LIVE | What Economic Survey says on GDP, inflation, and more

Update: 2024-07-22 07:28 GMT
Live Updates - Page 5
2024-07-22 08:37 GMT

India must seize job-creation opportunity provided by tourism sector

India needs to seize the opportunity provided by the tourism sector that represents a relatively low-hanging fruit for job creation amid a challenging environment in services and manufacturing industries due to the rise of AI, protectionism and supply concerns, the Economic Survey said.

India’s tourism industry showed positive signs of revival post-pandemic and witnessed over 92 lakh foreign tourist arrivals in 2023, implying a YoY increase of 43.5 per cent, while the hospitality industry has risen to meet the increasing number of tourists' needs by creating the highest amount of new supply in 2023 with the addition of 14,000 rooms, it noted.

Citing the World Economic Forum's (WEF) Travel and Tourism Development Index (TTDI) 2024 Report, the Economic Survey 2023-24 emphasised the need for improvements in tourist services and infrastructure and the development of a skilled workforce.

“In a challenging environment for employment generation in services due to the rise of AI and manufacturing due to rising protectionism, transportation costs and supply concerns, the tourism sector represents a relatively low-hanging fruit for job creation. India has to seize the opportunity,” the Survey asserted.

To formalise employment within this sector, the Ministry of Tourism has initiated the Incredible India Tourism Facilitator Certificate Programme.

It aims to create a skilled cadre of tourist facilitators nationwide through a digital platform that offers online learning opportunities and certification courses, it noted.

The Survey acknowledged that India's travel and tourism (T&T) sector has been influenced by global inflationary pressures and delays in the recovery of capacity, similar to other economies.

“However, the decline in price competitiveness since 2021 has been minimal compared to its peers, with only a 0.7 per cent drop. India's decline is particularly slight at just 0.1 per cent from 2021 levels, which reflects the government’s consistent efforts to maintain stability despite the slowdown caused by the COVID-19 pandemic,” it said.

India has significantly earned foreign exchange receipts amounting to over Rs 2.3 lakh crore through tourism, indicating a 65.7 per cent YoY increase.

The country's share of foreign exchange earnings in world tourism receipts increased from 1.38 per cent in 2021 to 1.58 per cent in 2022, the Survey noted.

Similarly, it said the hospitality industry has risen to meet the increasing number of tourists' needs and to elevate the overall guest experience.

“In 2023, the highest amount of new supply was created with the addition of 14,000 rooms, bringing the total inventory of chain-affiliated rooms to 183,000 in India,” the Survey said adding, that hoteliers are increasingly leveraging technology to personalise guest experiences and improve operational efficiencies.

Hotels are also adopting innovative operational strategies, such as leasing or managing external restaurant, spa, and lounge brands, to capitalise on established concepts that attract hotel residents, thereby boosting revenue. In FY24, the average daily rate increased from Rs 6704 to Rs 7616, marking a YoY growth of 13.6 per cent, it said.

Noting that the tourism sector has embraced the digital revolution, the Survey said, “One such initiative is E-Marketplace, designed to facilitate interactions between tourists and certified tourist facilitators and guides through web and mobile applications.”

2024-07-22 08:35 GMT

Telecom tech needs capital, govt to allocate 5% of USOF for R&D

The government has decided to allocate 5 per cent of Universal Services Obligation Fund (USOF) for research and development of telecommunications technology, said the Economic Survey 2023-24 tabled in Parliament on Monday.

At present, the government has a corpus of around Rs 80,000 crore collected under USOF which has now been renamed as Digital Bharat Nidhi.

“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.

According to the survey, the Telecom Technology Development Fund formulated in 2022 has seen significant participation from startups, MSMEs, academia and industry.

The survey said the government dedicated '5G Test Bed' to the nation in 2022, providing an end-to-end testing facility, enabling Research and Development (R&D) teams in the Indian academia and industry to validate their products, prototypes, and algorithms and demonstrate various services.

The survey also mentioned government efforts to leap towards development of technology for 6G services.

Based on the recommendations of Technology Innovation Group on 6G, the Bharat 6G Vision document was launched in March 2023 to develop and deploy 6G network technologies in India.

