Introduction

V Anantha Nageswaran, the Chief Economic Advisor, presented an economic survey for FY 2024. The Economic Survey is a comprehensive annual report prepared by the Ministry of Finance in India. Released just before the Union Budget, this document offers a detailed analysis of the country’s economic performance over the past year. It serves as a vital tool for policymakers, economists, and investors alike, providing insights into macroeconomic trends, sectoral performance, and the government’s policy initiatives. By examining key indicators such as GDP growth, inflation, fiscal deficit, and foreign trade, the Economic Survey paints a vivid picture of the nation’s economic health and prospects for the future. Following are the highlights of the economic survey.

Indian Economy – Steady as she goes

1. Global Economic Context

• The global economy expanded by 3.2% in 2023, a slight deceleration from previous years but surpassing initial projections of 2.8%.
• Emerging markets demonstrated resilience, outpacing expectations with robust domestic demand and strategic policy interventions.
• Advanced economies exhibited mixed performance, with the US continuing its growth trajectory while the Euro area faced subdued economic activity.
• Asia emerged as a growth engine, with China and India leading the recovery and surpassing pre-pandemic growth levels.
• Persistent core inflation posed a challenge, prompting central banks to adopt a tightening monetary stance, with interest rates being raised or maintained to curb inflationary pressures.
• Geopolitical tensions, exemplified by the Russia-Ukraine conflict, disrupted global supply chains, impacting trade and economic activity.
  

2. India’s Economic Performance

• India’s economy maintained its upward trajectory, recording a robust real GDP growth of 8.2% in FY24.
• The services sector emerged as the growth driver, contributing significantly to the performance of financial and professional services.
• The manufacturing and construction sectors also witnessed substantial expansion.
• Private consumption remained buoyant, supported by both urban and rural demand, with private final consumption expenditure (PFCE) growing by 4.0% in real terms.
• Gross Fixed Capital Formation (GFCF) exhibited growth, reflecting sustained investment activity from both the private and public sectors. Cumulative growth in private sector non-financial GFCF between FY19 and FY23 stood at 52% in current prices, while the same for general government was 64%.
• The banking sector displayed stability, supporting credit growth to crucial sectors such as MSMEs and housing.
• India’s merchandise exports demonstrated growth, although moderated by global demand conditions. However, services exports reached a substantial USD 341.1 billion.
  

3. Government Finances and Policies

• The fiscal deficit narrowed significantly from 6.4% to 5.6% of GDP in FY24, driven by robust tax revenues and controlled expenditure.
• Tax reforms yielded positive results, with direct tax revenues growing by 15.8% and indirect taxes by 10.6%.
• Government capital expenditure witnessed a substantial increase of 28.2% year-on-year, emphasizing infrastructure development and private sector participation.
• The National Monetisation Pipeline (NMP) contributed significantly, generating Rs 3.9 lakh crore to support fiscal objectives and enhance capital allocation efficiency.
• Inflationary pressures were managed effectively, with retail inflation declining from 6.7% in FY23 to 5.4% in FY24.
• The financial system exhibited resilience, with the Gross Non-Performing Assets (GNPA) ratio reaching a 12-year low of 2.8% and scheduled commercial banks (SCBs) maintaining robust profitability indicators.
  

4. External Sector and Inclusive Growth

• India’s current account deficit improved significantly from 2.0% of GDP in FY23 to 0.7% in FY24.
• Foreign portfolio investment (FPI) inflows surged to USD 44.1 billion, bolstering forex reserves and providing stability to the rupee.
• External debt remained manageable at 18.7% of GDP, while forex reserves offered ample coverage of over 11 months of imports.
• The government emphasized a shift from input-based to outcome-based welfare delivery under flagship schemes like PM Ujjwala Yojana and PM-AWAS Yojana.
• Direct Benefit Transfer (DBT) and Jan Dhan Yojana enhanced fiscal efficiency and reduced leakages.
• Social sector initiatives led to poverty reduction and increased consumption expenditure.
  

5. Economic Outlook

• India’s real GDP growth is projected to be in the range of 6.5% to 7% for FY25, supported by structural reforms and improving global economic conditions.
• The outlook is cautiously optimistic, considering potential global uncertainties and monetary policy adjustments.
  

