1. ECONOMIC SURVEY GROWTH TREND ANALYSIS
Growth Trajectory:
- Recovery: The Indian economy has recovered well from the pandemic, achieving real GDP growth of 2% in FY24. This marks the third consecutive year of growth exceeding 7%.
- Future Outlook: The Economic Survey projects a growth range of 5% to 7% for the current year (2024-25), indicating sustained economic momentum. However, this growth needs to be inclusive and address key challenges.
Challenges and Recommendations:
- Widening Inequality: The Survey identifies a widening gap between income brackets. It recommends:
- Informal Sector Integration: Enhance integration of the informal sector into the formal economy to provide better social security and benefits to workers.
- Women Workforce Participation: Increase female labor force participation rate (LFPR) to tap into this underutilized resource.
- Job Creation Challenge: India needs to create nearly 78.5 lakh new jobs annually in the non-farm sector by 2030 to accommodate its growing workforce.
- Skill Development Gap: The Survey emphasizes the need to bridge the gap between educational qualifications and the skills demanded by the job market. It suggests a reboot of skilling initiatives to equip the youth with the “right attitude and skills.”
- Policy Reforms: The Survey acknowledges the success of structural reforms like GST and IBC but argues for a shift towards “next-gen reforms.” These reforms should be:
- Bottom-up Approach: Focus on empowering local stakeholders and driving inclusive growth.
- Sustainable and Balanced Growth: Ensure environmental sustainability and equitable distribution of benefits.
Recommendations for Boosting Growth:
- Private Sector Investment: The Survey prioritizes organic and steady growth in private sector investment to generate sustainable job creation and income for workers.
- Green Transition: The document emphasizes financing a smooth transition towards a more environmentally sustainable economy.
- MSME Support: Removing hurdles faced by Micro, Small and Medium Enterprises (MSMEs) is crucial to foster entrepreneurship and job creation.
- Revitalizing Agriculture: The Survey calls for policy changes to unlock the full potential of the agriculture sector and make it a growth engine for the economy. It suggests “intelligent farmer-friendly policies” for this purpose.
2. Women-Led Development in India
Issue: Shift from Women’s Development to Women-Led Development
Source: Economic Survey 2024
Key Points:
- Increased Budgetary Allocation: A 218.8% rise in budget allocation for women’s welfare and empowerment schemes signifies a move from development focused on women to women leading development efforts.
- Gender Budgeting: The share of the Gender Budget in the Union Budget has reached 6.5% (highest ever), demonstrating the government’s commitment.
- Rising Female Labour Force Participation Rate (LFPR): Rural women are driving the increase, with LFPR rising from 23.3% (2017-18) to 37% (2022-23). However, the “motherhood penalty” still exists, with a dip in participation around childbirth.
- Skilling Initiatives: Increased focus on training women:
- Pradhan Mantri Kaushal Vikas Yojana (PMKVY) – Women trainees rose from 42.7% (2015-16) to 52.3% (2023-24).
- Jan Shikshan Sansthan (JSS) – Women beneficiaries constitute 82%.
- ITIs & National Skill Training Institutes – Women participation grew from 9.8% to 13.3%.
- Financial Inclusion: opening of 52.3 crore bank accounts, with 55.6% being women Pradhan Mantri Jan Dhan Yojana facilitated (as of May 2024).
- Care Economy: Estimated 2% of GDP investment in care economy could generate 11 million jobs, 70% for women. Models from Australia, Argentina, Brazil, and the US can be explored.
Benefits: Increased female LFPR and job creation in a promising sector. Investment in the care economy can be a win-win for women’s empowerment and job creation. International Labour Organisation (ILO) Report on Care Economy (2018)
3. MSMEs Key Challenges
Challenge: Formlisation
- Problem: Many MSMEs operate informally, hindering growth and access to benefits.
- Impact: Limits access to credit, markets, and government schemes.
Challenge: Access to Finance
- Problem: MSMEs struggle to secure loans due to lack of credit history or collateral.
- Impact: Hinders business expansion and investment.
Other Challenges
- Markets: Difficulty accessing domestic and international markets.
- Technology & Digitalisation: Lagging in adopting new technologies.
- Infrastructure: Inadequate infrastructure hinders operational efficiency.
- Skilling: Shortage of skilled workforce.
