Economic Survey 2024 Updates: CEA Nageswaran advices more FDI from China to boost India’s exports

Economic Survey 2024 Live: "The Economic Survey 2024 underscores the success of the government's Production Linked Incentive (PLI) scheme in boosting India's electronics exports. Leveraging tax breaks and subsidies, the scheme has transformed India's electronics trade with the US, shifting from a deficit of $0.6 billion in FY17 to a surplus of $8.7 billion in FY24. The mobile phone segment has witnessed phenomenal growth, with exports to the US jumping from $2.2 billion to $5.7 billion in just one year. The consumer electronics boom has also fueled job creation. This sector employs around 2% of the total workforce and has seen a staggering 66% increase in jobs between FY18 and FY22. While celebrating this progress, we also need to emphasize the importance of value addition across all categories – mobile phones, accessories, white goods, and IT hardware. Manufacturers like ZETWERK are actively building factories pan-India to support this objective. The Electronic System Design and Manufacturing (ESDM) sector also seeks a level playing field that fosters fair competition. This includes policies that ensure equal opportunities for participants of all sizes and origins, enabling value addition and backward integration throughout the industry.”

Economic Survey 2024 Live: “Given the economic survey's emphasis on growth and development aligned climate actions, we can expect incentives that boost domestic manufacturing to be a key pillar of the Budget's climate related announcements. This should include incentives for solar panel manufacturing and green hydrogen production. While the economic survey emphasises energy efficiency practices under LiFE, it must also emphasise the criticality of technology efficiency and super-efficient appliances that the budget could support through appropriate incentives and measures.”

Economic Survey 2024 Live: ""India already boasts of some of the most impressive Digital Public Infrastructure (DPI) and payment rails today including ground-breaking new protocols such as Credit Line on UPI. As a provider of next-generation banking solutions to large financial institutions, we hope that the Union Budget 24-25 will introduce further imperatives and incentives for banks and the associated technology ecosystem to create even more financial inclusion for the underserved Indians."

Economic Survey 2024 Live: "Economic survey is targeting GDP growth of 6.5 to 7 percent in this year and going alongwith RBI Projection of CPI Inflation of 4.5 and 4.1 for the current year and next year. They are targeting GDP growth rate of 6 percent on a long term basis which converts into nominal GDP growth rate of 9.5 to 10.5 pecent. Public debt to GDP ratio is expected to come down in the coming years due to higher nominal growth rate.

In RBI June bulletin, RBI staff member estimates real rate of interest at 1.4 to 1.9 percent due to higher potential growth rate of the economy. The working paper expects potential real GDP growth of around 8 percent on a sustained basis. There is a gap in RBI expectation and Economic Survey in terms of potential growth rates of the economy. Consumption expenditure forms 55 percent of the economy which is growing at 4 percent while the economy grew by 8 percent last year as per the economic survey. Additional trust is expected from the monetary authorities to achieve GDP growth over 6 percent in the coming years. As CPI inflation moves towards 4 to 4.5 percent, we can expect 50 to 75 basis points of rate cuts by RBI to support economic growth."

Economic Survey 2024 Live: The Economic Survey 2024 highlighted that product misselling is widespread in the insurance sector and should not be attributed merely to a few rogue agents. It stressed the importance of prompt and fair claim settlements and a reduction in rejection rates to enhance insurance penetration.

Economic Survey 2024 Live: To enhance the precision and relevance of economic data, the Ministry of Statistics and Programme Implementation (MoSPI) has initiated the process of updating the base year for the Consumer Price Index (CPI) from 2012 to 2024, according to the Economic Survey report released on Monday.

