Economic Survey 2024 Live Updates: Stock markets, dubbed as "increasingly integral" in Survey, show subdued reaction

Markets showed a subdued reaction to the Economic Survey, with the Sensex and Nifty closing lower on Monday. The declines were led by significant sell-offs in Reliance Industries and Kotak Mahindra Bank, exacerbated by a weak performance in global equity markets, which dampened investor sentiment.

The 30-share BSE Sensex fell by 102.57 points, or 0.13%, ending the day at 80,502.08. Earlier, it had dropped by 504 points, or 0.62%, to 80,100.65. The NSE Nifty declined by 21.65 points, or 0.09%, closing at 24,509.25. During the trading session, it had experienced a drop of 168.6 points, or 0.68%, reaching 24,362.30.

The Economic Survey 2023-24 highlights the growing significance of capital markets in India's economic growth. The survey notes that capital markets are increasingly integral to capital formation and investment, driven by advances in technology, innovation and digitisation.

(Inputs from PTI)

Economic Survey 2024 highlights India's stance on climate action, which affirms that the current global climate strategies are flawed and lack universal applicability. A single, standardised approach is inadequate, and developing nations must have the freedom to choose their own paths as they juggle developmental goals with effective climate action.

India, despite its substantial climate action progress, faces criticism for not adopting Western solutions. But this criticism often overlooks India’s unique social and cultural context, which is already aligned with sustainable development principles. India’s ethos, focusing on a harmonious relationship with nature, offers sustainable solutions often absent in market-driven societies.

India’s Mission LiFE outlines 75 actions for individuals to live sustainably. This initiative advocates for mindful consumption, promotes a circular economy, encourages reusing waste, supports local plant-based diets with a low ecological footprint, and emphasises water and energy conservation.

The services sector remains a major driver of India's economy, making up approximately 55% of the total economic output in FY24. Provisional estimates indicate that this sector grew by 7.6% during the fiscal year. Moreover, by March 2024, the services sector amassed a notable credit of ₹45.9 lakh crore, marking a 22.9% year-on-year growth.

As for India's services exports, they made up 4.4% of global commercial services exports in 2022. Following the pandemic, these exports have continued to perform robustly, representing 44% of India’s total exports in FY24.

Across industries, two key needs are driving the focus: boosting R&D and innovation, and enhancing workforce skills. Industry must spearhead these efforts, working closely with academia and integrating vocational training into educational programs to better address the skill gap, the Survey suggests.

As artificial intelligence (AI) increasingly permeates various economic sectors, it could pose substantial challenges to maintaining high growth rates for India in the years and decades ahead. Therefore, guiding technological advancements towards collective welfare is essential. Employers must balance the deployment of technology with the need for labour, the Survey recommends.

To alleviate the financial strain on the poor, the government has extended the provision of free food grains to approximately 81.35 crore beneficiaries under the PMGKAY. This support will continue for an additional five years, covering Antyodaya Anna Yojana (AAY) households and Priority Households (PHH).

The agriculture sector has shown an average annual growth rate of 4.18% at constant prices over the past five years. In 2023-24, the sector's growth rate was 1.4% at constant prices, Economic Survey 2024 reveals.

Furthermore, Indian agriculture's allied sectors are becoming significant growth drivers and potential sources for enhancing farm incomes. From 2014-15 to 2022-23, the livestock sector experienced a Compound Annual Growth Rate (CAGR) of 7.38% at constant prices. Meanwhile, the fisheries sector grew at an annual rate of 8.9% over the same period.

Many regulatory constraints, including those related to land use, building codes and restrictions on women's employment sectors and working hours, hinder job creation. Removing these barriers is likely to boost employment and enhance women's labour force participation, states the Economic Survey 2024.

Economic Survey 2024 reports that the Indian economy is advancing with a reformed welfare approach that emphasises empowerment, universal access to essentials, efficiency, cost-effectiveness, and increased participation from the private sector and civil society.

It adds that ensuring effective governance and unity across all government levels is crucial for the successful execution of social programs. But to maximise the efficiency of spending and outcomes, many ground-level channels will first need to be streamlined.

India has made significant progress in climate action, increasing renewable energy capacity and improving energy efficiency, as per Economic Survey 2024

By May 31, 2024, non-fossil sources accounted for 45.4% of the installed electricity generation capacity. Additionally, the country reduced its GDP emission intensity by 33% from 2005 levels by 2019.

Furthermore, in January-February 2023, the government issued sovereign green bonds worth ₹16,000 crore to fund public sector projects aimed at reducing economic emission intensity. This was followed by an additional ₹20,000 crore raised through sovereign green bonds in October-December 2023.

The Economic Survey outlines a growth strategy for Amrit Kaal, emphasising six key areas:

1. Prioritise boosting private investment.
2. Strategically focus on the growth and expansion of India’s Mittelstand (MSMEs).
3. Recognise agriculture’s potential as a future growth engine and remove policy impediments.
4. Secure financing for India’s green transition.
5. Bridge the education-employment gap.
6. Focus on building state capacity and capability to sustain and accelerate India’s progress.

Economic Survey 2024 states that moving forward, the government should focus on bottom-up reform and strengthening governance to ensure that the structural reforms of the last decade result in strong, sustainable, balanced and inclusive growth.

Meanwhile, key policy areas in the short to medium term include job and skill creation, fully utilising the agricultural sector's potential, addressing MSME challenges, managing India's green transition, handling the Chinese conundrum, deepening the corporate bond market, tackling inequality and improving the health quality of the young population.

India's external sector remained robust despite ongoing geopolitical challenges and persistent inflation. FY24 saw positive net foreign portfolio investment inflows into the country, driven by strong economic growth, a stable business environment and increased investor confidence.

