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

Coal is expected to continue to be the backbone of the Indian energy system for the next two decades and the phase-down of the dry fuel will be heavily dependent on the import of critical minerals required for clean energy and battery storage, the Economic Survey on Monday said.

The carbon dioxide removal technologies and carbon capture utilisation and storage need to be explored to bring down the emissions from the use of coal, as per the Economic Survey 2023-24.

“Coal phase-down will be heavily dependent on the import of critical minerals required for renewable energy and battery storage unless the country invests in the development of technologies based on domestically available mineral resources and those that enable the reuse, recovery, and recycling of critical minerals,” it explained.

It further said the adoption of gasification technology in India can transform the coal sector and bring down the dependence on import of natural gas, methanol, and ammonia, and will help lower emissions.

Coal, which accounts for 70 per cent of the total electricity generation, is also a critical input in various industries, such as steel, sponge iron, cement, and paper.

“Adopting gasification technology in India can revolutionise the coal sector, reducing reliance on imports of natural gas, methanol, ammonia, and other essential products while reducing emissions,” the Economic Survey 2023-24 said.

The Centre has launched several clean coal initiatives, including the coal gasification mission. The country is aiming to gasify 100 million tonnes of coal by 2030 through surface coal, lignite gasification projects.

Initiatives such as extracting coal bed methane gases, exploring coal to hydrogen, carbon capture and storage, and coal beneficiation through washeries can reduce emissions and enhance environmental sustainability.

‘Encouragement to adopt super-critical and ultra-super-critical technologies for coal power plants has also led to lower emissions and higher efficiency,” it said.

Coal accounts for more than 55 per cent of India’s primary commercial energy. Coal-fired power generation accounts for about 70 per cent of the total power generation.

The Economic Survey on Monday flagged a rise in mental health issues among Indians, calling for a paradigm shift towards a bottom-up, whole-of-community approach to address the problem.

Paying attention to mental health in society is both a health and an economic imperative, the policy document asserted while dwelling on the topic in a vast and detailed manner for the first time highlighting the various socio-economic repercussions of the issue.

Mental health drags down productivity more widely in the ecosystem than individuals' physical health issues, it noted.

Quoting the National Mental Health Survey (NMHS) 2015-16 data, the survey said 10.6 per cent of adults suffered from mental disorders in India while the treatment gap for mental disorders ranged between 70 to 92 per cent for different disorders.

Further, as per the NMHS, the prevalence of mental morbidity was higher in urban metro regions (13.5 per cent) as compared to rural areas (6.9 per cent) and urban non-metro areas (4.3 per cent), it added.

“The second and more expansive NMHS is currently in progress. According to Dhyani et al. (2022), individuals aged 25-44 years are the most affected by mental illnesses,” it noted.

Citing NCERT’s Mental Health and Well-being of School Students Survey, the survey said there is an increasing prevalence of poor mental health among adolescents, exacerbated by the COVID-19 pandemic, with 11 per cent of students reported as feeling anxious, 14 per cent as feeling extreme emotion and 43 per cent experienced mood swings. 50 per cent of students cited studies as a reason for anxiety, and 31 per cent cited examination and results.

“Mental health problems affect the quality of life of an individual and constrain the realisation of an individual's potential. At an aggregate economic level, mental health disorders are associated with significant productivity losses due to absenteeism, decreased productivity, disability, and increased healthcare costs,” it pointed out.

On the policy side, the document noted that India is creating positive momentum in policy development by recognising mental health as a fundamental aspect of overall well-being.

However, it said, “While most of the policy design is in place, proper implementation can accelerate the improvement on the ground. That said, there remain certain gaps in the existing programmes which need to be addressed to maximise their effectiveness.” The fundamental issue of the lack of awareness about mental health and the stigma surrounding it can render any sincerely crafted programme unfeasible, it added.

“Hence, there is a need to bring about a paradigm shift and utilise a bottom-up, whole-of-community approach in addressing the topic of mental health. Breaking the stigma starts with taking cognisance of the natural human tendency to accept physical ailments and seeking treatment for the same while being in denial about mental health issues,” the Economic Survey for 2023-24 said.

To an extent, the denial is an outcome of fear about social attitudes and social acceptance after one “comes out” with mental health issues, it said.

“For public health officials, tackling mental health requires acknowledging and addressing this fundamental reluctance. Arguably, mental health issues drag down productivity more widely in the ecosystem than individuals' physical health issues. Hence, paying attention to mental health issues in society is both a health and an economic imperative,” the document noted.

The survey suggested that effective pathways for integrating mental health interventions in schools can include developing an age-appropriate mental health curriculum for teachers and students, encouraging early intervention and positive language in schools, promoting community-level interactions, and balancing the role of technology.

The increase in mental health issues in children and adolescents is often linked to the overuse of the internet and, specifically, social media. Unrestrained and unsupervised use of the internet by children can culminate into a range of problems, from the more prevalent obsessive consumption of social media or 'doom scrolling' to severe ones such as cyberbullying.

