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

Chief Economic Advisor V Anantha Nageswaran on Monday said that households are investing more in financial assets and their market value are not captured in the national income data.

The Economic Survey 2023-24, tabled in Parliament, said that registered investor base at NSE has nearly tripled from March 2020 to March 2024 to 9.2 crore as of March 31, 2024, potentially translating into 20 per cent of the Indian households now channelling their household savings into financial markets.

Addressing reporters, Nageswaran said, “households are not in distress” and they are investing in financial assets which have done very well. Also, savings in physical assets have improved and gone up from 10.8 per cent in fiscal 2020-21 to 12.9 per cent in 2022-23.

“Especially in last 4 years the foray of retail investors into stock market through SIPs and mutual funds has been quite prolifically documented. Our national income data do not record this at market prices and that is the reason why there is a feeling that financial liabilities have grown faster than financial assets of households,” Nageswaran said.

Asserting that households are doing quite well, Nageswaran said the default statistics of small-ticket loans also do not flag any signs of distress in the household sector.

As per the National Account Statistics 2024 data released by Ministry of Statistics and Programme Implementation (MoSPI) in May, the net household savings declined sharply to Rs 14.16 lakh crore in three years to 2022-23, from Rs 17.12 lakh crore in FY22, and Rs 23.29 lakh crore in FY21.

Capital expenditure on the Railways has increased by 77 per cent over the past five years with significant investments in the construction of new lines, gauge conversion and doubling, the Economic Survey 2023-24 said on Monday.

According to the survey, in the financial year 2019-2020, the capital expenditure was 1.48 lakh crore which was increased to ₹2.62 lakh crore in 2023-24.

“Indian Railways, with over 68,584 route km (as of March 31, 2024) and 12.54 lakh employees (as of April 1, 2024), is the fourth largest network in the world under single management,” the survey said.

Highlighting the initiatives taken by the Railway Ministry for the enhancement of operations and services, the survey mentioned Amrit Bharat Station Scheme, Mumbai-Ahmedabad High Speed Rail (MAHSR) project and Dedicated Freight Corridors (DFCs) with the progress made in these respective projects.

According to the survey, Amrit Bharat Station Scheme, launched in August 2023 for development of stations on a continuous basis, involves preparation of master plans and its phased implementation to improve amenities, building improvements, multimodal integration, and sustainability.

It said that 1,324 stations have been identified for upgradation so far.

Talking about another initiative, Mumbai-Ahmedabad High Speed Rail (MAHSR) project, the survey said that under this 508-km project, executed with cooperation from the government of Japan, land acquisition and civil conduct award have been completed.

“Overall physical progress of 41.7 per cent has been achieved and financial expenditure of ₹59,291 crore was incurred until 31st March, 2024,” the survey said.

“Two DFCs are under implementation namely the eastern DFC with route length of 1,337 kilometre and the western DFC with route length of 1,506 kilometre,” it added.

It further stated that by the end of FY24, 96.1 per cent of the total DFC route length has been completed.

Highlighting other major achievements, the survey said that the Railways achieved its highest-ever production for both locomotives and wagons in FY24.

“Fifty one pairs of Vande Bharat have been introduced until March 2024. The fast pace of infrastructure augmentation has been the result of a substantial increase in financial allocation along with close project monitoring and regular follow-up with stakeholders for expeditious land acquisition and clearances,” the survey said.

It added, “High-speed, long-distance Vande sleeper trainset coaches having features like quick acceleration, diffused lighting, automatic doors and global positioning system-based passenger information system are under development.” According to the survey, the Railways is also planning to introduce Vande metro trainset coaches with features such as sealed wider gangways, centrally controlled automatic sliding doors, CCTVs for safety and surveillance, route map indicator, passenger information and infotainment system, fire detection system and aerosol-based fire suppression system.

“The first lot is expected to be turned out in FY25,” it said.

“Railways has taken several initiatives for providing a clean environment in and around railway stations and trains, such as replacement of conventional toilets with bio-toilets on coaches leading to clean tracks, segregation of bio-degradable/non-bio-degradable waste, solid waste management and discouraging use of single use plastic,” the survey added.

Issues related to data privacy and rising online frauds are emerging as significant hurdles in the growth of e-commerce in India, said the Economic Survey 2023-24.

