Economic Survey 2024: The Indian economy has seen significant growth through reforms in recent years, but it faces several challenges. Four of these were listed by Chief Economic Advisor V Ananta Nageshwaran and his team in their “mini Economic Survey” ahead of the Interim Budget in January 2024.
These could be addressed in the upcoming full Budget 2024, which Finance Minister Nirmala Sitharaman will announce on July 23, and the Economic Survey 2024, which is scheduled to be tabled in Parliament on July 22.
Over the past nine years, India’s economy has grown due to reforms, but it faces several challenges. Here’s a brief look at them. We take a look at what these challenges mentioned in the document titled ‘The Indian Economy: A Review’ are:
Impact of Global Economic Trends on India’s Growth
The first challenge is the impact of global economic trends and trade patterns on India’s growth and economy. The document noted that India’s growth depends not just on internal factors but also on global economic integration. It also highlighted the shift from hyper-globalisation to more localised production could affect trade and overall economic growth.
“First, in an increasingly integrated global economy, India’s growth outlook is not only a function of its domestic performance but also a reflection of the spillover effects of global developments. Increased geoeconomic fragmentation and the slowdown of hyper-globalisation are likely to result in further friend shoring and onshoring, which are already having repercussions on global trade and, subsequently, on global growth.”
Balancing Energy Security, Transition to Renewables
The second challenge noted is that balancing economic growth with energy security amidst global shifts towards renewable energy poses complex challenges across geopolitical, technological, and economic fronts.
“Second, the trade-off between energy security and economic growth versus energy transition is a multifaceted issue having various dimensions: geopolitical, technological, fiscal, economic and social, and the policy actions being pursued by individual countries impacting other economies.”
Rise of Artificial Intelligence (AI)
Thirdly, the rise of AI was registered as a global concern regarding job displacement, particularly in service sectors. It noted that developing economies such as India need to invest in infrastructure and digital skills to harness AI’s potential while managing its impact on employment.
“Third, the advent of Artificial Intelligence (AI) poses a big challenge to governments around the world due to the questions it poses to employment particularly in services sectors. This was recently highlighted in an IMF paper estimating that 40 per cent of global employment is exposed to AI, with the benefits of complementarity operating beside the risks of displacement.21 Further, the paper suggests that developing economies must invest in infrastructure and a digitally skilled labour force to fully harness AI’s potential.”
Skilled Workforce, Good Education and Public Health
Lastly, the document noted that ensuring a skilled workforce, good quality education, and public health are vital for sustained economic growth and productivity.
“Fourth, domestically, ensuring the availability of a talented and appropriately skilled workforce to the industry, age-appropriate learning outcomes in schools at all levels and a healthy and fit population are important policy priorities in the coming years. A healthy, educated and skilled population augments the economically productive workforce.”
Track Record of Overcoming Challenges
The document praised India’s track record in tackling challenges, terming them “significant but not insurmountable”. It noted that the country has made strides with initiatives such as the Pradhan Mantri Kaushal Vikas Yojana (PMKVY), which has trained 1.3 crore youth for better job prospects.
Efforts to promote renewable energy have also been successful, with substantial growth in 179.57 GW capacity from hydropower by November 2023, it stated. It added that technological advancements, such as internet penetration and Aadhaar, have enhanced inclusivity and efficiency in governance and economic transactions.
On financial inclusion too, it noted that the Jan Dhan Yojana has expanded financial access, with 51.5 crore beneficiaries as of January 2024, notably benefiting rural women.
“In sum, India’s ‘Mission Mode’ approach to getting the better of festering challenges stands the country in good stead in meeting the current and emerging challenges,” it stated.