Economic Survey projects 6.5% growth in next financial year

India's agriculture sector has been witnessing an average annual growth rate of 4.6% over the last 6 years

Published: Wednesday 01 February 2023

In the Economic Survey tabled today by Nirmala Sitaraman, it has been revealed that India’s economy will grow 6.5% in 2023-24, compared to 7% in the current fiscal and 8.7% in 2021-22. While India will remain the fastest-growing economy in the world, the account deficit may continue to widen as commodity prices rise due to the Ukrainian invasion.

In FY23, retail inflation was mainly driven by higher food inflation, while core inflation stayed at a moderate level. Food inflation ranged between 4.2% and 8.6% during April and December 2022, while the core inflation rate stayed at around 6% except in April 2022.

The survey has pointed to an improvement in employment conditions in India due to stronger consumption but adds that a further pick-up in private investment is essential for job creation. The Emergency Credit Linked Guarantee Scheme shielded India’s micro, small and medium enterprises from financial distress, with their quick recovery supported by “remarkably high” credit growth, reflected in the rise of goods and services tax paid by the units.

The survey said India's agriculture sector has been witnessing an average annual growth rate of 4.6% over the last six years. But if we see on a year-on-year basis, the growth rate has actually fallen from 3.3% in 2020-21 to 3%in 2021-22.

In three of these six years, the growth was reported to be below 4%. And in the rest of the three years, the high growth rate was mostly due to a low base effect (relative comparison) from the previous year and a good monsoon. For example, in 2016-17, the growth rate jumped to 6.8% from 0.6% in 2015-16, a year that saw a second successive drought. After 2016-17, the growth fell twice consecutively to 6.6% in 2017-18 and then to 2.1% in 2018-19, which was again a drought year, before it increased again to 5.5% in 2019-20.

In 2020-21 and 2021-22, agriculture showed a growth rate of 3.3% and 3%, respectively. But the good news is that the agriculture sector has shown robust growth, despite the shock of the pandemic and other factors like the ongoing Ukraine war. The other notable features of 2021-22 were that agricultural exports reached an all-time high of USD 50.2 billion.

Private equity (PE) investments in agritech skyrocketed over the past four years with an increase of more than 50% p.a., aggregating to 6600 crore annually. Total Kharif foodgrain production in the country is estimated at 149.9 million tonnes which is higher than the average foodgrain production of the previous five years (2016-17 to 2020-21). The production of pulses has also been notably higher than the average of 23.8 million tonnes in the last five years, points the Survey.

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