India's position in the World Bank’s Logistics Performance Index also improved, rising from 44th in 2018 to 38th in 2023 out of 139 countries.

Achieving long-term price stability demands a forward-looking approach, the Economic Survey 2024 states. Thus, evaluating the progress in building modern storage and processing facilities for fruits and vegetables is essential to manage seasonal price fluctuations effectively.

Additionally, the medium to long-term inflation outlook will depend on enhancing price monitoring mechanisms, bolstering market intelligence, and focusing on boosting domestic production of crucial food items like pulses and edible oils, areas where India remains heavily reliant on imports.

The RBI forecasts inflation to decrease to 4.5% in FY25 and 4.1% in FY26, provided there are no major shocks or disruptions and monsoon conditions are normal. The IMF aligns closely, predicting 4.6% inflation in 2024 and 4.2% in 2025 for India.

Additionally, the World Bank anticipates a drop in global commodity prices in the coming years, influenced by reduced costs for energy, food and fertilizers. This could further ease domestic inflation in India.

Adverse weather conditions was a common theme that limited food production in FY24. Tomato prices surged due to early monsoon rains, localised crop diseases and supply chain issues. Onion prices also spiked, influenced by poor quality from the previous harvest, delays in sowing, extended dry spells affecting Kharif crops and trade restrictions from other countries.

The Indian agriculture sector struggled with extreme weather, low reservoir levels and crop damage, affecting both farm output and food prices. As a result, food inflation rose from 6.6% in FY23 to 7.5% in FY24.

The Economic Survey highlighted a dangerous combination that threatens public health and productivity, potentially hampering India's economic growth. This mix includes social media, excessive screen time, sedentary lifestyles and unhealthy eating habits.

India's banking and financial sectors have shown exceptional performance in FY24. But as the financial landscape evolves, both global and local vulnerabilities could pose challenges to the country's finance sector. The Economic Survey states that government and regulators must therefore remain adaptable, ready to deploy policy and regulatory measures as needed.

India's impressive economic growth of 8.2% in FY24 was underpinned by a robust 9.5% growth in industrial output. Despite the pandemic's disruption to manufacturing value chains, the sector has sustained an average annual growth rate of 5.2% over the past decade. Key contributors to this growth include chemicals, wood products and furniture, transport equipment, pharmaceuticals, machinery and equipment.

In FY24, inflation rates fell across most Indian States and Union Territories, with 29 of the 36 regions seeing rates drop below 6%. This trend aligns with the overall decrease in all-India average retail inflation from FY23.

Quoting Provisional Estimates, Economic Survey 2024 indicates that the services sector grew by 7.6% in FY24. In 2022, India’s services exports made up 4.4% of global commercial services exports. Despite the pandemic, services exports have remained robust, contributing to 44% of India’s total exports in FY24.

The Indian stock market has experienced a significant boost, with its market capitalisation to GDP ratio ranking as the fifth largest globally: Economic Survey 2024

In FY24, primary capital markets enabled capital formation totaling Rs 10.9 lakh crore, which represents about 29% of the gross fixed capital formation by both private and public corporations for FY23: Economic Survey 2024

The global fiscal deficit, measured as a percentage of GDP, increased by 1.6 percentage points in 2023 compared to the previous year.

Following the pandemic, India's economy has rebounded and grown systematically. In FY24, real GDP was 20% above its FY20 level—a milestone achieved by only a few major economies. Looking ahead to FY25, strong growth prospects remain, though they are contingent on geopolitical, financial and climatic uncertainties.

While global economic growth was 3.2% in 2023, according to the April World Economic Outlook, India's real GDP surged by 8.2% in FY24. The emphasis on sustaining macroeconomic stability helped shield India's economy from the broader external challenges.

Despite global disruptions, supply chain issues and unpredictable monsoon patterns, effective administrative and monetary policies have kept inflation in check. Consequently, retail inflation, which averaged 6.7% in FY23, decreased to 5.4% in FY24.

The Economic Survey projects India's real GDP growth for the fiscal year 2024-25 to fall within the range of 6.5% to 7%. This forecast is in line with the International Monetary Fund's prediction of a 7% growth rate.

Speaking ahead of today’s Economic Survey presentation, PM Narendra Modi said: “Today is the first Monday of Sawan. An important session is starting on this auspicious day. I extend my greetings to the countrymen on the first Monday of Sawan. The monsoon session of Parliament is starting today. Today, the whole country is looking at it. This should be a positive session…”

He added: “This Budget is an important budget for Amrit Kaal. Today's budget will decide the direction for the next 5 years of our term. This budget will also become a strong foundation of our dream of 'Viksit Bharat'...”

The Economic Survey each year is framed around a central theme, which reflects the prevailing economic climate and policy priorities, shaping the analysis and recommendations. For 2022, the theme was 'Agile Approach,' which delved into India's strategies and responses to the COVID-19 crisis. In 2023, it shifted to 'Recovery Complete,' focusing on how the economy rebounded from pandemic disruptions and navigated the Russian-Ukraine conflict.

The Economic Survey serves as a comprehensive review of the government's financial performance and economic health for the fiscal year ending March 31. Compiled by the Economic Division of the Department of Economic Affairs under the Ministry of Finance, it provides a detailed assessment of the economy for 2023-24 and forecasts for the year ahead.

This report, which includes an evaluation of key economic indicators and anticipated policy shifts, is overseen by the chief economic adviser. Traditionally, it is unveiled by the Ministry of Finance one day prior to the Union Budget presentation.

Finance Minister Nirmala Sitharaman is set to present the Economic Survey 2024 today, marking the start of the Monsoon Session. Stay tuned for the latest updates and comprehensive analyses.