The creation of 6G Vision document also led to the constitution of Bharat 6G Mission and an apex council to lay down the phase-wise objectives of the 6G Mission.

“The Bharat 6G Alliance was also launched in July 2023 as a collaborative platform of public and private companies, academia, research institutions and standards development organisations to enable India to become a leading global supplier of IP, products and solutions of affordable 5G, 6G and other future telecom solutions,” the survey said.

It noted that India's international rank in mobile broadband speed has improved from 118 to 15 in March 2024.

The 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, while the number of wireless telephone connections stood at 116.5 crore at the end of March 2024.

The survey said 6,83,175 km of Optical Fibre Cable (OFC) has been laid, connecting a total of 2,06,709 gram panchayats in the BharatNet phase I and II.

2024-07-22 08:33 GMT

Re-orientation of farm policies needed despite subsidies: Preface

In the preface to the Economic Survey 2023-24, 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.

Nageswaran has noted that while the government provides substantial support to farmers through subsidies on water, electricity, and fertilizers, along with income tax exemptions and minimum support prices, there is room for improvement in policy implementation.

“A case can be made that they (farmers) can be served better with some re-orientation of existing and new policies,” the CEA stated.

The survey pointed out that current policies, implemented by both national and sub-national governments, often work at cross-purposes, leading to unintended consequences. These include soil fertility degradation, groundwater depletion, environmental pollution, and nutritional imbalances in crop production and dietary habits.

Nageswaran emphasised the potential for significant benefits if the complexities in farm sector policies are addressed. “The payoff will be immense if we untie the knots that bedevil farm sector policies,” he said.

The CEA suggested a paradigm shift in viewing agriculture's role in economic development. Contrary to conventional models of economic progression from agriculture to industry to services, Nageswaran proposed that the farm sector could potentially be an economic “saviour” for India.

“Can the farm sector be the saviour?” he questioned, adding that a return to sustainable farming practices and revised policymaking could boost agricultural value addition, and farmer incomes, and create opportunities in food processing and exports.

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.

2024-07-22 08:31 GMT

Need for convergence of efforts at Centre, states to improve education quality

Convergence of efforts across the Centre, states, and local bodies is needed to improve the quality of education, especially primary education, the Economic Survey has suggested.

The National Education Policy (NEP) 2020 is expected to yield foundational literacy and numeracy for every child passing the third standard in the near future, said the Survey for 2023-24.

The Survey noted education is one of the most critical areas for India’s development, and mission-mode and cost-effective implementation of well-designed and well-intentioned programmes is essential to improve the quality of education, especially primary education, without which further years of education add little value.

“To realise the same, unity of purpose and convergence of efforts across the Centre, state, and local governments is called for, as ‘public education’ is a concurrent list subject,” the Survey document said.

According to the Survey, the government's spending on social services including education rose by 9.36 per cent to Rs 23.50 lakh crore in FY24 from Rs 21.49 lakh crore in FY23. Of the total, Rs 8.28 lakh crore was spent on education alone during FY24, around 8 per cent higher from Rs 7.68 lakh crore in FY23.

2024-07-22 08:29 GMT

Remittances to India likely grow 3.7% to $124 bn in 2024

Remittances to India — the second largest source of external financing after service exports — are projected to grow at 3.7 per cent to USD 124 billion in 2024 and at 4 per cent to reach USD 129 billion in 2025, the Economic Survey said on Monday.

India’s primary source of remittances is oil-exporting countries.

According to the World Bank, India has the largest emigrant population and is the top remittance recipient country. In 2023, remittances to India had hit USD 120 billion.

“The outlook for remittance in India for 2024 is strong, with the expectation that remittance growth will moderate to 3.7 per cent, taking... levels to USD 124 billion in 2024,” the Economic Survey tabled in Parliament by Finance Minister Nirmala Sitharaman said.

The diversification of India’s migrant pool — between a large share of highly skilled workers employed mostly in high-income OECD markets, and the less-skilled migrants employed in the GCC markets — is likely to lend stability to their remittances in the event of external shocks, it added.

