Inflation in check, core inflation below 4%; says Chief Economic Advisor
Chief Economic Advisor Dr V Anantha Nageswaran assured that inflationary pressures in India are under control, with core inflation staying well below 4%. Speaking at a press conference on Monday, he acknowledged a minor drop in foodgrain production due to an erratic monsoon but expressed optimism about the agricultural sector's performance in the coming year.
A day before presenting the Union Budget, Finance Minister Nirmala Sitharaman tabled the Economic Survey 2023-24, marking the start of Parliament's Budget Session. The survey forecasts the Indian economy to grow at 6.5-7% in FY25, with the Reserve Bank of India projecting a 4.5% inflation rate for the same period. Highlighting employment, the survey mentions the transformative impact of AI on the global economy. It also states that India’s economy has recovered rapidly from the pandemic, with real GDP in FY24 being 20% higher than pre-COVID levels.
Economic Survey and Its Implications
The Economic Survey is a comprehensive report detailing the national economy's status for the closing financial year. Prepared by the Economic Division of the Department of Economic Affairs, it is guided by the Chief Economic Advisor and approved by the Finance Minister. Although it precedes the Budget, its assessments and recommendations are not binding. Dr. Nageswaran highlighted that households are increasingly investing in financial assets. The Economic Survey 2024 noted a tripling of the registered investor base at the National Stock Exchange from March 2020 to March 2024, with 20% of households now channelling their savings into financial markets.
Agricultural and Economic Growth Projections
Dr. Nageswaran projected a 7% growth rate for FY 2025, contingent on favourable monsoon conditions. He noted that the erratic monsoon had slightly affected foodgrain production in 2024, but the growth rate was conservatively estimated at 6.5-7%. The survey emphasized inclusive economic growth, incorporating themes such as artificial intelligence, energy security, and employment. It identifies areas needing attention to address these challenges effectively.
Sectoral Growth and Innovation
Fishing and aquaculture experienced the highest average decadal growth (8.9%) from 2014 to 2023, followed by livestock (7.4%). Forestry and logging grew by 3.9%, while crops had the lowest growth at 1.9%. Dr. Nageswaran underscored the need for diversification in these sectors. Regarding India's startup ecosystem, the number of patents filed increased 17 times between FY 2015 and FY 2024. As of March 2024, over 13,000 startups recognized by the Department for Promotion of Industry and Internal Trade (DPIIT) are involved in AI, IoT, Robotics, and Nanotechnology.
Infrastructure and Logistics
Dr. Nageswaran highlighted improvements in logistics, citing the expansion of National Highways, the introduction of Vande Bharat trains, and reduced wait times at highway toll gates. He also noted the doubling of operational airports since 2014. Addressing Climate Change and Geopolitical Issues The CEA addressed climate change, emphasizing the need to balance development with mitigation and adaptation. He also discussed the implications of geopolitical fragmentation, with terms like localization and decoupling gaining prominence, and the drive towards domestic competitiveness. Dr. Nageswaran’s press conference underscored the government's efforts to manage economic challenges while preparing for sustainable growth. The insights provided in the Economic Survey will guide the upcoming fiscal policies and development strategies.