In the Indian context, the rising usage of the Internet on mental health has been indicated by a 2021 study on 'Effects of using Mobile Phones and other devices with Internet accessibility by children' by the National Commission for Protection of Child Rights, according to which 23.8 per cent of children use smartphones while they are in bed, and 37.2 per cent of children experience reduced levels of concentration due to smartphone use, it noted.

The outlook for India’s financial sector appears bright, but it needs to brace for likely vulnerabilities, said the Economic Survey 2023-24.

The Indian financial sector is at a “turnpike moment”, it said, adding that the dominance of banking support to credit is being reduced, and the role of capital markets is rising.

For a country that aspires to be a developed nation by 2047, this is a long-awaited and welcome development, it said.

“Being reliant on and exposed to the capital market, however, comes with its challenges and trade-offs. As India’s financial sector undergoes this critical transformation, it must also brace for likely vulnerabilities and prepare itself with regulatory and government policy levers to intervene and hedge, as required,” it said.

Even as banks, non-banks and corporates battled balance-sheet excesses, the consequences of the credit boom of the first decade of the new millennium and the inevitable bust that followed in the second decade, the broad industry kept advancing the cause of financial inclusion and financial deepening, it said.

“Moving forward, healthier corporate and bank balance sheets will further strengthen private investment. The positive trends in the residential real estate market indicate that the household sector capital formation is increasing significantly,” it said.

As India embarks on the vision to become a developed country by 2047, it is imperative that financial intermediation costs decline globally, the Survey said.

It further said the financial sector needs to support capital formation and promote trade, business, and investments in MSMEs, enabling them to scale.

“It also needs to provide insurance protection and retirement security to all citizens. The share of insurance and pension fund assets in GDP stands at 19 per cent and 5 per cent, respectively, in India, compared to a high of 52 per cent and 122 per cent in the US and 112 per cent and 80 per cent in the UK, leaving scope for further improvements,” it added.

Financial sector firms — public or privately owned — must become customer-centric. Without that, most quantitative metrics will remain elusive, it recommended.

The short-term inflation outlook for India is benign, and the expectation of a normal monsoon and moderating global prices of key imported items give credence to the projections made by the RBI and IMF, the Economic Survey said on Monday.

However, to ensure long-term policy stability, the Survey 2023-24 suggested making focused efforts to increase the production of major oilseeds, expanding the area under pulses, and assess the progress in developing modern storage facilities for specific crops.

The Economic Survey 2023-24 also suggested linking of price monitoring data for essential food items collected by different departments to help monitor and quantify the build-up of prices at each stage from the farm gate to the final consumer.

“The ongoing efforts to construct the producer price index for goods and services may be expedited to have a greater grasp of episodes of cost-push inflation,” said the Survey.

It also prescribed expeditiously revising the consumer price index with fresh weights and item baskets.

In 2023, India’s inflation rate was within its target range of 2 to 6 per cent. Compared to advanced economies like the USA, Germany, and France, India had one of the lowest deviations from its inflation target in the triennial average inflation from 2021-2023, the Survey said.

India successfully managed to keep retail inflation at 5.4 per cent in FY24, the lowest level since the Covid-19 pandemic period.

Retail inflation in June rose to four months high of 5.1 per cent. Also, wholesale inflation stood at 3.36 per cent in the month on account of rise in prices of food articles, especially vegetables and manufactured items.

Raising concerns over growing obesity and increase of consumption of highly processed foods laden with sugars and fat, the Economic Survey said 54 per cent of the total disease burden in India is due to unhealthy diets.

Obesity presents a “concerning situation” and preventive measures must be taken to enable citizens to have a healthier lifestyle, it said.

“Obesity is emerging as a serious concern among India’s adult population,” said the Survey.

If India needs to “reap the gains of its demographic dividend, it is critical that its population's health parameters transition towards a balanced and diverse diet”, it said.

Citing a report from the Indian Council for Medical Research, the Economic Survey observed that the rise in consumption of highly processed foods laden with sugars and fat, coupled with reduced physical activity and limited access to diverse foods, exacerbate micronutrient deficiencies and overweight/obesity problems.

Estimates show that the adult obesity rate in India has more than tripled, and the rise in children is the steepest in the world for India, behind Vietnam and Namibia, the survey stated, referring to a World Obesity Federation report.

The survey further said as per National Family Health Survey (NFHS), the incidence of obesity is significantly higher in urban India than in rural India. In urban India, it is 29.8 per cent in men versus 19.3 per cent of rural India.

The percentage of men facing obesity in the 18-69 age bracket has increased to 22.9 per cent in NFHS-5 from 18.9 per cent in NFHS-4. For women, it has increased from 20.6 per cent (NFHS-4) to 24 per cent (NFHS-5).

“Combined with an ageing population in some states, obesity presents a concerning situation. Preventive measures must be taken to enable citizens to have a healthier lifestyle,” the survey said.