“India’s efforts to link its Unified Payments Interface (UPI) with source countries such as the United Arab Emirates and Singapore are expected to reduce costs and speed up remittances,” the Survey said.

In 2023, the increase in remittances was driven mainly by declining inflation and strong labour markets in the United States and Europe — the largest destinations for India's skilled migrants — and other OECD destinations, as well as positive demand for skilled and less-skilled workers in the GCC countries.

Net services receipts increased from USD 143.3 billion during 2022-23 to USD 162.8 billion in 2023-24, primarily on account of rising exports of software, travel and business services.

The survey said remitters get better value in rupee terms when it depreciates in terms of foreign currencies, be it for UAE's Dirham, the US Dollar, the British Pound, or any other currency.

For every one USD a worker earns in distant land, he returns an augmented amount after necessarily being converted according to the foreign land he works in.

Hence, remittances exhibited a positive association with the exchange rate movement.

2024-07-22 08:27 GMT

India needs to generate 78.5 lakh jobs in non-farm sector annually till 2030

The Indian economy needs to generate an average of nearly 78.5 lakh jobs annually until 2030 in the non-farm sector to cater to the rising workforce, according to the Economic Survey for 2023-24.

The Survey provided a broad estimate of the number of jobs that the economy has to generate.

It further said that everyone in the working age will not seek jobs. Some of them will be self-employed and some of them will be employers too.

More than jobs, the Survey added, economic growth is about generating livelihoods. Governments at all levels and the private sector will have to strive together for it.

It said that the share of agriculture in the workforce will gradually decline from 45.8 per cent in 2023 to 25 per cent in 2047.

“Consequently, the Indian economy needs to generate an average of nearly 78.5 lakh jobs annually until 2030 in the non-farm sector to cater to the rising workforce,” the Survey said.

The demand of 78.5 lakh jobs in the non-farm sector per year, can be met by supplementing the existing schemes of PLI (60 lakh employment generation over 5 years), MITRA Textile scheme (20 lakh employment generation) and MUDRA, etc., it suggested.

The rising employment of flexi workers through staffing companies can be a channel for ensuring social security for informal workers, it stated.

It pointed out that long-existing challenges remain of formalising a burgeoning workforce, facilitating job creation in sectors which can absorb workers shifting from agriculture, and ensuring social security benefits for those in regular wage/salaried employment.

It further suggested that state governments can grease the wheels of hiring by easing the compliance burden and reforming laws on land.

Concurrently, the employment landscape is fast changing worldwide, and India, aspiring to be a developed nation by 2047, must partake in the massive reshaping of jobs that AI has and is likely to further spin off, it suggested.

The impact of automation on workers being complex and uncertain, the direction of technological change remains susceptible to forces of political economy, it noted.

India thus needs to invest in research and steer the AI bandwagon towards shared prosperity, it suggested, adding that something as basic and age-old as unpaid care work needs attention too.

The development of an affordable, reliable, and quality creche and elderly care infrastructure is the Achilles heel for female participation in paid work, which should be determined by comparative advantage and choice rather than dictated by gender, it stated.

In their fascination for AI and fear of erosion of competitiveness, businesses have to bear in mind their responsibility for employment generation and the consequent impact on social stability, it said.

It noted that the new Labour Codes marginally improved some of regulatory limits (like daily work hours).

However, it stated that the Codes are yet to be fully-operationalised and many states are found to be reintroducing the older restrictions under the new Laws.

It suggested that labour laws need to be reviewed to re-evaluate incentives for employers, with a focus on achieving better outcomes for economic growth and prosperity in the manufacturing sector.

Implementing more flexible labour laws could unleash substantial economic potential, promote gender inclusivity, and attract industrial investment, it stated.

2024-07-22 08:25 GMT

Need to link skill development with sops in high-growth areas

With only 4.4 per cent of India’s young workforce formally skilled, linking skill development with production linked incentive (PLI) and employment-linked incentive schemes in high-growth potential sectors like toy, apparel, tourism, logistics and textiles would aid upgrading of skills as production moves up the value chain, the Economic Survey said on Monday.

The Survey stated that “in order to reap the demographic advantage, it is necessary to equip the workforce with employable skills and knowledge that meet the requirements of the globalised labour market”.

