India’s GDP will grow at a baseline rate of 11% in nominal terms and 6.5% in real terms in 2023–24.

According to the 2022-23 Economic Survey, which was presented in Parliament on January 31, India’s GDP will grow at a baseline rate of 11% in nominal terms and 6.5% in real terms in 2023–24. The survey highlighted the fact that “agencies worldwide continue to project India has the fastest growing major economy” despite the three shocks of Covid-19, the Russia-Ukraine war, and synchronised policy rate hikes by central banks around the world that led to an appreciation of the US dollar and a widening of the current account deficit (CAD) in net importing economies. The survey estimated real growth in the range of 6-6.8% depending on downside and upside risks.

In spite of the fact that it was emphasised that “private capex soon needs to take up the leadership role to put job creation on fast track,” the poll recognised private consumption and (government-driven) capex as the main drivers of growth in 2022–2023.

In the study, four major positives for India’s growth forecast were noted. Inflationary impulses from China’s opening up turned out to be neither significant nor persistent, recessionary conditions in major advanced economies prompted a cessation of monetary tightening, and capital flows returned to India amid stable domestic inflation below 6%. These factors all contribute to the limited health and economic effects of the Covid-19 infection epidemic on the rest of the world. The Economic Survey observed that these three variables will result in the fourth positive outcome, a rise in animal spirits that will further stimulate private sector investment.

While the widening of the CAD, plateauing export growth, and increases in RBI interest rates posed downside risks to India’s growth outlook in 2022–2023, the survey also noted that “the growth estimate for 2022–2023 is higher than for almost all major economies and even slightly above the average growth of the Indian economy in the decade leading up to the pandemic.” The survey stated that India’s performance in terms of growth, “and that too without the benefit of a base effect,” was “a reflection of India’s underlying economic resilience, of its ability to recoup, renew, and reenergise the growth drivers of the economy,” with “the domestic stimulus to growth seamlessly replacing the external stimuli.”

The poll found that, unlike in the past, when global economic shocks were severe but spaced out over time, this feat was attained in a particularly challenging global economic climate that has experienced three global economic shocks since 2020.

The survey praised the post-pandemic focus on capital expenditures in central government spending and emphasised that it “was not an isolated initiative meant only to address the infrastructure gaps in the country” but rather “part of a strategic package aimed at crowding-in private investment into an economic landscape broadened by the vacation of non-strategic public sector enterprises (disinvestment) and idling public sector assets.”

The survey stated that higher buoyancy in both direct taxes and the Goods and Services Tax (GST), along with limited growth in revenue expenditure, “should ensure the full expending of the capital budget within the budgeted fiscal deficit,” as a hint that the government will stick to its fiscal deficit target for 2022–23 and continue on the fiscal consolidation path in the Union Budget.

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The Periodic Labour Force Survey (PLFS), which was conducted in response to worries about a K-shaped recovery in the Indian economy, showed a decline in unemployment rates and an increase in the labour force participation rate, supporting the Economic Survey’s claim that India’s growth performance has been inclusive. According to the report, programmes like the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) and the Emergency Credit Line Guarantee Scheme (ECLGS) contributed to aiding the underprivileged and smaller businesses.