New Delhi: Ahead of the Union Budget 2024-2025 presentation, Finance Minister Nirmala Sitharaman presented the Economic Survey document in Parliament. Excerpts:
India made significant progress on climate action: Economic Survey
Recognising its position as one of the most climate-vulnerable countries, India has made significant progress on environmental protection, according to the Economic Survey 2023-24, tabled in Parliament on Monday.
The Survey showed that the country’s energy needs are expected to grow 2 to 2.5 times by 2047.
The country has “successfully reduced the emission intensity vis-a-vis its Gross Domestic Product (GDP) by 33 per cent between 2005 and 2019, thus achieving the initial Nationally Determined Contributions (NDCs) target for 2030, 11 years ahead of scheduled time.”
The country has “also committed to increasing the share of non-fossil fuel-based electricity to 40 per cent and enhancing forest cover to absorb 2.5 to 3 billion tonnes of carbon dioxide by 2030.”
It showed that the country’s GDP grew at a Compound Annual Growth Rate (CAGR) of about seven percent between 2005 and 2019. On the other hand, emissions grew at a CAGR of about four percent; that is, “the rate of emissions growth is lower than the rate of growth of our GDP.”
“This shows that India has successfully decoupled its economic growth from greenhouse gas emissions, reducing the emission intensity of its GDP,” the Survey said.
As per the Survey, India’s primary energy needs in 2022-23 were met with almost “84 per cent from coal, oil and natural gas combined.”
The Survey attributed these to recent initiatives such as the PM-Surya Ghar Yojana, launched in February 2024, which harnesses India’s 7,600 km long coastline for wind energy, and the Green Hydrogen Mission, which targets five MMT of green hydrogen by 2030.
Meanwhile, India has also led several international initiatives to mitigate climate change and build resilience. These include the International Solar Alliance (ISA), One World, One Sun, One Grid, The Coalition for Disaster Resilient Infrastructure, The Infrastructure for Resilient Island States, and the goal of Net Zero, the Leadership Group for Industry Transition.
To sustain its economic growth rate over a quarter century and do it sustainably, India needs to keep “the environment and climate in mind”, said the Survey.
The Economic Survey is prepared by the Economics Division of the Department of Economic Affairs of the Finance Ministry under the guidance of India’s Chief Economic Advisor (CEA).
Farm sector gets boost as Agri Infra Fund mobilises Rs 73,194 crore
The Agriculture Infrastructure Fund (AIF) launched by the Government to spur growth in the farm sector has succeeded in mobilising an investment of Rs 73194 crore, according to the Economic Survey released on Monday.
In addition, the Government has been implementing the Agriculture Marketing Infrastructure (AMI) to improve the extent of storage infrastructure.
The agriculture sector has registered an average annual growth rate of 4.18 percent at constant prices over the last five years. However, as per provisional estimates for 2023-24, the growth rate stood at 1.4 percent at constant prices due to the erratic monsoon.
The survey also highlights that allied sectors of Indian agriculture are steadily emerging as robust growth centres and promising sources for improving farm incomes.
The government’s priority has been to provide timely, cost-effective, and adequate credit that reduces dependence on non-institutional credit and increases investment. The survey adds that the measures have reduced the share of non-institutional credit from 90 percent in 1950 to 23.40 percent in 2021-22.
To facilitate the adoption of smart agriculture technologies, the government has taken up digital initiatives such as the Digital Agriculture Mission and e-National Agriculture Market (e-NAM), allowing better price discovery. The Digital Agriculture Mission 2021-2025 aims to modernise agriculture through advanced technologies like AI, remote sensing, drones, etc, it added.
The government has taken various measures to promote cooperatives and farmer-producer organisations. As of February 29, 2024, 8,195 Farmer-Producer Organizations (FPOs) have registered under the new FPO scheme.
Economic Survey lists six key growth areas for ‘Amrit Kaal’
In the last 10 years, the government pursued big-ticket reforms focused on restoring the economy’s health, 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.’
According to the Survey, the growth strategy for ‘Amrit Kaal’ is predicated on six key areas.
“Firstly, there must be a deliberate focus on boosting private investment.
Secondly, the growth and expansion of India’s ‘Mittelstand’ (MSMEs) is a strategic priority.
Thirdly, the potential of agriculture as an engine of future growth must be recognised and policy impediments removed,” the document stressed.