Money and Finance – Stability is the watchword

6. Monetary Policy and Inflation Control

• The Reserve Bank of India (RBI) maintained a steady policy repo rate of 6.5% throughout FY24.   
• Despite global economic pressures, inflation remained relatively controlled. Food inflation, however, increased from 6.6% in FY23 to 7.5% in FY24.   
• Significant policy repo rate hikes of 250 basis points from 4% in May 2022 to 6.5% in February 2023 influenced lending and deposit rates.
• India is undergoing its third FSAP, with reports expected by February 2025.
  

7. Liquidity Management

• The RBI employed various tools, including Variable Rate Reverse Repo (VRRR) and Variable Repo (VRR) auctions, for liquidity management, conducting 49 fine-tuning operations in FY24.
• The Temporary Incremental Cash Reserve Ratio (I-CRR) was used to manage surplus liquidity.   
  

8. Banking Sector Performance

• The banking sector exhibited improvement with a reduced Gross Non-Performing Assets (GNPA) ratio of 2.8% in FY24.   
• Credit growth was robust in the agriculture, MSME, and personal loans sectors.
• Initiatives like the Kisan Credit Card (KCC) and Emergency Credit Linked Guarantee Scheme (ECLGS) enhanced credit accessibility.
  

9. Digital Financial Inclusion

• Digital infrastructure and credit bureaus played pivotal roles in expanding financial inclusion.
• The introduction of the Open Credit Enablement Network (OCEN) is expected to streamline credit flows.   
• The number of adults with formal financial institution accounts increased from 35% in 2011 to 77% in 2021.   
• With over 116.5 crore smartphone subscribers, India’s digital landscape supports the success of UPI.
  

10. Securities Markets and Financial Services

• India’s stock market capitalization to GDP ratio ranked fifth globally, supported by robust regulations and digital infrastructure.   
• Gujarat International Finance Tec-City (GIFT City) emerged as a global financial hub.   
  

11. Insurance Sector

• The global insurance industry contracted by 1.1% in real terms in 2022.   
• India’s insurance penetration moderated slightly to 4% in FY23 from 4.2% in FY22.   
• Ayushman Bharat Pradhan Mantri Jan Arogya Yojana (AB-PMJAY) issued 34.2 crore Ayushman cards.
  

12. Government and Regulatory Responses

• Strengthening banking regulations, amendments in recovery laws, and the Insolvency and Bankruptcy Code (IBC) aimed to address bank and corporate stress.
• Asset Reconstruction Companies (ARCs) played a crucial role in acquiring distressed assets.   
• SEBI facilitated Foreign Portfolio Investors (FPIs) investment in debt instruments of companies undergoing resolution.
• The National Asset Reconstruction Company (NARCL) was established to acquire distressed assets from banks.
    

13. Microfinance Institutions (MFIs)

• The RBI’s regulatory framework ensures uniformity and consumer protection in the microfinance sector.
• MFIs have shown robust performance with improving Return on Assets (RoA) and Return on Equity (RoE).
  

14. Pension Sector

• India’s pension sector witnessed growth, with the total number of subscribers increasing to 735.6 lakh in March 2024.   
• Atal Pension Yojana (APY) subscribers constituted approximately 80% of the total pension subscriber base.
  

Prices and Inflation – Under Control

15. India’s Recent Inflation Trends

• India successfully managed to contain retail inflation at 5.4% in FY24, marking the lowest level since the onset of the COVID-19 pandemic.
• The retail inflation rate further eased to 5.1% in June 2024.
• India’s inflation rate consistently remained lower than both the global average and that of Emerging Markets and Developing Economies (EMDEs) in 2022 and 2023.
  

16. Domestic Retail Inflation Trends

• Core inflation gradually declined to 3.1% by June 2024.
• Government interventions, including price cuts in LPG, petrol, and diesel, significantly lowered fuel inflation.
• The Pradhan Mantri Garib Kalyan Anna Yojana ensured food security for vulnerable populations.
  