Economic Survey 2024 Live: “The Chief Economic Advisor has sounded a cautious note by projecting a growth rate of 6.5-7.0% for FY25, highlighting the global uncertainties and domestic challenges. The Economic Survey has proposed a compact between the Central and state governments, corporate sector and academia to overcome the unprecedented economic scenario. There is a nudge to governments to let go of various regulations, citing the Ishopanishad. There is also a nudge to the private sector to invest in IP, machinery and equipment. Academia has been nudged to provide the necessary skills and knowledge for IP creation. There is an acknowledgment of the challenges faced by our exports, manufacturing and small and medium enterprises. There is also a hint at lowering our emphasis on manufacturing and adopting the agricultural sector too as a generator of jobs, which comes from a statement that our choices cannot be binary. We now await the Union Budget to see how these headwinds highlighted in the Economic Survey are countered by the fiscal outlays and policies.”

Economic Survey 2024 Live: Here are key highlights on farm policies -

• Chief Economic Advisor V Anantha Nageswaran has advocated for a nationwide discussion on the agriculture sector, stressing the need for policy re-orientation despite current subsidies and support measures.
• In the preface to the Economic Survey 2023-24, Nageswaran observed that although the government provides extensive support to farmers through subsidies on water, electricity, and fertilizers, as well as income tax exemptions and minimum support prices, there is still room for improvement in policy implementation. "The case can be made that farmers might benefit from a re-orientation of existing and new policies," the CEA stated.
• The survey highlighted that current policies, implemented at both national and state levels, often contradict each other, leading to unintended outcomes such as soil fertility decline, groundwater depletion, environmental pollution, and imbalances in crop production and dietary habits.
• Nageswaran emphasized the potential for significant benefits if the complexities in farm sector policies are addressed, stating, "The payoff will be immense if we untie the knots that plague farm sector policies." 
• He proposed a paradigm shift in how agriculture is perceived in economic development, suggesting that the sector could potentially serve as an economic "saviour" for India, contrary to the traditional progression model from agriculture to industry to services.

Economic Survey 2024 Live: Chief Economic Adviser to the Government of India, Dr V. Anantha Nageswaran said, "With several countries attempting net zero emission at the same time and trying to achieve energy transition, it is going to be a major issue in resource availability... Geopolitical fragmentation, climate change, and global trade did not affect East Asia when they were making their transition from lower-income to higher-income countries... We have to chart our path towards Viksit Bharat amidst these headwinds. This is why domestic growth becomes very important... The average growth rate till March'24 has been around 8% and the real GDP is 20% above the pre-pandemic levels... Investment is being driven not only by public sector capital formation, both union and state governments are spearheading the capital formations. Private Capex has recovered and is growing..."

Economic Survey 2024 Live: The Chief Economic Adviser (CEA) pointed out that although AI is highly energy-intensive, its overall impact is still uncertain. AI might influence business process outsourcing jobs, presenting a minor short-term issue for India, but it could provide substantial long-term advantages.

Economic Survey 2024 Live: The Chief Economic Adviser (CEA) is optimistic about economic growth despite current challenges. He believes a 7% growth rate is attainable for the financial year 2024-25, though the official forecast is between 6.5% and 7% to reflect uncertainties.

Economic Survey 2024 Live: The Chief Economic Adviser (CEA) emphasized that breaking down the fiscal deficit shows a focus on investment.

Economic Survey 2024 Live: According to the Chief Economic Adviser (CEA), a weak currency does not have a significant impact on India because the country has a very low external debt ratio.

Economic Survey 2024 Live: The Chief Economic Adviser (CEA) anticipates improved performance in the farm sector for the financial year 2024-25. Furthermore, a widespread acceleration in industrial growth is also expected.

Economic Survey 2024 Live: The Chief Economic Adviser (CEA) noted that the Production-Linked Incentive (PLI) schemes are achieving significant results as of May 2024. These schemes are gaining traction and demonstrating considerable progress in critical sectors like electronics and pharmaceuticals, with reported investments surpassing ₹1.28 lakh crore.

India's Chief Economic Adviser V Anantha Nageswaran in the Economic Survey document said that India can either integrate into China's supply chain or promote foreign direct investment (FDI) from the neighbour to boost global exports, Reuters reported

"Among these choices, focusing on FDI from China seems more promising for boosting India's exports to the U.S., similar to how East Asian economies did in the past."

The report said choosing the FDI strategy "appears more advantageous than relying on trade" as it can arrest the growing trade deficit New Delhi has with Beijing, the top exporter for India.