Citing third-party data, the survey said that the e-commerce industry in India is expected to cross USD 350 billion by 2030 and called for the need to educate users on the safe use of e-commerce platforms.

“The rise of e-commerce is constrained by inadequate skills required for online selling, such as cataloguing. Data privacy issues and increasing online fraud have turned out to be the most significant hurdle in the growth of e-commerce in India. It becomes imperative to educate users on the safe use of e-commerce platforms,” the survey said.

The survey mentioned that India's e-commerce market has gained significant momentum during the past few years, owing to technological advancements, evolving new-age business models coupled with government initiatives like the Digital India program, UPI, One District - One Product (ODOP), Open Network for Digital Commerce (ONDC), new foreign trade policy, easing of FDI limits and Consumer Protection (E-Commerce) (Amendment) Rules 2021.

It has identified data privacy and cybersecurity as critical concerns in the digitisation of services in the country and called for adopting strong security measures, compliance with privacy regulations, and innovation, among others.

“Data privacy and cybersecurity have become critical concerns with the increasing digitisation of services,” according to the survey.

It said that the government is spearheading data protection laws and cybersecurity policies to safeguard consumer data and strengthen cybersecurity measures in the services sector.

“To further embrace technology with confidence, ensuring the adoption of strong security measures, compliance with privacy regulations, and fostering innovation in security technologies are essential,” the survey noted.

It said the future of e-commerce is built on the enhanced user experience through AI, seamless digital payment methods, innovations like UPI, and business engineering data analytics for business operations and enhancements.

The survey mentioned that the buyer ecosystem in India is evolving at a very sharp rate, and business models will need to innovate to serve the needs of a diverse shopper base regarding service expectations, price sensitivity and language requirements.

“Local language platforms are needed as the shopper base expands to tier-2 and tier-3 cities. Growing startups and innovative social media platforms provide an opportunity to test unique business models that might be targeted to specific demographic cohorts,” the survey said.

India requires an investment support of USD 1.4 trillion — an average of USD 28 billion per year — to become a net-zero economy by 2070 and raising financial resources for adaptation and mitigation action of this scale is an “unprecedented challenge”, according to the Economic Survey 2023-24 tabled in Parliament on Monday.

Reaching net zero means achieving a balance between greenhouse gas emissions and the amount of these gases removed from the atmosphere by either natural processes, such as photosynthesis, or by other methods of carbon capture and storage. The consolidated report on the state of the economy in the previous year said India's climate action has been largely financed through domestic resources and the flow of international finance has been “very limited”.

Citing the Reserve Bank of India's (RBI) data, the report said bridging the “substantial funding gap” necessitates allocating 2.5 per cent of India's annual Gross Domestic Product (GDP) to green finance.

“Preliminary estimates indicate that the aggregate investment support required by India to achieve its 2070 net-zero target will be USD 1.4 trillion at an average of USD 28 billion per year. Raising financial resources for climate change adaptation and mitigation actions of this scale is an unprecedented challenge,” the document read.

A 2022 report by the Climate Policy Initiative found that domestic sources accounted for the majority of green finance in India, at 87 per cent and 83 per cent in financial years 2019 and 2020 respectively.

While international sources are increasing (from 13 per cent in FY 2019 to 17 per cent in FY 2020), the economic survey said they are still insufficient to meet India's net-zero target.

“Mobilising substantial capital from traditional sources presents multifaceted challenges in emerging economies like India. The perceived sovereign risks associated with emerging market and developing economies (EMDEs) and the capital-intensive nature of such projects, coupled with lengthy gestation periods and evolving regulatory frameworks, can create misalignment between investor expectations and project timelines,” the government said.

The economic survey also noted that the flows of global capital to developing countries have been impeded by high costs of capital.

Despite securing a good rating on its green-bond framework, Indian sovereign green bonds have hardly received any "greenium" from private investors. It is more a "wall of capital" than a "flood of capital" that is waiting to fund energy transition in EMDEs. It is just not mobile. All of these together have severely hampered the flow of finance for green-transition projects, the survey said.

“Greenium” or green premium refers to the savings an issuer of a green bond realises on the associated coupon payment because the bond is green.