17. Core Inflation Dynamics

• Effective monetary policy transmission and subdued inflationary pressures in both goods and services sectors led to a four-year low in core inflation in FY24.
• The RBI’s gradual increase in the repo rate by 250 basis points from May 2022 to February 2023 contributed to a four-percentage-point decline in core inflation between April 2022 and June 2024.
• Consumer durables inflation moderated due to improved raw material supply, while core services inflation remained stable but required policy attention.
  

18. Food Inflation Challenges and Mitigation Strategies

• Adverse weather conditions impacted food production, leading to increased prices of essential commodities like vegetables, pulses, and milk.
• Food inflation rose from 6.6% in FY23 to 7.5% in FY24.
• Government interventions such as open market sales, imports, and export restrictions on commodities like sugar helped stabilize food prices.
• Rural areas experienced higher inflation rates compared to urban areas due to a higher reliance on food items in the consumption basket.
  

19. Outlook and Future Strategies

• The RBI and IMF project a gradual decline in India’s inflation towards the target range, with projections of 4.5% in FY25 and 4.1% in FY26 by the RBI, and 4.6% in 2024 and 4.2% in 2025 by the IMF.
• Anticipated declines in global commodity prices are expected to further support India’s inflation outlook.
• Enhancing domestic production of key commodities, improving storage facilities, and refining price monitoring mechanisms are crucial for long-term price stability.
  

External Sector – Stability Amid Plenty

20. Global Foreign Direct Investment (FDI) and Trade

• Global FDI declined marginally by 2% to USD 1.3 trillion in 2023.
• Global merchandise trade fell by 5% in 2023 amid geopolitical challenges.
• External debt as a percentage of GDP in Emerging Markets and Developing Economies (EMDEs) increased to 29.8% in 2023 from 26.2% in 2012.
• India’s trade openness indicator rose from 37.5% in FY05 to 45.9% in FY24, significantly contributing to economic growth. The share of trade in GDP increased from 32.3% in FY05 to 40.8% in FY23.
• Trade practices like ‘decoupling’, ‘derisking’, and ‘reshoring’ are reshaping international trade relationships.
  

21. Merchandise Trade

• India’s merchandise exports and imports showed resilience, with exports crossing USD 776 billion and imports at USD 898 billion in FY23.
• In FY24, merchandise exports grew slightly by 0.23%, while imports declined by 4.9%, widening the trade deficit.
• Engineering goods dominated exports with a 25% share, followed by agriculture and allied products (11%).
• Electronics exports grew significantly, ranking 24th globally in 2022.
  

22. Services Sector

• India’s services exports grew at a CAGR of over 14% from 1993 to 2022.
• Services exports grew by 4.9% to USD 341.1 billion in FY24, driven by IT/software services and ‘other’ business services.
  

23. India’s External Debt and Remittances

• India’s external debt to GDP ratio declined to 18.7% at the end of March 2024.
• The share of short-term debt in total external debt declined to 18.5%.
• Remittances increased to USD 106.6 billion in FY24, driven by declining inflation and strong labour markets in the US and Europe.
  

24. Changing Landscape of India’s Trade Arrangements

• India pursued a mix of multilateral engagements and bilateral FTAs.
• Recent FTAs with Mauritius, UAE, Australia, and CEPA offer specific advantages.
• Ongoing negotiations with the UK, EU, and ASEAN reflect India’s commitment to broadening its trade footprint.
  

25. FDI in the Industry and Services Sector

• FDI inflows relative to GDP declined in recent years, particularly in the industry and services sectors.
• Investment intentions shifted towards new and futuristic sectors like renewables, artificial intelligence, EVs, and semiconductors.
• Physical FDI faced challenges due to geopolitical factors and the rise of non-equity modes of international production.
• Digital FDI witnessed significant growth, driven by sectors like software, hardware, and digital services.
  

26. Exchange Rates and Economic Stability

• The Indian Rupee exhibited relative stability against major currencies in FY24.
• India’s foreign exchange reserves reached USD 653.7 billion in June 2024.
  