The Economic Survey document acknowledged the government's efforts in the telecom sector. 

"Telecommunication technology development requires significantly large and patient capital for R&D and commercialisation. To address this, the government has decided that an allocation of 5 per cent of annual collections from Universal Services Obligation Fund would be made available for funding R&D in the telecom sector," the survey said.

• India's international rank in mobile broadband speed has improved from 118 to 15 in March 2024. 
• Overall teledensity (number of telephones per 100 population) in India increased from 75.2 per cent in March 2014 to 85.7 per cent in March 2024. 
• Number of wireless telephone connections stood at 116.5 crore at the end of March 2024. 
• Around 6,83,175 kilometre of Optical Fibre Cable (OFC) has been laid, connecting a total of 2,06,709 gram panchayats in the BharatNet phase I and II.

The Economic Survey 2024 highlighted the resilience of the Indian economy despite global headwinds. 

"India’s real GDP grew by 8.2 per cent in FY24, posting growth of over 7 per cent for a third consecutive year, driven by stable consumption demand and steadily improving investment demand," it stated.

In the Economic Survey 2024 tabled in Parliament today, India's Chief Economic Advisor V Anantha Nageswaran has called for a pan-India dialogue on the agriculture sector, highlighting the need for policy re-orientation despite existing subsidies and support measures.

"A case can be made that they (farmers) can be served better with some re-orientation of existing and new policies. The payoff will be immense if we untie the knots that bedevil farm sector policies," Nageswaran said.

The survey underscored the potential for making the agricultural sector both "fashionable and productive" for India's urban youth, potentially setting a global model for both developing and developed nations.

The Economic Survey 2024 document released today noted that despite the government's tax cuts aimed at boosting capital formation, the response from the corporate sector has been mixed. 

“Private sector investment in machinery and equipment and intellectual property products grew cumulatively by only 35 per cent over four years to FY23, while investment in dwellings, other buildings, and structures increased by 105 per cent. This imbalance is seen as a hindrance to raising the manufacturing share of GDP and improving competitiveness,” it said.

Further, it emphasised the need for corporations to step up hiring and increase worker compensation, arguing that this is in their best interest to sustain demand and economic growth. 

“Although corporate profits have grown significantly, hiring and compensation have not kept pace, highlighting a gap that needs to be addressed,” it added. 

• The Economic Survey 2024 has said that the Indian economy needs to generate around 78.51 lakh jobs annually in the non-farm sector to meet growing demand and population growth.
• India's workforce is nearly 56.5 crore, with more than 45 per cent employed in agriculture, 11.4 per cent in manufacturing, 28.9 per cent in services, and 13.0 per cent in construction. 
• India's female labour force participation has been rising over the last six years, and the unemployment rate is on the decline, dropping to 3.2 per cent in FY23.

The Economic Survey called artificial intelligence (AI) "phenomenal in its rapid pace of innovation and ease of diffusion" but also cautioned that the the future of work will be reshaped by it.

“The advent of AI casts a huge pall of uncertainty as to its impact on workers across all skill levels — low, semi and high. The biggest disruption for the future of work is the accelerated growth in AI, which is poised to revolutionise the global economy,” the Survey noted.

"India would not remain immune to this transformation. AI is being recognised as a general-purpose technology, like electricity and the internet, which is phenomenal in its rapid pace of innovation and ease of diffusion. As AI systems continue to get smarter and adoption increases, the future of work will be reshaped," it said.

Capital markets are becoming more prominent in India's growth story, with an expanding share in capital formation and investment landscape on the back of technology, innovation and digitisation, as per the Economic Survey 2024. 

Further, Indian markets are resilient to global geo-political and economic shocks.

“Despite heightened geopolitical risks, rising interest rates and volatile commodity prices, Indian capital markets have been one of the best performing among emerging markets in FY24,” it said.

"The exemplary performance of the Indian stock market compared to the world and emerging markets over the years can be primarily attributed to India’s resilience to global geo-political and economic shocks, its solid and stable domestic macroeconomic outlook, and the strength of the domestic investor base," the Economic Survey added.