- Policy Gap: The Economic Survey acknowledges a gap between policy intentions and actual outcomes for MSMEs.
- Government’s Approach: Seeks support from the financial sector to improve capital formation and promote business activities in MSMEs.
4. Infrastructure Sector Challenges in India
Key Issues:
- Limited Private Participation: Public sector investments have driven infrastructure growth, but private sector participation lags.
- Data Deficiency: Lack of quality data on infrastructure development, financing, and utilization hinders effective policymaking.
- Land Acquisition Delays: Delays in acquiring land and clearances create bottlenecks for project execution.
- Project Challenges: Long payback periods, absence of independent regulators, and complex project structures deter private investment.
Government Initiatives: Public-Private Partnerships (PPP): Models like the hybrid annuity model aim to attract private investment with affordable financing options. (Limited success in specific sectors like roads and water)
Recommendations for Improvement:
- Subnational Initiatives: State and local governments can adopt innovative approaches like pooled financing, specialized intermediaries, and asset recycling programs to mobilize resources.
- Data Consolidation: Creating a comprehensive national infrastructure project inventory by consolidating data from various sources would enable better tracking and evaluation.
Probable Conclusion for questions releated to Infrastrucure sector and its bottleneckes
The Economic Survey emphasizes the need for boosting private sector participation to ensure sustainable infrastructure development. Addressing land acquisition delays and improving project structuring are crucial for attracting private capital.
5. Economic Survey 2024 - Health Concerns
Issue: Rising burden of non-communicable diseases (NCDs) and mental health issues impacting workforce health and economic productivity.
Causes:
- Unhealthy lifestyle choices:
- Sedentary habits due to social media and screen time.
- Consumption of processed foods high in sugar and fat.
- Unsustainable food habits.
Impact:
- Increase in obesity: 4% rise in men and 3.4% rise in women since 2015-16 (NFHS data).
- Surge in Type 2 diabetes: Incidence rose from 2% to 20% in the last 50 years.
- 4% of disease burden attributed to unhealthy diets (National Institute of Nutrition data).
- Mental health concerns: 10.6% of adults suffer from mental disorders (National Mental Health Survey 2015-16).
Recommendations:
- Focus on promoting healthy eating habits and balanced diets.
- Prioritize mental health awareness and support.
- States: Effective implementation of national screening programs for NCDs and mental health.
- Healthcare System: Shift focus towards managing chronic conditions like diabetes.
- Implement longitudinal patient follow-up for effective disease management.
- Private sector’s role in promoting unhealthy habits needs to be addressed.
- Social media’s negative impact on children’s mental health requires attention.
6. Modernising Agricultural Marketing
The survey acknowledges India’s agricultural success but emphasizes the need for structural transformation to address challenges like climate change and water scarcity
Key Issues:
- Low farmer income: Traditional methods and crops lead to insufficient income for smallholder farmers.
- Poor market infrastructure: Weak market infrastructure hinders price discovery and increases post-harvest losses.
- Limited participation of cooperatives and FPOs: These institutions can empower farmers but require greater support.
Recommendations:
- Incentivize states for reforms: The survey proposes financial incentives to encourage states to implement reforms suggested by the 15th Finance Commission. This could involve:
- e-NAM implementation: Expanding the reach and effectiveness of the e-National Agriculture Market for online agricultural trading.
- FPO and cooperative support: Strengthening Farmer Producer Organizations (FPOs) and enabling cooperatives to play a bigger role in agri-marketing.
- Market infrastructure development: Creating an index to rank states based on the functioning of their Agricultural Produce Market Committees (APMCs) and other market institutions. This ranking would determine the level of financial incentive.
Benefits of Modernization:
- Improved price discovery: Efficient markets ensure farmers receive better prices for their produce.
- Reduced post-harvest losses: Improved infrastructure minimizes spoilage and waste.
- Empowering farmers: FPOs and cooperatives give farmers more bargaining power and market access.
- Shift towards high-value agriculture: Modernization can incentivize farmers to move from traditional crops to higher-value products like fruits, vegetables, and livestock.
Additional Notes:
Increased investment in technology, production methods, and marketing infrastructure is crucial for growth.
The allied sectors of animal husbandry, dairying, and fisheries hold significant potential to boost farm incomes.