Medium-Term Outlook – A Growth Vision for New India

27. Key Areas of Focus

• Workforce distribution: Agriculture (45%), Manufacturing (11.4%), Services (28.9%), Construction (13%). India needs to create 7.85 million non-farm jobs annually. Emphasis is on boosting jobs in organized manufacturing and services.
• Youth employability stands at 51.25%, up from 34% a decade ago. Issues include public perception, coordination, assessment inconsistencies, and a shortage of trainers. Female labour participation is at 37%, with additional challenges in entrepreneurship and innovation support.
  
• Focus on sustaining growth without inflating food prices by improving price discovery and crop diversification. Key needs include upgrading technology and reducing input wastage.
• MSMEs face extensive regulations and a credit gap of Rs 20-25 lakh crore. Government schemes like Pradhan Mantri Mudra Yojana aim to ease these challenges.
• Goals include reducing GHG emissions by 33-35% from 2005 levels and increasing non-fossil fuel-based electricity to 40%. Enhancing forest cover to absorb 2.5-3 billion tonnes of CO2 by 2030 is also targeted. India needs to allocate 2.5% of GDP to green finance.
• China’s manufacturing overcapacity impacts global prices and India’s trade balance. India must balance between importing from China and leveraging Chinese investments to boost domestic manufacturing.
• 56.4% of the disease burden is due to unhealthy diets. Rising obesity rates and micronutrient deficiencies highlight the need for improved dietary habits.
  

28. Growth Strategy

• Initiatives include the Aatmanirbhar packages and the Production Linked Incentive (PLI). The goal is to increase private sector investment to 35% of GDP.
• MSMEs contribute 30% of GDP and employ 11 crore people. Government support includes the Emergency Credit Line Guarantee Scheme (ECLGS) and equity infusion through the MSME Self-Reliant India Fund.
• The Make in India Mittelstand initiative has attracted €1.4 billion in investment from German companies, focusing on sectors like automotive and renewables.
• Agriculture is vital for food security and climate adaptation. Strategic shifts are needed to enhance its role in economic security.
• India should leverage global green capital and innovative financing methods. The International Financial Services Centres Authority (IFSCA) could attract international climate finance.
  

Climate Change – Dealing with Tradeoffs

29. Vision and Goals

• Per Capita Emissions: India’s per capita carbon emissions are about one-third of the global average, reflecting its lower historical emissions footprint despite economic growth.
• Net Zero Target: India aims for Net Zero carbon emissions by 2070, aligning with its vision of a ‘Viksit Bharat’ or ‘Developed India’ by 2047.
• Economic and Environmental Balance: The strategy focuses on high, inclusive, and sustainable economic growth while transitioning to a low-carbon pathway.
• National Action Plan on Climate Change (NAPCC): Includes nine missions across various sectors like solar power, water, energy efficiency, and sustainable agriculture.
• State Action Plans on Climate Change (SAPCC): 34 operational plans detailing sector-specific actions and priorities.
  

30. Progress on Climate Action

• As of April 2024, India has installed 82.64 GW of solar power, with an additional 15.03 GW added in 2023-24.
• The Perform Achieve and Trade (PAT) scheme targets significant energy savings across sectors, with an energy saving target of 0.3370 MTOE for 2023-26.
• India has achieved 40% of cumulative electrical power from non-fossil fuels by 2021 and aims to reach 50% by 2030.
• Government Programs: Includes NICRA, Swachh Bharat Mission, and various rural development schemes.
• PM-Surya Ghar Yojana: Aims for 30 GW of solar capacity with substantial CO2 reductions and job creation.
• Targets production of 5 MMT of green hydrogen by 2030 with significant financial incentives.
• Ramsar Sites expansion and community-led water governance, as seen in Navanagar, Gujarat, demonstrating improved water management and agricultural productivity.
  

31. Energy Transition Challenges

• Future Demands: Energy needs are projected to increase significantly by 2047.
• Fossil fuels make up approximately 84% of primary energy, while non-fossil sources account for 45.4% of electricity capacity as of May 2024.
• Land and Resource Constraints: Increasing renewable energy demands more land and water, and critical minerals are unevenly distributed globally.
• Around USD 250 billion per year is needed until 2047 for a Net Zero pathway.
• Financing Mechanisms: Includes sovereign green bonds, enhanced ESG disclosures, and frameworks for green deposits.
• Carbon Credit Trading Scheme (CCTS): Transitioning from the PAT scheme, with targets set for GHG emissions and mechanisms for trading carbon credits.
• India’s participation in global initiatives like the International Solar Alliance (ISA) and the Coalition for Disaster Resilient Infrastructure (CDRI) reflects its leadership in international climate efforts.
  

