient management of these crises, adept handling of crude oil supply, along with its focus on economic reforms, played a pivotal role in sustaining growth.
In all, the past decade has been a testament to India's economic resilience and potential.
With strategic reforms, inclusive policies, India has not only overcome its challenges but has also positioned itself as a global economic powerhouse, ready to take on future challenges with confidence.
It would be interesting to see how the coming decade unfolds for India!
For more insights on the Indian economy and the Budget 2024 announcements, check out #BeyondTheBudget.
See you with another interesting market story next week.
Until then - Happy learning!
Sources: Kotak Securities, Department of Economic Affairs, Economic Times
Disclaimer: This article is for informational purposes only and does not constitute financial advice. Investors should conduct their own research and consult with financial professionals before making any investment decisions. Read the full disclaimer here.