Financial support to help middle-income and poor countries fight climate change will be at the centre of this year's UN climate conference in Baku, Azerbaijan, where the world will reach the deadline to agree on the New Collective Quantified Goal (NCQG) -- the new amount developed nations must mobilise every year starting 2025 to support climate action in developing countries.

But achieving consensus will not be easy, given the disappointing progress made on major conflict points at the mid-year UN climate talks in Bonn, Germany.

At the 2009 UN climate conference in Copenhagen, rich nations pledged to provide USD 100 billion annually from 2020 to help developing countries mitigate and adapt to climate change. However, delays in achieving this goal have eroded trust between developed and developing nations and have been a continual source of contention during annual climate negotiations.

In May, the Organisation for Economic Cooperation and Development (OECD) claimed that developed countries had met the long-standing USD 100 billion-a-year promise by providing nearly USD 116 billion in climate finance to developing countries in 2022, with nearly 70 per cent of the money given in the form of loans.

However, international non-profit organisation Oxfam last week said climate finance provided by rich countries in 2022 totalled no more than USD 35 billion.

Developing nations argue that they cannot be expected to reduce carbon dioxide (CO2) emissions faster if developed countries — historically responsible for climate change -- do not provide enhanced financial support. Rich countries are now expected to raise more than USD 100 billion, with developing countries, including India, demanding trillions of dollars to tackle climate change.

It would be comedy if not real and tragic, the Economic Survey said on Monday calling out the obsession of developed nations to dictate emissions reductions to developing countries while their own use of AI is driving a surge in emissions.

The survey drew attention to an "ultimate irony" on the issue and noted that developed nations are obsessing over prospective emissions from the developing world, even as widespread adoption and race for AI is poised to push up their energy demands like never before.

"It would be a comedy if it were not real and tragic", quipped the Survey, noting that even as developed nations prepare to impose a carbon tax at the border on imports coming into their countries laden with carbon, they are ramping up energy demand like never before, thanks to obsession with letting AI "guide, take over and dominate natural intelligence".

"Demand-side management (DSM) has traditionally been recognised as a significant intervention to reduce energy demand. It is an ultimate irony that even as developed nations obsess over prospective emissions from the developing world, the widespread adoption of artificial intelligence is going to result in the demand for power to expand to levels not seen in decades in America," it said citing industry reports.

A case in point, it said, is one of the leading global technology companies that promised to achieve net zero by 2030 at the turn of the decade.

"But, the race to dominate the emerging technology of Artificial Intelligence has caused its emissions to be higher by 30 per cent by 2023," it said.

It further noted that in a research report published in April, analysts in Goldman Sachs wrote that the demand for power in the US would experience a growth not seen in a generation, thanks to AI and that transmission, one of the major bottlenecks for clean energy transition, and the addition of data centres and AI could exacerbate this.

The Economic Survey went on to say that these developments should convince any reasonable reader that the developed world has not only tied itself into knots but is also contributing – wittingly or otherwise – to deepening and entrenching poverty and inequality in developing and consigning them to perpetual underdeveloped status by coercing them into prioritising emissions over their economies.

"Developed countries, having relied on a fossil fuel-based growth strategy for the past two centuries to reach where they are today, seek ambitious cuts in emissions from developing countries, pushing them to adopt policy measures, instruments and production and energy systems that are distinctly different from the carbon-emitting traditional strategies that fuelled the growth of the former," the Economic Survey said.

Limited demand and pricing constraints are among key challenges that impede the commercialisation of space technologies in the country, according to the Economic Survey 2023-24 The survey, tabled in Parliament by Finance Minister Nirmala Sitharaman Monday, said that India has added two more satellite launch vehicles — Launch Vehicle Mark-3 (LVM-3) and Small Satellite Launch Vehicle (SSLV) — to its fleet of rockets comprising the Polar Satellite Launch Vehicle and the Geosynchronous Satellite Launch Vehicle.

It noted that space sector reforms announced in 2020 have been transformative in enhancing the participation of private players in the Indian space programme.

“A string of Space exploration missions has been conducted viz. Mars Orbiter Mission (2014), ASTROSAT (2015), Chandrayaan-2 Orbiter (2019) and subsequently, Chandrayaan-3 landing on the Moon (2023) & Aditya – L1 mission (2023),” the Survey said.

