New Delhi: The Economic Survey for 2022-23 while dwelling on the outlook for the forthcoming fiscal of 2023-24, has said that India’s recovery from the pandemic was relatively quick, and growth in the new financial year will be supported by solid domestic demand and a pickup in capital investment.
It further noted that aided by healthy financials, incipient signs of a new private sector capital formation cycle are visible and more importantly, compensating for the private sector’s caution in capital expenditure, the government raised capital expenditure substantially.
“Budgeted capital expenditure rose 2.7 times in the last seven years, from 2015-16 to 2022-23, re-invigorating the capex cycle. Structural reforms such as the introduction of the Goods and Services Tax and the Insolvency and Bankruptcy Code enhanced the efficiency and transparency of the economy and ensured financial discipline and better compliance,” the survey added.
The document, which was laid in Parliament by Finance Minister Nirmala Sitharaman on Tuesday, further said that global growth is forecasted to slow from 3.2 per cent in 2022 to 2.7 per cent in 2023 as per IMF’s World Economic Outlook, October 2022.
A slower growth in economic output coupled with increased uncertainty will dampen trade growth. This is seen in the lower forecast for growth in global trade by the World Trade Organisation from 3.5 per cent in 2022 to 1.0 per cent in 2023.
“On the external front, risks to the current account balance stem from multiple sources. While commodity prices have retreated from record highs, they are still above pre-conflict levels. Strong domestic demand amidst high commodity prices will raise India’s total import bill and contribute to unfavourable developments in the current account balance. These may be exacerbated by plateauing export growth on account of slackening global demand. Should the current account deficit widen further, the currency may come under depreciation pressure,” the survey said in its forecast for 2023-24.
At the same time though it noted that entrenched inflation may prolong the tightening cycle, and therefore, borrowing costs may stay ‘higher for longer’ and in such a scenario, the global economy may be characterised by low growth in 2023-24.
“However, the scenario of subdued global growth presents two silver linings — oil prices will stay low, and India’s current account deficit will be better than currently projected. The overall external situation will remain manageable,” the survey said on a note of optimism.