Social Sector – Benefits that Empower

32. Current Status of India’s Social Sector

• PM Ujjwala Yojana: Over 10.3 crore free gas connections have been provided.
• Swachh Bharat Mission: 11.7 crore toilets have been constructed.
• Jan Dhan Accounts: 52.6 crore bank accounts have been opened.
• PM-AWAS Yojana: 3.47 crore permanent houses have been built for the underprivileged.
• Jal Jeevan Mission: 11.7 crore households now have access to tap water.
• Ayushman Bharat Scheme: 6.9 crore hospital admissions have been facilitated.
• Enhanced fiscal efficiency through the Direct Benefit Transfer (DBT) and JAM trinity, with over Rs. 38 lakh crore transferred via DBT since 2013.
• National Multidimensional Poverty Index (MPI): Developed by NITI Aayog, measuring health, education, and standard of living. MPI has nearly halved from 0.117 (2015-16) to 0.066 (2019-21), with 13.5 crore Indians moving out of multidimensional poverty.
  

33. Household Consumption Expenditure Survey (HCES) 2022-23

• Increase in Monthly Per Capita Consumption Expenditure: 40% rise in rural areas and 33.5% in urban areas compared to 2011-12.
• Gini Coefficient: Decrease from 0.283 to 0.266 in rural areas and from 0.363 to 0.314 in urban areas.
• Rural-Urban Divide: Reduced from 83.9% to 71.2%.
• Economic Inequality: The consumption of the lowest 5% has increased faster than the top 5%.
• Global Statistics: 970 million individuals are affected by mental disorders, with increases in depressive and anxiety disorders due to the COVID-19 pandemic.
• Indian Context: The National Mental Health Survey (NMHS) 2015-16 reported a 10.6% prevalence of mental disorders, with higher rates in urban areas.
• One in seven individuals aged 10-19 years has a mental disorder. Investing in mental health yields high economic returns, with an estimated return on investment of 6.5 times for implementing the Mental Health Care Act 2017 in India.
• A 2021 study by the National Commission for Protection of Child Rights found that 23.8% of children use smartphones in bed and 37.2% experience reduced concentration due to smartphone use. U.S. Surgeon General Vivek Murthy has suggested warning labels on social media platforms to address mental health issues among teenagers.
  

34. Education Sector Developments

• National Curriculum Framework (NCF-SE) 2023: Emphasizes competency-based education, vocational education from grade 3, and integration of Indigenous knowledge.
• Total enrolment reached 4.33 crore in FY22, with notable growth in female enrolment.
• National Credit Framework (NCrF): Supports lifelong learning with digital solutions like APAAR and the Academic Bank of Credits (ABC).
• UGC Regulations permit earning up to 40% of credits through online courses.
• Vidyanjali Programme: Launched on September 7, 2021, to improve school infrastructure and education quality through community involvement and corporate social responsibility. The initiative has benefited over 1.44 crore students by providing subject assistance, mentoring, and modern resources.
  

35. Research and Development (R&D)

• Patent Grants: Nearly 1 lakh patents were granted in FY24, with a 31.6% increase in patent filings in 2022.
• Global Innovation Index: India’s rank improved to 40th in 2023.
• Gross Expenditure on R&D (GERD): More than doubled from Rs. 60,196.8 crore in FY11 to Rs. 127,381 crore in FY21.
• India’s R&D investment as a percentage of GDP is 0.64%, lower compared to China (2.41%) and the US (3.47%).
• Anusandhan Foundation: Launched with a proposed corpus of Rs. 1 lakh crore to enhance the R&D ecosystem.
  

