Breaking the Norms: Finance Ministry releases “The Indian Economy: A Review” instead of Economic Survey 2023-24 ahead of Budget 2024

Finance Ministry releases The Indian Economy: A Review ahead of the Interim Budget 2024
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Finance Minister Nirmala Sitharaman will present the Interim Budget 2024 on February 1. Every year, a day before the presentation of the budget document, the central government presents an Economic Survey. However, a survey will not be presented on January 31, the budget being of interim nature and in light of the upcoming elections.

In the recently released mini-annual Economic Survey titled ‘The Indian Economy: A Review,’ Chief Economic Adviser V Anantha Nageswaran outlines India’s potential to reach a $7 trillion economy by 2030.

This comprehensive 74-page document, a precursor to the upcoming Interim Union Budget 2024, delves into the country’s real growth rate projections for the fiscal year and highlights key challenges.

With Lok Sabha elections approaching in April and May, this interim report, dubbed the mini economic survey, serves as a preview of India’s growth trajectory and identifies challenges for the upcoming fiscal year. CEA Nageswaran expresses optimism, stating that FY25 could mark the fourth consecutive year of the Indian economy growing at or above 7 percent post-pandemic.

The Economic Survey is not a constitutional requirement. It is a government practice to present the Economic Survey every year before the budget. However, the government is not compelled to present the Economic Survey, and its recommendations are not binding on the government.

The first Economic Survey of India was presented in 1950-51 as part of the Union Budget. After 1964, it was separated from the Budget and presented each year during the Budget Session before the presentation of the budget.

The Economic Survey provides a bird’s eye view of the trends noticed in different sectors over the previous year. These sectors include agriculture, manufacturing, employment, infrastructure, prices, exports, imports, foreign exchange reserve, and money supply.

The National Statistical Office (NSO) previously projected a growth rate of 7.3 percent for FY24, while various research agencies anticipate a growth rate ranging from 6.3 to 6.5 percent for the current scenario.

Key challenges highlighted in the report include:

Global Economic Integration: The report emphasizes that India’s growth outlook is intricately linked to global developments, citing increased geo-economic fragmentation and a slowdown in hyper-globalization. These factors may lead to friend-shoring and onshoring, impacting global trade and growth.

Climate Action and Development: Development is seen as crucial for building resilience and effective climate action. The report urges a balance between development and emissions mitigation, emphasizing the need to avoid making the low-income status of several nations permanent.

Artificial Intelligence (AI) Impact: The positive growth outlook, fueled by the digital revolution, faces challenges from AI. The report discusses AI’s potential impact on employment, highlighting the need for developing economies to invest in infrastructure and a digitally skilled workforce to harness its benefits.

Workforce and Education Challenges: Ensuring a skilled workforce, age-appropriate learning outcomes, and a healthy population are identified as policy priorities. The report cites an increase in the employable percentage of students, emphasizing the importance of a healthy, educated, and skilled population for economic productivity.

Geopolitical Tensions and Export Challenges: Persisting geopolitical tensions, particularly recent events in the Red Sea, pose obstacles to exporting. The report underscores the importance of lowering logistics costs and investing in product quality to maintain and expand market share, especially in areas where India has a competitive advantage.

As India navigates these challenges, the annual Economic Survey provides valuable insights into the country’s economic landscape and sets the stage for informed policy decisions.

tSignificantly, the inaugural Budget of Independent India, presented on November 26, 1947, by Finance Minister R.K. Shanmukham Chetty, was notably an interim one. In his address, he conveyed:

“From the 15th August, 1947 to the 31st March, 1948. I may briefly explain the circumstances in which it has been necessary to present a fresh Budget for this period. With the division of the country and the emergence of two independent Governments in place of the old Central Government, the Budget for the current year 1947-48 passed by the Legislature last March ceased to be operative. Although under the transitional provisions of the constitution, the Government could authorize the expenditure necessary for the rest of the financial year, it was felt that it will be in accordance with the public wish that a Budget should be placed before the representatives of the people at the earliest possible moment. There is nothing spectacular about my statement and there will be no surprises associated with a Budget. I shall place before the House our estimate of revenue and expenditure for this period and I shall try to indicate in broad outlines the pattern of the economic life of the country and the problems that we will have to face in the immediate future.”

Likewise, as the Lok Sabha elections 2024 are set to take place this year in April-May, a full budget is not being presented by FM Sitharaman. A complete budget and the Economic Survey will be presented in July, when the results are declared and a new cabinet is appointed.

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