It added that the indigenous satellite navigation constellation i.e NavIC series was completed and operationalised in 2016.

The survey said challenges related to the commercialisation of technologies include the presence of a very niche and/or competitive marketplace, pricing constraints, typically limited demand (that inhibits large-scale commercialisation), and a lack of visibility of long-term demand.

It said major technological areas wherein a developmental gap exists include the development of indigenous capability for the realisation of carbon fibres, dedicated captive semiconductor fab for space applications, availability of major alloying elements.

The survey said that over the last few years, the space sector has seen remarkable progress in the buildup of rockets, satellites and spacecraft used for space exploration, and ground infrastructure.

“Presently, India has 55 active space assets which include 18 communication satellites, nine navigation satellites, five scientific satellites, three Meteorological Satellites, and 20 Earth Observation satellites,” the survey said.

It said New Space India Limited (NSIL) has successfully executed its contract to launch 72 satellites of OneWeb to Low Earth Orbit through LVM3, M2 and M3 missions, establishing LVM3 as a reliable Launch Vehicle in the global commercial launch services market.

It said the Indian National Space Promotion and Authorisation Centre (IN-SPACe) -- a single window agency to promote and authorise space activities — has received 440 applications as on January 1, from more than 300 Indian entities pertaining to authorisation, handholding, facility support and consultancy, technology transfer, and facility usage.

The survey said 51 MoUs and 34 joint project implementation plans have been signed with various non-governmental entities as of January 1, to extend the necessary support for carrying out the space activities.

The Economic Survey points towards robust growth model for the country and the contribution of various sectors, especially the micro, small and medium enterprises is quite encouraging, said a top official of Confederation of Indian Industry, Southern Region.

The growth of the microfinance sector is remarkable and praiseworthy, CII Kerala Past Chairman and CII Southern Region MSME Co-Chairman P Ganesh said here on Monday.

“Economic Survey 2023-24 points towards a robust growth model for the country. The contribution of various sectors especially the MSME is quite encouraging. The growth of the microfinance sector is remarkable and praiseworthy. The skilling of the workforce and the free flow of affordable finance to the MSME segment needs a percolated effort,” Ganesh said in a statement.

The pre-budget Economic Survey highlights the need for measures to boost talent and productivity through private sector investment, experts said on Monday.

Rumki Majumdar, Economist, Deloitte India, said the Survey has highlighted measures to boost talent and productivity through private sector investment in skills (in addition to what the government is initiating), physical and digital connectivity and building state capacity and capabilities.

She said MSMEs, agriculture, education and employment, and upskilling as key pillars for uplifting the masses through jobs, income and skills.

Aditi Nayar, Chief Economist and Head, Research & Outreach, ICRA said the Survey stresses that in the medium term, growth needs to be supported by the private corporate sector as well as the state governments.

On inflation, she said that “managing inflation is not just the prerogative of the RBI and its MPC, and would require active intervention by the Centre, especially in the arena of food price management. The realisation of both these paradigms is crucial to ensure an optimal growth-inflation mix over the medium term.”

The Economic Survey has projected a growth rate of 6.5 per cent and 7 per cent, further solidifying India’s strong macroeconomic fundamentals, CBRE Chairman and CEO-India, South-East Asia, Middle East and Africa, Anshuman Magazine said on Monday.

The country's economic performance in FY'24 surpassed expectations, registering a robust growth rate of 8.2 per cent. "This momentum is noteworthy considering three out of the past four quarters exceeded the 8 per cent growth mark," he said in his reaction to the Economic Survey.

Inflation is anticipated to moderate around 4.5 per cent and it reflects a 'well-balanced' economic environment, he said.

“The survey acknowledges the real estate sector, particularly the residential segment, as a significant driver of private investment. The survey emphasizes the importance of continued collaboration between central and state governments, along with the private sector, to sustain this momentum,” Magazine said in a statement.

India's post-pandemic recovery has been orderly and expansive and it is testament to the underlying resilience of the economy, he said.

“Looking ahead to FY'25, several indicators such as robust private consumption, increased bank lending activity and improved corporate capital expenditure indicate towards a good year ahead,” he added.