Narendra Modi speaks to media at the opening of the budget session of Parliament in New Delhi on Tuesday. Agence France-Presse
Prime Minister Narendra Modi on Tuesday described the economic survey as a comprehensive analysis of India’s growth trajectory. “The economic survey presents a comprehensive analysis of India’s growth trajectory including the global optimism towards our nation, focus on infra, growth in agriculture, industries and emphasis on futuristic sectors,” PM Modi tweeted.
Earlier on Tuesday, Finance Minister Nirmala Sitharaman laid the economic survey for 2022-23 in the Parliament.
The survey has projected a growth of 7 per cent in the current fiscal, while it has given a downward projection of 6.5 per cent growth in 2023-24.
Slowing global demand is weighing on India’s merchandise exports, noted the Economic Survey 2022-23 presented by Finance Minister Nirmala Sitharaman on Tuesday.
The empirical literature documents that global growth exerts a strong statistically and economically significant impact on India’s real exports, though the impact has reduced over the years.
Global growth is forecast to slow down in 2022 and 2023 as per IMF estimates. This is the weakest growth profile since 2001 except for the global financial crisis and the acute phase of the Covid-19 pandemic. “Thus, the export outlook may remain flat in the coming year if global growth does not pick up in 2023, as indicated by many forecasts,” the Survey said.
“In such cases, product basket and destination diversification which India is taking through FTAs would be useful to enhance trade opportunities. At times when the base (global growth and global trade) is not growing, export growth will have to come predominantly through market share gains,” it added.
“In turn, that comes from the focus on efficiency, productivity, technology, and innovation. That game has to be lifted. Governments can try and open markets through FTAs. But, to take advantage of that is in the hands of private sector participants.”
The Survey noted that India is facing competition from South Asian countries in a few of its export competitive products. In the textile sector, Bangladesh and Vietnam are seen to be expanding their exports globally, in recent years.
Further, Vietnam has been able to expand its exports in machinery and equipment; computers, electronic products, and certain agriculture products among others. “However, given the benefits of the lower average age of the working population along with the advantage of economies of scale, India has the potential to cater to the global demand for several products in a cost-effective manner.”
On the imports side, notwithstanding uncertainty surrounding the outlook on global crude oil prices, “the recent softening in its prices augurs well for India’s POL imports. However, non-oil, non-gold imports, which are growth-sensitive, may not witness a significant slowdown as Indian growth continues to be resilient”, the Survey asserted.
India is one of the fastest-growing insurance markets in the world and is expected to emerge as one of the top six insurance markets by 2032, according to the Economic Survey 2022-23 that was presented in the Parliament on Tuesday.
Digitisation of India’s insurance market, accompanied by an increase in FDI limit for insurance companies, is likely to facilitate an increased flow of long-term capital, a global technology, processes, and international best practices, which will support the growth of India’s insurance sector.
Also, as we move to a high middle-income economy, India’s pension sector has tremendous scope for growth. Government initiatives towards enhancing pension literacy of subscribers and intermediaries, and a nudge from the regulator and the government to encourage young adults to join the pension scheme would play a significant role in enhancing pension availability to a more extensive section of the society, the Economic Survey said.
The increasing outreach of the banking sector and capital markets is reflected in the insurance and pension sectors. Insurance penetration in India has been steadily increasing, with life insurance penetration being above the emerging markets and global averages.
Important government interventions and a conducive regulatory environment have supported the growth of the insurance market, which has seen increasing partnerships, product innovations, and vibrant distribution channels.
The pension sector too has been taking rapid strides since the introduction of the National Pension Scheme (NPS), more recently, the Atal Pension Yojana (APY). The sector has witnessed a robust increase in the number of subscribers and assets under management (AuM), the Survey said.
The expansion of the sector has been aided by government measures such as relaxation in CCS (Pension) Rules, integration of electronic Pension Payment Order (e-PPO) with DigiLocker, and relaxation in the timeline for submitting Digital Life Certificate.
As global central banks reaffirm their hawkish stances and telegraph ‘higher-for-longer’ policy rates in their battle against inflation, monetary conditions are expected to remain tight worldwide.