'Steady As She Goes': $300 Bn In 1993 To $3.6 Trillion In 2024, Where India Is Headed? Economic Survey Outlook

The Economic Survey of 2023-24, the first survey under Modi 3.0 rule, on Monday said, the state of the economy is steady as it goes. The economic survey expects Indian economy to grow at a rate of 7% and plus in the medium term, on a sustained basis if we build on the structural reforms undertaken over the last decade. For this, there is need of tripartite compact between the Union Government, State Governments and the private sector.

India's economy has seen paradigm shift in three decades. From being valued at $300 billion in 1993, India has showed resilient growth reaching at a staggering $3.5 trillion.

As per Economic Survey. from 1993 to 2024, India has witnessed a remarkable 12-fold increase despite the Indian rupee depreciating by around 3 per cent annually between 1993 and 2024.

A point to note in this impressive growth journey is that India achieved it without a big rise in the country's overall indebtedness, indicating an efficient utilisation of capital.

India's per capita current dollar GDP has also recorded multi-fold surge. This increased from 301.5 in 1993 to 2,484.8 in 2023, which indicates a substantial improvement in the standard of living.

India is defined by Economic Survey --- a 'historical' and 'long civilisation'. The survey added, it provided answers to many questions that humankind faced and still faces. It is a country with a big land mass and a huge population.

And hence, India rightly aspires to be reckoned with as a great power in economic and other terms.

Giving an example of its neighbouring country China, the Economic Survey stated that the neighbour to the Northeast and a nation of comparable size and population and antiquity of civilisation as India, has grown to become a major global economic and political power in less than a generation.

Hence, India, t00, has now set for itself the goal of becoming a developed nation within a generation by 2047, the hundredth year of independence, the survey said.

Talking about the current scenario all over the world, the economic survey said, "We have arrived at a multipolar world."

And this multipolar world, the survey, believes is more difficult than the "bipolar world that we were used to for nearly five decades after the War ended."

On the cultural level, the survey said, "the rise of what is called the 'Far Right' by mainstream media in advanced nations is, in effect, a clash of priorities between globalist elites and others whose fortunes are bound by and tied to their national geographies. This clash of priorities transcends economics."

While the idea of economic globalisation has run its course. In fact, the survey believes this may not have been reversed fully, but it has peaked. India's economic survey believes it will continue to face obstacles as economic policies worldwide pivot to the promotion of national champions for reasons too well-known to bear repetition here.

Apart from this, there is also a rethinking of the role of government in national economic strategy as inequality, poverty, and indebtedness have become pressing issues in the aftermath of the Covid pandemic.

Lastly, there is the crisis posed by climate change and global warming. Developed countries are pushing for a reduction in the emission of greenhouse gases into the atmosphere, it said.

Survey said, "This is the global backdrop to India's growth, prosperity, and superpower aspirations for the next quarter century."

Going forward, India has to sustain its economic growth rate over a quarter century and do it sustainably,
keeping the environment and climate in mind. Water stress looms large, as does air pollution, it said.

Also, the survey said, Life expectancy, much higher now than in the past, has stagnated in recent years. It has to educate and skill its youth to stay ahead of the curve so that they can work with emerging technologies while overcoming the accumulated education and skill deficits, accentuated by the pandemic, that make it harder to raise productivity even with the current state of technological progress.

Further, as per the survey, economic policies have to be crafted in such a manner that they do not address issues narrowly or incompletely while rendering problems in other areas more intractable. Goals for a higher share of renewable power with its implications for land usage and dependence on inimical powers for resources are one example. The impact of farm sector policies on water security is another example.

Adding survey said, "With the global backdrop described earlier likely to come in the way of India boosting its
exports at the same pace and level as East Asian countries and national security considerations likely to make foreign direct investment flows volatile year-to-year, India has to generate domestic resources mostly for its own investment and growth priorities. Geopolitics imposes its ceiling on external deficit and, consequently, external financing."

Against this background, the medium-term growth outlook for the Indian economy, which will be detailed in this chapter, is premised on the following key tenets as per the survey:

1. First, increasing geoeconomic fragmentation and the consequent resource nationalism have significant growth-limiting impacts on countries.

2. Second, a global trust deficit is driving countries to pursue policies focused on enabling them to become self-reliant and protect them from external shocks, especially in sectors of strategic importance.

3. Third, the integration of climate change strategies into national development policy and planning is not merely an environmental imperative but more, as it impacts socio-economic stability, public health, banking, and public finances.

4. Fourth, for better and worse, technology is emerging as the biggest strategic differentiator determining the economic prosperity of nations. Its productivity enhancing potential is beyond doubt, but the social impact of emerging technologies such as Artificial Intelligence (AI) via labour market disruptions and labour displacement is barely understood.

5. Fifth, countries across the board have limited policy space to manoeuvre, given the multiple crises confronting the global economy. Therefore, recognition and acceptance of trade-offs have become more necessary than before for policymakers.

6. Sixth, in the last decade (2014-2024), the Government of India has pursued big-ticket reforms focused on restoring the health of the economy, elevating the potential growth by relieving supply-side constraints and strengthening its capabilities, capable of fulfilling the growth aspirations of the people in the present and the Amrit Kaal.

Thereby, the survey said, "Going forward, the Government's focus must turn to bottom-up reform and the strengthening of the plumbing of governance so that the structural reforms of the last decade yield strong, sustainable, balanced, and inclusive growth."

Data from the survey, showed that the Indian economy recovered swiftly from the pandemic, with its real GDP in FY24 being 20 per cent higher than the pre-COVID, FY20 levels. This meant a CAGR of 4.6 per cent from FY20, despite a 5.8 per cent decline in FY21 inflicted by the pandemic. Analysis in this chapter shows that the current GDP level is close to the pre-pandemic trajectory in Q4FY24. During the decade ending FY20, India grew at an average annual rate of 6.6 per cent, more or less reflecting the long-run growth prospects of the economy. This is the background against which it can see the prospects for FY25.