Employment – Towards Quality

36. Current Employment Scenario

• India’s labour market has improved over the past six years, with the unemployment rate dropping to 3.2% in 2022-23.
• The all-India annual unemployment rate for individuals aged 15 years and above has been declining since the COVID-19 pandemic.
• The quarterly Periodic Labour Force Survey (PLFS) reports for urban areas indicate a slight decrease in the unemployment rate from 6.8% in Q1 2023 to 6.7% in Q1 2024. Both WPR and LFPR have increased, reflecting a recovery in employment post-pandemic.
• Employment Distribution by Sector: Agriculture: 45%, Manufacturing: 11.4%, Services: 28.9%, Construction: 13%
• Breakdown of Employment Status: Self-Employed: 57.3%, Unpaid Workers in Household Enterprises: 18.3%, Casual Labour: 21.8%, Regular Wage/Salaried Workers: 20.9%
• Youth Unemployment Rate: Declined from 17.8% in 2017-18 to 10% in 2022-23.
  

37. Evolving Landscape

• Nearly two-thirds of new EPFO payroll subscribers are in the 18-28 years age band.
• Female Labour Force Participation Rate (FLFPR): Increased in rural areas by 16.9% points from 2017-18 to 2022-23.
• Wage Growth: Rural areas: 6.9% CAGR (FY15-FY22), Urban areas: 6.1% CAGR (FY15-FY22)
• Nominal wage rates in agriculture grew by 7.4% for men and 7.7% for women, Non-agricultural wages grew by 6.0% for men and 7.4% for women.
• In 2020-21, around 7.7 million workers were part of the gig economy, constituting 2.6% of the non-agricultural workforce.
• Workforce Participation Rate (WPR): Men: Constant at 54.4% (2023), Women: Rising from 27.0% (2023) to 40.0% (2036), Agriculture Sector: Expected to decline from 45.8% (2023) to 25% (2047).

Agriculture – Plenty of upside left if we get it right

38. Agriculture Production and Crop Diversification

• India’s agriculture sector is a crucial part of the economy, supporting 42.3% of the population and contributing 18.2% to the GDP. Over the past five years, the sector has experienced an average annual growth rate of 4.18%.
• Foodgrain Production: 2022-23: Reached a record 329.7 million tonnes, 2023-24: Slightly decreased to 328.8 million tonnes due to adverse monsoon conditions.
• Oilseeds Production: Increased to 41.4 million tonnes in 2022-23 with a slight increase in 2023-24.
• Crop Diversification Programme (CDP): Promotes alternative crops like pulses and legumes under Rashtriya Krishi Vikas Yojana (RKVY).
• National Food Security Mission (NFSM): Enhances production and productivity of foodgrains and commercial crops through technology demonstration and capacity building.
• Minimum Support Prices (MSP): Increased MSPs for oilseeds and pulses to encourage diversification.
• Imported Oil Share: Reduced from 63.2% in 2015-16 to 57.3% in 2022-23.
  

39. Investment and Credit

• Gross Capital Formation (GCF): Increased by 19.04% in 2022-23, GCF as a percentage of GVA rose from 17.7% in 2021-22 to 19.9% in 2022-23.
• Average annual growth rate of 9.70% from 2016-17 to 2022-23.
• Provides capital subsidy (25% for plains and 33.33% for North-East and hilly regions), 48,357 projects sanctioned with Rs 4570 Crore released as subsidy.
• Kisan Credit Card (KCC): 7.5 crore KCCs issued with a limit of Rs 9.4 lakh crores as of January 31, 2024, including fisheries and animal husbandry since 2018-19.
• Pradhan Mantri Fasal Bima Yojana (PMFBY): The insured area reached 610 lakh hectares in 2023-24, facing challenges like high premiums, delays in claim settlement, and lack of awareness.
• PM-KISAN Scheme: Provides Rs 6000 per year to land-holding farmers, with over Rs 3.24 lakh Crore released to more than 11 crore farmers.
• PM-Kisan Maandhan Yojna (PMKMY): Offers a monthly pension of Rs 3,000 to farmers aged 60 and above.
  