Currently, Production-Linked Incentive (PLI) scheme is available for 14 sectors. Industry bodies have been demanding introduction of an employment-linked incentive scheme to promote job creation in the economy, in the face of a growing young population amidst concerns about jobless growth.

According to the Survey, to maximise the outcomes from skilling initiatives, convergence, and utilisation of synergies with other employment-centric programmes would mutually benefit the two verticals.

“Measures are being taken by government to translate India's demographic dividend into a productivity dividend by enabling job and entrepreneurial opportunities that are in sync with the aspirations and abilities of India's youth. It is partnering with the industry to enhance skilling with employability,” said the Survey.

It further stated that “linking skill development with PLI scheme and employment-linked incentive schemes in high-growth potential sectors like toy, apparel, tourism, logistics, textiles, leather sector etc. would aid upgrading of skills as production moves up the value chain”.

2024-07-22 08:23 GMT

Aviation industry on cusp of unprecedented growth but efficiency, viability need improvement

India’s aviation industry is on the cusp of unprecedented growth, and there should be a focus on improving the efficiency and viability of airlines while ensuring environmental sustainability, the Economic Survey 2023-24 says.

While emphasising the importance of collaborative efforts between the government, industry stakeholders and international partners, the survey said there is a need to provide adequate long-haul connectivity from India by strengthening Indian airlines, as a large proportion of Indian international traffic goes through connectivity hubs in the Middle East and Southeast Asia.

The civil aviation sector is boosted by growing demand, increased economic activity, tourism, higher disposable incomes, favourable demographics and greater penetration of aviation infrastructure.

India is the third largest domestic aviation market that recorded a 15 per cent year-on-year growth in total air passengers handled at airports to 37.6 crore in FY24.

The survey highlighted that economic growth necessitates the growth of the aviation industry and the need for expanded airport capacity, which, in turn, brings up sustainability concerns and the need for more skilled workers.

“The aviation industry in India is on the cusp of unprecedented growth, with a strong order book of more than 1500 aircraft placed by Indian airlines and a projected demand for over 2,200 aircraft by 2042,” it said.

For India to take a leadership position in aviation, focus is required on improving the efficiency and viability of airlines while ensuring environmental sustainability, the survey said.

According to the survey, the sector holds significant potential, requiring collaborative efforts between the government, industry stakeholders, and international partners. Investments in infrastructure, skill development, and sustainability initiatives will fuel the future expansion of the aviation sector in India.

“The airline industry is a highly competitive segment, susceptible to external shocks, such as oil prices, exchange rates, epidemics, wars, and equipment issues. These shocks can affect the operations of an airline and impact its viability, hence the development of capabilities in segments, such as MRO, leasing and skilling are needed to further support the airlines,” it noted.

Further, the survey said the future of aviation services in India is anchored in the growth of the maintenance, repair, and operations (MRO) sector and the burgeoning drone industry.

As per the survey, an emerging challenge for the aviation sector would be compliance with a mandatory phase of the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) from 2027.

For the FY2020 to FY2025 period, the government's capital expenditure plan is over Rs 26,000 crore to develop, upgrade and modernise airports to meet international standards.

The Airport Authority of India (AAI) has spent around Rs 23,000 crore from FY2020 to FY2024 while public-private partnerships and other airport operators have shelled out around Rs 49,000 crore during the same period.

“The number of airports in India has more than doubled since 2014. However, there is a need to augment this capacity by adding more airports as well as expansion/upgradation of existing airports in the next five years,” the survey said.

Among the services sectors, the survey said the aviation space saw the most significant credit inflow with a year-on-year growth of 56 per cent, attributed to increased aircraft leasing, hiring and a positive medium to long-term growth outlook.

2024-07-22 08:19 GMT

Pharma sector needs skill advancement, innovation for further growth

The domestic pharmaceutical industry needs skill advancement, innovation and a strong supply chain with the segment size expected to touch USD 130 billion by 2030, says the Economic Survey 2023-24.

The Indian pharmaceutical market is currently valued at around USD 50 billion and is the world’s third-largest by volume.

