Domestic resources will push growth: Eco Survey

India has to generate domestic resources mostly for its own investment and growth priorities in the medium term as global headwinds could come in the way of export led growth and national security considerations could make foreign direct investment flows volatile year-to-year, Economic Survey 2023-24, tabled in the Parliament on July 22, says.

It emphasised the need to create productive employment, address the skill gap challenge, tap the full potential of the agricultural sector, and reduce the compliance burden and financing bottlenecks of MSMEs and managing the country’s green transition as some of the key areas of policy focus to ensure that India’s growth continues unimpeded.

The Survey wanted the Central government to focus on bottom-up reforms and strengthen governance measures to ensure the structural reforms of the last decade yield strong, sustainable, balanced, and inclusive growth for the country.

The medium-term growth outlook of the Survey recognises the significant growth-limiting impacts of increasing geo-economic fragmentation and the consequent resource nationalism on countries. Ensuring the security of supply through building buffers and slack has replaced the ability to operate at the frontiers of efficiency. ‘Just in case’ has replaced ‘Just in time’, it says.

The Survey calls for a balance between inward-looking policies versus outward-looking policies as global trust deficit is driving countries to pursue policies focused on enabling them to become self-reliant and protect them from external shocks, especially in sectors of strategic importance.

It highlights the importance of integrating climate change strategies into national development policy and planning by stating that such measures are not merely an environmental imperative as it impacts socio-economic stability, public health, banking, and public finances. “Climate change imposes costs and requires policymakers to balance adaptation to climate change and emission mitigation. It also necessitates a trade-off between energy security and economic development on the one hand and energy transition on the other”, the Survey points out.

The Survey stated that the big-ticket reforms pursued by the government in the last decade focused on restoring the health of the economy, elevating the potential growth by relieving supply-side constraints and strengthening its capabilities. “The next stage is to ensure that these reforms are implemented correctly, and this will require intense engagement with state governments, the private sector, and civil society” it said.