40. Animal Husbandry, Dairying, and Fisheries

• The contribution of livestock to total GVA in agriculture and allied sectors increased from 24.32% in 2014-15 to 30.38% in 2022-23.
• The fisheries sector contributes 6.72% to agricultural GVA, with a CAGR of 8.9% over the same period, supporting about 30 million people, including marginalized communities.
• Animal Husbandry Infrastructure Development Fund (AHIDF): Supports investments in dairy and meat processing, feed plants, and breed improvement, with a 3% interest subsidy and a 25% credit guarantee.
• The Indian Council on Agricultural Research (ICAR) has been pivotal in areas like crop and seed production, bio-fortified varieties, millets, animal health, mechanisation, and post-harvest management.
  

41. Food Processing and Security

• In 2022-23, ICAR released 347 varieties/hybrids of 44 crops, 99 horticultural crops, and 27 bio-fortified varieties.
• The food processing industry has been growing at an average annual rate of 5.35% over the past eight years.
• In 2022-23, agri-food exports, including processed foods, were valued at USD 46.44 billion, making up about 11.7% of India’s total exports.
• The share of processed food exports increased from 14.9% in 2017-18 to 23.4% in 2022-23.
• Operation Green: Initially focused on tomato, onion, and potato (TOP), now covers 22 perishable crops (TOTAL), including short-term price stabilization measures and long-term integrated value chain development projects with subsidies for transportation, storage, and food processing projects.
• As of May 2024, 263.33 LMT of wheat and 489.20 LMT of rice have been procured, benefiting over 1 crore farmers. The central pool’s stock of wheat and rice exceeds 600 LMT.
• The One Nation One Ration Card (ONORC) system allows migrant beneficiaries to access rations nationwide.
  

Industry – Small and Medium Matters

42. Performance of the Manufacturing Industry

• Manufacturing and construction sectors achieved near double-digit growth, while mining & quarrying, and electricity & water supply also showed strong positive growth.
• The HSBC India Purchasing Managers’ Index (PMI) for manufacturing remained consistently above 50, indicating sustained expansion and stability.
• The manufacturing sector contributed 14.3% to the total gross value added at current prices in FY23.
• Nearly 47.5% of all manufacturing output is used for further production in other sectors, and it supplies almost 50% of inputs across all sectors (agriculture, industry, and services).
• MSMEs contributed 35.4% to the manufacturing output in FY22 and 45.7% to exports in 2023-24.
• The Udyam Registration Portal has registered 4.69 crore MSMEs as of July 2024.
  

Services – Fuelling Growth Opportunities

43. Performance of the Service Industry

• India’s services sector has experienced strong growth, exceeding 6% annual real growth over the past decade, with an estimated 7.6% growth in FY24. Services exports account for 4.4% of the global market, and in FY24, 71% of the 1,85,312 new companies registered were in the services sector.
• AI poses a challenge to sustainability and job creation in business services. To address this, focusing on human capital development is crucial to leverage the benefits of large, well-functioning cities.
• The Indian government has supported the services sector through initiatives such as Digital India, export promotion schemes, infrastructure development, skill enhancement, and focused efforts on healthcare and tourism.
• The services sector’s Gross Value Added (GVA) grew by 7.6% in FY24. Despite challenges in the trade, hotel, and transport sectors, positive indicators include a Purchasing Managers’ Index (PMI) reaching a 14-year high of 61.2 in March 2024 and strong bank credit growth.
• India’s services exports grew by 4.8% in FY24, with significant contributions from computer & business services (73% share) and travel services. However, transportation services declined by 19.1% due to decreased global freight rates.
• The services sector saw a 22.9% YoY increase in bank credit in FY24, reaching Rs 45.9 lakh crore. India ranks 15th in FDI inflows, with a 58.3% increase in External Commercial Borrowings (ECBs) for the sector.
  