In some states, such as in the NCT (Delhi), the proportion of women with obesity is 41.3 per cent, as against 38 per cent for men.

In Tamil Nadu, for men, obesity is 37 per cent and it is 40.4 per cent for women.

In Andhra, it is 36.3 per cent for women while for men it is 31.1 per cent.

The Economic Survey underscored the pressing need for comprehensive reforms in India’s agricultural sector, citing structural issues that could impede the country's overall economic growth trajectory.

The Survey identifies several key challenges facing the agriculture sector, including the need to sustain growth while managing food price inflation, improving price discovery mechanisms, and addressing land fragmentation.

“Despite its centrality in India’s growth trajectory, the agriculture sector continues to face structural issues that have implications for India’s economic growth,” the Survey said.

According to the document, policymakers must strike a delicate balance between incentivizing farmers to increase production and keeping food prices within acceptable limits. This dual objective requires careful policy interventions, the Survey noted.

Other critical issues highlighted in the report, prepared by Chief Economic Advisor V Anantha Nageswaran, include the need to reduce disguised unemployment, increase crop diversification, and enhance overall efficiency in the sector.

To address these challenges, the Survey recommends a multi-pronged approach.

Key suggestions include upgradation of agricultural technology, the application of modern skills in farm practices, enhancing agricultural marketing avenues, price stabilisation, the adoption of innovation in farming, lowering wastages in the use of fertiliser, water, and other inputs, and improving the agriculture-industry linkages.

The Survey emphasizes the importance of technological interventions and skill development in transforming the agricultural landscape. It also stresses the need for sustainable practices to ensure long-term viability of the sector.

The Survey observes that the policy reforms undertaken by the government over the past decade have laid the foundation for sustained moderate to high growth in the coming years.

“To sustain growth for nearly a generation up to 2047 or more and to ensure that it makes people’s lives better and fulfils their aspirations, bottom-up reforms are necessary,” it noted.

It is both urgent and important for India to re-imagine the contours of its primary sector for the next generation. India may have to abandon the “old development playbook” of moving on from agriculture to industry and services as economic development matures, it added.

The Economic Survey said the advent of Artificial Intelligence (AI) casts a “huge pall of uncertainty” with regard to the impact on workers across all skill levels.

The Economic Survey 2023-24 predicted that the new-age technology, while turbocharging productivity, has the potential to disrupt employment in certain sectors.

The Survey described AI as “phenomenal in its rapid pace of innovation and ease of diffusion” but also cautioned that the future of work will be reshaped by it.

“... The advent of Artificial Intelligence casts a huge pall of uncertainty as to its impact on workers across all skill levels -- low, semi and high,” it said.

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.

The Survey said AI has considerable potential for boosting productivity, but “also has the potential to disrupt employment in certain sectors”.

“Routine tasks, including customer service, will likely witness a high degree of automation; creative sectors will see extensive usage of AI tools for image and video creation; personalised AI tutors can reshape education and sectors like healthcare can witness accelerated drug discovery,” 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, according to the Economic Survey 2023-24. Furthermore, 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, the Economic Survey said.

The BSE benchmark Sensex has surged around 25 per cent in FY24. Moreover, the uptrend continued in FY25, with the 30-share index on July 3 touching the 80,000 mark in intra-day trading for the first time.

“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,” said the document.

A higher level of private sector financing and resource mobilisation from new sources will be crucial for India to build quality infrastructure, according to the Economic Survey 2023-24.

According to the survey, facilitating 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.

The survey noted that there is 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 production-linked incentive scheme (PLI) for automobile and auto components has so far attracted a proposed investment of Rs 67,690 crore, says the Economic Survey 2023-24.

A capital of Rs 14,043 crore has been invested till end-March 2024, it stated.

Applicants have proposed employment generation of 1.48 lakh, against which 28,884 of jobs have been generated till March 31, 2024, the Economic Survey 2023-24 stated.

So far, 85 applicants have got approval under the scheme, it noted.

The PLI scheme for automobile and auto components has a budgetary outlay of Rs 25,938 crore from FY23 to FY27.

The scheme has been sub-divided into champion OEM incentive scheme and component champion incentive scheme.

Besides, the government has approved the National Programme on Advanced Chemistry Cell (ACC) Battery Storage in May 2021 with a budgetary outlay of Rs 18,100 crore.

The growth in the value of domestic production and consumption of automotive parts moderated during FY20 to FY23, compared to the preceding five years, as per the latest Economic Survey.

In the first half of the last decade, passenger vehicles, such as cars and utility vehicles, experienced significant growth, it said.

However, the pandemic had a substantial impact on all segments of the automotive industry, it added.

"While passenger vehicles quickly recovered, the recovery period for two-wheelers, three-wheelers, and commercial vehicles is longer," it stated.

In FY24, the country produced around 49 lakh passenger vehicles, 9.9 lakh three-wheelers, 214.7 lakh two-wheelers, and 10.7 lakh commercial vehicles, it stated.