The Economic Survey for 2022-23 has reaffirmed India’s economic resilience in midst of the global slowdown. In the baseline scenario a growth of 6.5% is expected in FY24, higher than our expectation of 6.1%. We feel that while India will maintain healthy growth momentum, there is need to be cautious given the slowing global growth. Moreover, in FY24 we are also expecting some fizzling out of the pent-up demand seen in the current fiscal.

The survey also talks about potential GDP growth of 7-8% per annum in the medium term. We feel that this higher potential growth is achievable if some of the reforms required to improve productivity and improve Ease of Doing business are implemented in a timely manner. Moreover, there is a need to focus on inclusive growth, hence investment in human capital and support for the unorganised sector and MSME segment becomes critical.

On inflation front, the survey highlights that overall inflationary pressure could be expected to ease in FY24 from the levels seen during this year. This is in line with our expectation of average CPI inflation moderating to 5.1% in FY24 from 6.5% in FY23.

In midst of concerns around the global economy, the Survey highlights that the external situation is manageable given our high forex reserves and low external debt. With export slowing, we expect CAD to remain high at around 2.2% of GDP in FY24, but much lower than estimated 3.5% of GDP in FY23. We feel that given the volatile and uncertain global environment, there is need to remain cautious on the external sector.

Overall the survey paints an optimistic picture that definitely can become the reality if the Government acts quickly on some of the reform measures and takes steps to grab the geo-political opportunity.