The Economic Survey for 2023-24 placed before Parliament on Monday is forthright on some aspects. Its straight talk on the need for private companies to use the profits they’ve piled up, thanks partly to a tax cut, to invest in India is an example.
The hypocrisy of the rich world in expecting us to start phasing out fossil fuels at this juncture of the economy’s emergence is also squarely dealt with, especially the “Alice in Wonderland” air around some global plans. Of near-term relevance is its pointed reminder that job generation is a task for India’s private sector, which must take up the investment baton from the government.
While corporate profits have multiplied since the 2019 tax rate cut, private money has been invested too slowly, especially in machinery, intellectual property and the like. Although the survey paints a stable and bright picture of the economy overall, and spies signs of a revival in private capex, it also seems to bear some anxiety over the Centre having to prematurely rein back capital spending to reduce its fiscal deficit.
Written by the Centre’s chief economic adviser V. Anantha Nageswaran and his team, the survey’s macro outline of India’s economy is along expected lines. Growth is projected at 6.5-7% in 2024-25 on the high base of an 8.2% expansion logged in 2023-24. In the context of a troubled global economy, this pace is impressive.
Yet, unless rapid growth also creates good jobs in large volumes, it could lose popular appeal as a tracker of success. By the survey’s estimates, almost 7.9 million new non-farm jobs are needed each year. The survey blames the past deficiency on shocks that played havoc with the labour market, citing both the earlier banking crisis and the covid pandemic.
Controversially, it denies any structural ailment a role. While trends were disrupted by those shocks, evidence exists of job creation being a problem in need of durable solutions, even if official data that classifies employment widely can be cited to contest it. As for that other pain, inflation, though it’s not yet down to our 4% target, it seems to be easing.
There is space to quibble over the survey’s take on the economy’s external position, but with the current account deficit under 1% of GDP and foreign debt low, it is broadly stable despite global difficulties.
Expectedly, too, the survey calls for farm reforms and lighter regulation of businesses. Less predictably, it flags artificial intelligence (AI) as a significant concern. What it stands out for, though, is its chapters on climate action in the quest for a Viksit Bharat.
It takes a good hard look at what the world may be getting wrong and makes a case for India not to over-prioritize carbon control in a way that would sacrifice the imperative of growth. It minces no words in calling out the West on its unfair expectations of burden sharing.
“It would be a comedy if it were not real and tragic,” it notes of developing countries facing carbon barriers even as AI amps up energy-use hugely in the West. Still, while pointing out that India has been reducing the carbon intensity of its GDP growth, the survey offers a detailed analysis of India’s energy flow and a brief note on carbon markets to go with a broad framework for a green transition.
This part of the survey also bats for autonomy in India’s approach to carbon neutrality by 2070. “That market economics must not follow a universally-designed golden mean and must adapt to local conditions,” the survey observes, is now well accepted. The details, though, as its climate analysis suggests, still need plenty of debate.