(Part II)
In my previous blog, I covered the first chapter of the report titled “Indian Economy – A Review”. I discussed the past, present, and future of the Indian economy. Now, in this blog, I am going to explore “What Made the Indian Economy Resilient?”.
Here, I focus on the measures that the government has taken in the past ten years in several aspects of public policy, which have contributed to the post-Covid economic resilience and set India on a path to sustained economic growth in the coming years. Specifically, I lay stress on the domestic economy, macroeconomic stability, human resources, and the Indian economy’s external sector.
According to the report, India’s domestic economy is robust, with real GDP projected to grow at 7.9% between FY22 and FY24, fueled by initiatives like Make in India and PLI schemes. Consumption demand is resilient, with PFCE driving post-Covid recovery. Investment growth is supported by government efforts to recapitalize banks and streamline infrastructure projects. The agricultural sector ensures food security, while industrial reforms stimulate manufacturing and exports. It also notes that digital infrastructure facilitates citizen-centric services, and credit creation is strong, with NBFCs playing a significant role. Financial markets are evolving, with equity and bond markets showing stability and growth which is crucial for financing India’s capital needs and promoting financial literacy.
The report observes that India prioritizes macroeconomic stability through flexible inflation targeting, maintaining inflation within a 2 to 6 percent range. The Price Stabilization Fund manages price volatility in agricultural commodities. Despite global challenges like supply chain disruptions and geopolitical conflicts, India contained inflation, diversified energy sources, and stabilized retail inflation to 5.5 percent in FY24. According to the report, timely supply-side measures and supportive monetary policy helped mitigate food inflation, with the RBI progressively raising the policy repo rate to 6.5 percent. On the other hand, with projected average inflation of 5.4 percent in FY24, India aims to moderate macro vulnerabilities, supported by improved fiscal and external balances.
The report further explained that India’s welfare approach shifted to long-term empowerment which is focusing on universal access to amenities and enhancing quality of life. Investments in social services and capital expenditure indicate asset creation. While target-based budget allocation and real-time monitoring enhance transparency. Furthermore, Initiatives like DBT and JAM minimized leakages and child immunization and sanitation investments yielded positive outcomes. It also highlighted that social security schemes like APY and PMJJY showed progress and infrastructure drove employment. Amid Covid-19, safety nets ensure food security and employment. Millions escaped multidimensional poverty. Access to amenities increased while health expenditure declined. Eventually female GER surpassed males’. The report emphasized on key achievements including Ayushman Bharat, NEP, large-scale skilling, and entrepreneurship support. Interestingly women-led development initiatives and efforts towards sustained human development, including addressing malnutrition and ensuring quality learning outcomes, reflect India’s progress. Employment landscape improved, with challenges remaining in formalizing the workforce and ensuring social security benefits.
The report also highlighted that India’s merchandise exports hit USD 451.1 billion in FY23 despite global tensions, with services rising by 120% over a decade. Merchandise imports grew by 16.8% in FY23 but eased in FY24 due to weaker demand. Trade balance improved to USD 166.4 billion in April-November 2023. Remittances reached USD 125 billion in 2023, boosting the current account. Capital account surged, adding USD 27 billion to reserves since FY23. FDI inflows totaled USD 596.5 billion from FY15-FY23. Foreign reserves reached USD 623.2 billion, covering over ten months of imports. It is also true that global challenges kept going, but FDI reforms and remittances bolstered confidence.
The report further added that India prioritizes resilient growth and inclusive development, aligning with global climate goals. Its comprehensive approach to climate action balances adaptation, resilience, and mitigation despite its low historical carbon contribution. India’s NDCs aim for emission intensity reduction, non-fossil fuel energy targets, and carbon sink creation. The report clarifies that by achieving these targets, India has met its electricity and emission goals ahead of schedule, updating its NDCs for more ambitious targets. Additionally various missions and funds support climate action across sectors, including renewable energy expansion and energy efficiency schemes. India leads international initiatives like ISA and CDRI, emphasizing a pragmatic approach to climate policy amidst energy security concerns.
Ultimately India’s economic journey, marked by substantive reforms, positions it as the world’s 5th largest economy, poised to reach USD 5 trillion by 2027. With robust domestic demand and infrastructure investments, GDP growth is expected to sustain around 7%. The GST unification fosters production scale-up and fiscal strength. Despite global economic stagnation, India’s internal resilience fuels growth at 7.4%. Moreover, future reforms target skill development, health, and energy security, aiming for a USD 7 trillion economy by 2030.
While geopolitical risks become visible, India’s trajectory showcased resilience and potential for enhanced living standards, reflecting its dynamic economic landscape. Yet the government should prioritize addressing local issues and encouraging inclusive development across all sectors of the Indian economy.
Reference
V. A. Nageswaran. (2024). Indian Economy – A Review. Department of Economic Affairs, Ministry of Finance. Government of India. Retrieved from https://www.dea.gov.in/sites/default/files/The%20Indian%20Economy%20-%20A%20Review_Jan%202024.pdf
Vidhan Bharat 
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