44. Major Services: Sector-wise Performance

• India has enhanced its transport networks, with significant improvements in road tolling efficiency and high-speed corridors. Indian Railways saw a 5.2% increase in passenger traffic and a 5.3% rise in freight loadings in FY24.
• Airways and Tourism: India is the third-largest domestic aviation market, with a 15% increase in total air passengers and a 7% rise in air cargo. Tourism saw a 43.5% increase in foreign tourist arrivals in 2023, with tourism generating Rs 2.3 lakh crore in foreign exchange earnings.
• Real Estate: Real estate contributes over 7% to India’s GVA, with over 1.2 crore houses sanctioned under PMAY-U. Challenges include stalled projects worth Rs 4.1 lakh crore, but RERA has improved transparency and accountability.
• Technology and Startups: IT and tech start-ups have surged, with over 31,000 start-ups in 2023. The growth of Global Capability Centres (GCCs) has been significant, with employment exceeding 16.6 lakh and revenues increasing to USD 46 billion in FY23.
  

Infrastructure – Lifting Potential Growth

45. Developments across infrastructure sectors

• Studies highlight gaps in infrastructure investment, according to the Asian Development Bank, World Bank, and CRISIL. From FY21 to FY24, the Union Government’s capital expenditure increased 2.2 times, and the state government’s capital expenditure grew 2.1 times.
• Gross Budgetary Support (GBS): GBS for Railways and the National Highway Authority of India (NHAI) increased from 36.4% in FY21 to 42.9% in FY24. Expenditure on these sectors rose 2.6 times, reflecting a focus on connectivity infrastructure.
• National Monetisation Pipeline (NMP): Launched in August 2021, the NMP aims to raise Rs 6 lakh crore through asset monetisation from FY22 to FY25. In the first two years, Rs 2.3 lakh crore in transactions were completed, with Rs 1.51 lakh crore in FY24, a 55% increase from FY22.
• Physical Connectivity: Capital investment in road transport increased from 0.4% to 1.0% of GDP, with record private investment and asset monetisation exceeding Rs 1 lakh crore. The length of national highways grew 1.6 times from 2014 to 2024, with significant improvements in construction pace and logistics efficiency.
• Railways: Indian Railways, with a network of over 68,584 route kilometres, saw a 77% increase in capital expenditure over five years, reaching Rs 2.62 lakh crore in FY24. Key developments include the introduction of 51 pairs of Vande Bharat trains and enhanced infrastructure.
• Water Transport: Major port capacity nearly doubled since 2014, with improved rankings in the World Bank Logistics Performance Index. The Sagarmala National Programme has completed 262 projects worth Rs 1.4 lakh crore, with further development planned.
• Civil Aviation: Over Rs 72,000 crore has been invested in airport development from FY20 to FY24, with 21 greenfield airports approved and 12 operationalized. The UDAN scheme has awarded 1,390 routes, with 579 operationalized, enhancing regional connectivity.
• Drones and Aircraft Leasing: India’s drone sector has expanded with new regulations, including airspace maps and a Production Linked Incentive (PLI) scheme. The International Financial Services Centre (IFSC) at GIFT City promotes aircraft leasing, with over 20 aircraft and 49 engines leased.
• Maintenance, Repair, and Overhaul (MRO): India’s MRO sector has grown from 114 to 147 facilities since 2016. The National Civil Aviation Policy (NCAP-2016) supports alignment with global standards, with expanded capacities and increased industry involvement.
  

46. Energy Infrastructure

• India’s unified transmission grid can transfer up to 118,740 MW with significant infrastructure expansion, including 485,544 circuit kilometres of transmission lines and 1,251,080 MVA transformation capacity. Peak electricity demand rose to 243 GW.
• India aims for 50% of its power capacity from non-fossil sources by 2030, with a current installed capacity of 190.57 GW, representing 43.12% of total generation. Significant investments are being made in renewable energy, with Rs 8.5 lakh crore invested from 2014-2023 and a projected Rs 30.5 lakh crore for 2024-2030.
• The Saubhagya Scheme has electrified 2.86 crore households. New regulatory measures, such as the Electricity (Late Payment Surcharge and Related Matters) Rules, 2022, provide financial relief to various stakeholders in the electricity sector.
  
• Key challenges include mobilizing finance, land acquisition issues, and integrating new technologies into the grid. There are efforts to address these through various programs and initiatives.
• India’s space sector has made significant strides with 55 active space assets and successful missions like Chandrayaan-3. Technological integration in infrastructure, such as the PM GatiShakti and Digital India initiatives, aims to enhance efficiency and governance.