Assessing Impact: The Indian Economic Review 2024
4 min read • Updated: January 31, 2024, 9:53 PM
The Indian Economic Review for 2024, replacing the traditional Economic Survey due to impending elections, offers a succinct assessment of India's economic performance. Despite global uncertainties, India has shown resilience and growth, driven by proactive policy interventions. Key highlights include advancements in logistics and infrastructure, digitalization of citizen services, financial sector reforms, and robust growth in fintech and capital markets. The review underscores India's sustainable growth and stability trajectory, signalling promising prospects for the nation's economy in the coming years.
Key Takeaways -
- In place of the traditional Economic Survey, the Finance Ministry has issued The Indian Economic Review, which offers a concise assessment of economic performance, due to the impending Lok Sabha elections, which influence fiscal policy and budget planning.
- India navigated global uncertainties through proactive policy interventions, weathering challenges and emerging stronger. Macroeconomic stability, fueled by flexible inflation targeting and fiscal prudence, reinforces this picture of resilience.
- Booming markets, robust capital formation, and a commitment to long-term welfare strategies through initiatives like JAM and One Nation One Ration Card project India's trajectory towards continued growth, offering immense potential for investors and financial professionals.
2024's Economic Review arrives in place of the traditional Economic Survey, an omission due to India's upcoming general elections. Nevertheless, the document delivers a comprehensive and candid assessment of the nation's economic performance, revealing a landscape that battled global uncertainties and emerged stronger. This analysis dissects key facets of the review, offering citizens a critical insight into India's trajectory.
The Indian Economic Review, as presented by the Fin Min, maps out a very clear picture of the nation's economic status quo by highlighting progress in focused sectors.
Here’s a quick overview -
Logistics and Infrastructure:
As highlighted in the report, India's logistics sector has undergone a remarkable metamorphosis, fueled by the revolutionary Unified Logistics Interface Platform (ULIP) and comprehensive policy measures.
The seamless integration of 35 systems from eight ministries into ULIP has slashed red tape and streamlined processes, leading to a noteworthy 0.8-0.9% reduction in logistics costs as a percentage of GDP.
The implementation of GST has further catalyzed this positive shift, facilitating cost reductions for trucks and significantly reducing turnaround times at major ports. These concerted efforts, coupled with a focus on boosting domestic steel production and affordable housing, have ignited a commendable 12% annual growth in the construction sector from FY22 to FY24.
Digital Infrastructure and Citizen-Centric Services:
The COVID-19 pandemic proved to be a crucial catalyst for the evolution of India's digital public infrastructure, popularly known as India Stack. Comprised of three interconnected layers – Identity (Aadhaar), Payments (UPI, Aadhaar Payments Bridge), and Data (Account Aggregator) – India Stack has democratized access to public and private services, enabling seamless, paperless, and cashless transactions.
The report aptly underscores the pivotal role of this digital infrastructure in facilitating swift transactions, fostering financial inclusion, and driving the success of initiatives like the Pradhan Mantri Jan Dhan Yojana (PMJDY).
Financial Sector and India Stack:
The integration of India Stack with the financial and telecommunications sectors has been a game-changer. Demonetization, coupled with bold policy measures like 100% FDI in telecom, paved the way for a surge in cashless transactions and a dramatic reduction in mobile data tariffs.
This rise in data consumption, alongside the evolution of India Stack, played a crucial role in facilitating the smooth rollout of GST in 2017. The financial sector's resilience is further underscored by the enactment of the Insolvency and Bankruptcy Code (IBC) and sustained recapitalization efforts, which have successfully steered banks from a "twin balance sheet problem" to a "twin balance sheet advantage."
The resultant credit growth, bolstered by measures like the Emergency Credit Linked Guarantee Scheme (ECLGS), has been instrumental in powering economic recovery post-pandemic.
Export of Services and Fintech Growth:
India's robust digital ecosystem has not only propelled domestic growth but also solidified its position as a leading exporter of services. The rise of Global Capability Centers (GCCs) in India, coupled with a skilled workforce and improved infrastructure, has fueled the export of business services.
The fintech sector has emerged as a significant player, with India ranking as the third-largest growing fintech economy globally. The impact of India's digital journey is tangible, with over 4.5 million individuals and companies benefitting from enhanced access to financial services through the Account Aggregator framework.
Financial Markets and Capital Expansion:
Indian financial markets have witnessed remarkable development, with equity markets outperforming global counterparts. The surge in demat accounts and the robust flow of IPO issuances, especially in the SME segment, underscore the increasing participation of retail investors.
Bond markets have also witnessed substantial growth, fueled by measures like the Retail Direct scheme, sovereign green bonds, and robust regulatory frameworks. The outlook for India's financial markets remains optimistic, with their capacity to finance the nation's growing capital investment needs remaining a key driver of future economic expansion.
As we delve into the details of India's economic review for 2024 and anticipate the upcoming budget, it becomes evident that the nation has not merely weathered global uncertainties but has actively charted a course for sustainable growth.
The coming years hold promise as India continues to build on its economic strengths, fostering a climate of stability, innovation, and prosperity.