The Economic Survey 2024 suggested that a higher level of private sector financing and resource mobilisation from new sources will be crucial for India to build quality infrastructure. 

“This would not only require policy and institutional support from the central government, but state and local governments would have to play an equally important role,” it said.

It further noted a need to improve data capture and reporting mechanisms for investments in infrastructure across instruments and sectors as well as its composition across different projects at a granular level.

The Economic Survey 2024 has said that India's production linked incentive scheme (PLI) for automobile and auto components has so far attracted a proposed investment of ₹67,690 crore.

“A capital of ₹14,043 crore has been invested till end-March 2024. Applicants have proposed employment generation of 1.48 lakh, against which 28,884 of jobs have been generated till March 31, 2024. So far 85 applicants have got approval under the scheme,” it stated.

The Economic Survey said that remittances to India will grow at 3.7 per cent to $124 billion in 2024, and at 4 per cent in 2025 to reach $129 billion. 

The Economic Survey 2024 document stated that India's headline inflation rate is largely under control, although the inflation rate of some specific food items is elevated. 

The trade deficit was lower in FY24 than in FY23, and the current account deficit for the year is around 0.7per cent of GDP.

The Indian economy is on a strong wicket and stable footing, demonstrating resilience in the face of geopolitical challenges, as per the Economic Survey 2024. 

It added that the Indian economy has consolidated its post-Covid recovery with policymakers — fiscal and monetary — ensuring economic and financial stability, asserting that the economy continues to expand.

It however also indicated global volatility, adding that “change is the only constant for a country with high growth aspirations”.

"For the recovery to be sustained, there has to be heavy lifting on the domestic front because the environment has become extraordinarily difficult to reach agreements on key global issues such as trade, investment and climate," the Economic Survey said.

The Economic Survey document released today, a day ahead of the Union Budget 2024, emphasied public health and diet. It noted that as much as 54 per cent of disease burden in India is due to unhealthy diets, adding that there is a “need to transition towards balanced, diverse diet”.

The Economic Survey document noted that artificial intelligence (AI) casts a “huge pall of uncertainty” with regard to impact on workers “across all skill levels”. 

Notably, this was an issue raised in the mini document published in January ahead of the Interim Budget as well. 

The 2024 Economic Survey document has suggested that the government must “let go its grip in areas where it does not have to free up its capacity and enhance capability”.

“Power is a prized possession of governments; it can let go of at least some of it and enjoy the lightness it creates,” it added.

"Private capital formation after good growth in the last three years may turn slightly more cautious because of fears of cheaper imports from countries that have excess capacity," the Economic Survey document stated.

It however noted that healthier corporate and bank balance sheets would strengthen private investment.

India's policy adeptly steered through challenges, ensuring price stability despite global uncertainties, the Economic Survey 2024 document said.

The Economic Survey document sees India's real GDP growth at 6.5-7 per cent in FY25. "The survey conservatively projects a real GDP growth of 6.5–7 per cent, with risks evenly balanced, cognizant of the fact that the market expectations are on the higher side," it stated.

Notably, this growth forecast aligns with the International Monetary Fund's estimate of 7 per cent. It is however, below the Reserve Bank of India's estimate of 7.2 per cent growth for FY25.

The Economic Survey document said that retail inflation has come down to 5.4 per cent in FY24, compared to 6.7 per cent in FY23. 

The Economic Survey 2024 said that it saw core inflation remained sticky due to services inflation and a strong labour market, especially in most Asian Economies.

As per the Economic Survey document tabled by Finance Minister Nirmala Sitharaman in Parliament today, the outlook for India's financial sector “appears bright”, PTI reported. 

India's economic survey has projected growth at 6.5-7.0 per cent in FY25, Reuters reported. This is notably, below the Reserve Bank of India's forecase of 7.2 per cent projected growth for the current financial year ending March 2025.