Fourthly, there is a need to secure financing for the green transition in India.
Fifthly, the education-employment gap must be bridged.
And finally, focused building of state capacity and capability is required for sustaining and accelerating India’s progress.
“The next stage is to ensure that these reforms are implemented correctly, and this will require intense engagement with state governments, the private sector, and civil society,” the Survey suggested.
India has well-established infra to attract FDI in renewables, telecom
Over the medium term, India is focusing on integrating its value chain with that of the West, particularly in sectors like renewable energy and advanced technology, including AI, semiconductors, and next-generation telecommunications.
The Survey said this strategy is being pursued through agreements such as the Australia-India Free Trade Agreement and the US-India Clean Energy Initiative.
“As a result, the trading patterns within these sectors are starting to develop.
Considering India’s vision of becoming ‘Aatmanirbhar’, Rs 1.97 lakh crore worth of Production-Linked Incentive (PLI) schemes for 14 key sectors were announced to enhance India’s manufacturing capabilities and exports.
Over Rs 1.28 lakh crore of investment was reported until May 2024, which has led to production/sales of Rs 10.8 lakh crore and employment generation (direct & indirect) of over 8.5 lakh.
Exports were boosted by Rs 4 lakh crore, with significant contributions from sectors such as large-scale electronics manufacturing, pharmaceuticals, food processing, and telecom & networking products.
The Survey said that telecommunication is the gateway to India’s fast-paced growth of digital services.
Currently, India is amongst the fastest-growing 5G networks in the world.
The Bharat 6G Alliance was launched in July last year as a collaborative platform of public and private companies, academia, research institutions, and standards development organisations. Its aim is to enable India to become a leading global supplier of IP, products, and solutions for affordable 5G, 6G, and other future telecom solutions.
As of June 2024, the country’s total number of mobile towers was 8.02 lakh, while the number of Base Transceiver Stations (BTSs) stood at 29.37 lakh, and 5G BTSs were 4.5 lakh.
Centre fuelling rapid infra growth, but states need to pitch in as well
The Economic Survey states that buoyant investment by the Centre has played a pivotal role in funding large-scale infrastructure projects in recent years, including highways, seaports, railways, and airports. However, state governments and the private sector need to pitch in to accelerate development.
It highlights that National Highway construction increased threefold, from 11.7 km per day in FY14 to 34 km per day by FY24, while capital expenditure on Railways has increased by 77 percent in the past five years, with significant investments in the construction of new lines, gauge conversion, and doubling.
Similarly, in FY24, new terminal buildings at 21 airports were operationalised, which increased passenger handling capacity by approximately 62 million passengers per annum.
Besides, India’s rank in the International Shipments category in the World Bank Logistics Performance Index has improved to 22nd in 2023 from 44th in 2014.
It also states that 945 km of metro rail or regional rapid transit (RRTS) railway lines are operational, 939 km are under construction in 27 cities, and 86 km were operationalised in FY24.
Private capex picks up in FY24; spending in transport, railways, and defence to boost growth
The Economic Survey said that increased spending in sectors such as road transport and highways, railways, defence services, and telecommunications will deliver higher and longer impetuses to growth by addressing logistical bottlenecks and expanding productive capacities.
The government’s capital expenditure for FY24 stood at Rs 9.5 lakh crore, an increase of 28.2 percent year over year and 2.8 times the level of FY20.
According to the survey, private companies’ capital expenditures picked up in the financial year ending March this year compared to FY23.
The government’s thrust on capex has been a critical driver of economic growth amid an uncertain and challenging global environment.
The focus of capex has been broad-based. Government capex has also begun to crowd in private investment.
Additionally, the government continues to disburse grants-in-aid to the states for the creation of capital assets, thereby incentivising them to increase their productive spending, said the Survey.
“The government should focus on creating an enabling policy and regulatory environment for the upgradation of capacity and know-how of component manufacturers, increasing the availability of trained human resources, and addressing resource bottlenecks and regulatory impediments,” the survey noted.
Challenges
The Survey highlighted several issues, including the fact that only 51.25 percent of young people are considered employable; over half of them are not yet easily hired after graduating, and many of them lack the skills required by a modern economy. The survey also enumerated the difficulties facing the skilling and entrepreneurial sectors, including the widespread belief that skilling is the final resort for people who have failed to advance or have chosen to leave the traditional educational system.
–IANS