“Pharma industry is expected to reach USD 130 billion by 2030. The next leg of growth in pharma necessitates skill advancement, the use of innovation and technology, and the establishment of a strong supply chain,” the survey said.

India’s strength in the pharmaceutical sector lies in being a cost effective and efficient producer of existing off-patent drugs — also called the generic industry, it stated.

The world needs both the innovators and those that can provide drugs at a reasonable price, with the latter playing a vital role in enhancing social benefits.

The development of new drugs aimed at addressing unaddressed health concerns will improve the breadth and quality of healthcare access for the population, while producing better returns on investments, it stated.

“Hence, the strength of the industry lies in having a diverse combination of innovators and generic producers. As we move towards realising the vision of Viksit Bharat, it is vital to promote innovation,” the survey added.

The Economic Survey 2023-24 also noted that the export growth in the sector can be sustained by increasing the capabilities in biopharmaceuticals manufacturing.

The export has witnessed growth in the last 5-6 decades due to consistent innovation, the survey stated.

It noted that India is largely dependent on imports for many antibiotic Active Pharmaceutical Ingredients (APIs) manufactured through fermentation.

“India’s import dependency is largely due to a lack of cost-effective options in domestic API manufacturing compared to imports,” the survey said.

Domestic infrastructure and R&D capabilities have improved considerably in recent years, but challenges remain, it added.

2024-07-22 08:16 GMT

Govt measures helping toy industry boost exports, cut Chinese imports

The government’s steps such as mandatory quality norms and increase in customs duties have significantly helped the domestic toy players boost exports and reduce dependence on Chinese imports, Economic Survey said on Monday.

It said that India’s emergence as a toy exporting nation can also be attributed to its integration into the global value chain and zero-duty market access for domestically manufactured toys in critical countries such as the UAE and Australia.

The industry has long faced challenges in the global trade landscape, consistently being a net importer of toys for many years.

“Rising exports, coupled with declining imports, transformed India from a deficit to a surplus nation in the trade of toys,” it said.

For over a decade, India was heavily relied on China for around 76 per cent of its toy imports.

“India’s import bill for toys from China dropped from USD 214 million in FY’13 to USD 41.6 million in FY’24, leading to a decline in China's share in India's toy imports from 94 per cent in FY’13 to 64 per cent in FY’24, indicating India’s competitiveness in the international toy market,” the Survey said. During the period from 2014 to 2020, focused efforts by the government also resulted in the number of manufacturing units doubling.

The measures taken by the government for the toy industry include the formulation of a comprehensive National Action Plan for Toys with 21 specific action points, an increase in basic customs duty on toys, sample testing of each import consignment to curb sub-standard imports, issuance of a Quality Control Order for toys, and support through cluster-based approaches.

The government is considering a production linked incentive (PLI) scheme for the sector to further boost the domestic manufacturing.

Toy Association of India senior vice-president and CEO of Noida-based Little Genius Toys Pvt Ltd Naresh Kumar Gautam said that the country's exports from the sector will further grow in the coming years.

The Survey also said that India has transitioned from an arms importer and found a place in the list of the top 25 arms exporter nations.

The defence industry, including the private sector and Defence Public Sector Undertakings (DPSUs), has made efforts to achieve the highest-ever defence exports.

There has been a rise in the number of export authorisations issued to defence exporters. From 1,414 export authorisations in FY23, the number has increased to 1,507 in FY24.

About 100 domestic companies are exporting a wide range of defence products and equipment such as aircraft like Dornier-228, artillery guns, Brahmos missiles, PINAKA rockets and launchers, radars, simulators, and armoured vehicles.

To give a push to defence exports, the government has taken several policy initiatives over the past ten years.

Export procedures have been simplified and made industry-friendly, with end-to-end online export authorisation curtailing delays and facilitating ease of doing business, the latest Economic Survey said.

On smartphones, it said that India's domestic production and exports of smartphones have been increasing steadily, with significant changes achieved, especially since the launch of the PLI scheme in 2020.

India also became the world's sixth-largest smartphone exporter in 2022, from 23rd in 2014.

These exports rose by 42 per cent to USD 15.6 billion in 2023-24.

Tags:    

Similar News