• The Economic Survey will be presented by Finance Minister Nirmala Sitharaman in the Lok Sabha at 1 pm and in the Rajya Sabha at 2 pm.
• India's CEA V Ananta Nageswaran will hold a press conference at 2.30 pm.
• To live streaming the Parliament Budget session: Track Sansad TV and PIB India on YouTube. 
• The Ministry of Finance will also stream live on Facebook — https://www.facebook.com/finmin.goi 
• For live updates: Follow on Twitter @FinMinIndia 
• To download and access the Economic Survey documents on the India Budget website after the release, check — https://www.indiabudget.gov.in/economicsurvey/ 

The ‘The Indian Economy: A Review’ in January document praised India's track record in tackling challenges, terming them “significant but not insurmountable”.

“In sum, India’s ‘Mission Mode’ approach to getting the better of festering challenges stands the country in good stead in meeting the current and emerging challenges,” it stated.

• “The Budget session is an important destination in our democracy's proud journey. A government has come back to power for a third term after 60 years.”
• “We are working to gradually realise the guarantees I have given.” 
• “Our Budget will set the direction of our journey for the next five years and will set a strong foundation for ‘Viksit Bharat’.” 
• “Positive outlook, investment, and performance define India; it is at the peak of opportunities.” 
• “The people have given their verdict. (We) will appeal to all political parties to fight together for the country for the next five years.” 

Prime Minister Narendra Modi on July 22, lashed out at the "negative politics" of some parties, stating that they were using the Parliament's time to hide their failures, PTI reported. He hit out at the opposition parties for "trying to scuttle his voice" in Parliament, adding that such a tactic has no place in democracy.

He also said the Budget session is an "important destination in our democracy's proud journey".

Prime Minister Modi said the Budget 2024 will set the direction for the journey of the next five years and lay the foundation for fulfilling the dream of 'Viksit Bharat' in 2047, PTI reported.

Modi said his government is moving forward to implement on the ground the guarantees he has given to the people.

"This is the Budget session. The guarantees that I have been giving, we are moving forward to implement those guarantees on the ground. This Budget is an important Budget of the Amrit Kaal. The opportunity of five years that we have, this budget will decide the direction of that journey as well as lay the foundation for fulfilling the dream of Viksit Bharat in 2047," Modi said.

In a video address on July 22, ahead of the Parliament's Budget session today, Prime Minister Narendra Modi said the people of India have given their verdict in the Lok Sabha elections, PTI reported. He added that “all political parties must fight together for the country for the next five years”.

• It noted that the country has made strides with initiatives such as the Pradhan Mantri Kaushal Vikas Yojana (PMKVY), which has trained 1.3 crore youth for better job prospects.
• Efforts to promote renewable energy have also been successful, with substantial growth in 179.57 GW capacity from hydropower by November 2023, it stated. 
• It added that technological advancements, such as internet penetration and Aadhaar, have enhanced inclusivity and efficiency in governance and economic transactions. 
• On financial inclusion too, it noted that the Jan Dhan Yojana has expanded financial access, with 51.5 crore beneficiaries as of January 2024, notably benefiting rural women.

“Budget session important destination in our democracy's proud journey, a government has come back to power for third term after 60 years,” Prime Minister Narendra Modi said ahead of the Budget session of Parliament today.

“We are working to gradually realise the guarantees I have given,” Modi added.

• Lastly, the document noted that ensuring a skilled workforce, good quality education, and public health are vital for sustained economic growth and productivity.
• Ensuring the availability of a talented and appropriately skilled workforce to the industry, age-appropriate learning outcomes in schools at all levels and a healthy and fit population are important policy priorities in the coming years.
• A healthy, educated and skilled population will augment the economically productive workforce.

• Thirdly, the rise of AI was registered as a global concern regarding job displacement, particularly in service sectors. 
• It noted that developing economies such as India need to invest in infrastructure and digital skills to harness AI's potential while managing its impact on employment.
• An IMF paper estimated that 40 per cent of global employment is exposed to AI, with risks of displacement.

The second challenge noted is that balancing economic growth with energy security as move towards renewable energy poses complex issues geopolitically, technologically, and economically.