Good afternoon, everybody. Can you hear me? Well, so we just spent a one month of 2023. So you still have 11 more months to go. So I wish you all are very happy and healthy. Rest of 2023 a morning we had the International Monetary Fund release its World Economic Outlook update and they maintained India's GDP forecasts are estimate for current financial year at 6.8 next financial year at 6.1 and importantly for 20 for 25. They kept India's real GDP growth forecast at 6.8% so they show an acceleration of India's GDP after a slight dip, which the estimate for the next financial year. In fact, the presentation today is going to focus on this aspect. That India's GDP growth is poised to do better in the reminder of this decade and died is the focus of this economic survey itself. Okay, moving the it's frozen basically let you admire the covers slight for a bit longer than it needed to be. So what are the key messages? As I mentioned in the initial remarks, why is the economic growth going to perform better this decade reminder of the decade and what the reforms of the last eight years have done to make sure that happens and beyond 2030 what will be India's medium term growth magnets? And finally, as we look ahead to 2047 what else on what more we could do to realise India's full potential in number of Carl. And if you look at the is it moving properly on the screens? Okay, thank you. The survey looks ahead to the medium term because the pandemic response and recovery faces over. In fact, Chapter one, the title, it still says, State of the economy recovery complete, and therefore, after a long time, we have banking non banking on corporate sectors with healthy balance sheets, and they are ready to borrow and lend and invest. So we don't have to speak about pandemic recovery anymore. We have to look ahead to the next face of India's economic growth process. So why is economic growth going to be better this decade? In order to look ahead to the future, we always have to first look back at the rear view mirror. Let's rewind the tape a little bit. What happened in the first decade of the millennium was lot of optimism about BRICs economies by 2000, to balance sheets were lean and mean, cos we're willing to borrow invest banks were willing to lend so leverage ratio in the corporate sector and in the overall non financial private sector rose very sharply in the first decade. And it got to the point where the credit to GDP ratio in actual terms was much higher than the trained in the first decade of the millennium. That is what you see. The middle hump is basically actual candid GDP ratio was well about rent, and it persisted for a long time. And because it was quite well about trend and also lasted long and naturally, it led to appeared of excess borrowing and excess lending, and the second decade was a pay back tie. So India went through a classic financial cycle, credit boom and credit bust, and this is not something new for the world. Every time you go through a financial boom and bust, it does leave its impact on economic growth, and that is what happened to us, especially in the second half of last decade, and you can see this year, look at this chart. From 1982 2000, the bank predict to GDP ratio was roughly around between 25 30%. And then he jumped from 25 to 55 60%. And spend the second decade of this millennium hovering in that range. This is the decision process. So there was massive expansion. Remember, this is a ratio. GDP went up, but the bank card it expanded even more than GDP growth and naturally, such a big spike within a space of 10 years. What we could not achieve in the previous 20 years naturally had to lead to some kind of a credit indigestion problem which had to be adjusted in the second decade. And now that process of indigestion that has been sorted out and the balance sheets are repaired now and banks non performing ratio, whether it is scheduled commission banks in general or public sector banks, they are lower now and you can see that also, banks have done so partly to recapitalisation, rising fresh equity and also to hire provisioning so bank balance sheets are repaired. And that is why you see that in the credit growth picking up. You look at cadet growth across sectors agriculture, industry services and personal sector housing loans on car loans, etcetera. The growth rate is now sustainably about double digits. And this is a sign that this is what we were missing towards the second half of last decade because of Beilun shit issues so quickly. Summarised. Exactly what happened was 2005 to 12 credit boom that led to Beilun Sheet stressed later, face of a higher non performing assets due to pass for barons and then, by the time week will repair, just want to leave one sadistic with you. The non financial private sector leverage ratio debt to GDP went up by 40% points in the first decade from 2000 to 2010, and from 2010 to 2018 it came down by 30% points and by 2018, that was kind of Danny had bottomed out. But before we could start expecting corporate's to borrow and borrow and banks to lend, came the collapse of island efforts and some housing finance companies. And by the time we got a grip on that problem came the pandemic that lasted two years and then 2022. We had the commodity price shock and synchronised monetary policy tightening after a very long time in the developed world. So it's a case of balance sheet stress, followed by successive one off X orjan ISS or external shocks that have basically prevented the impact of economic reforms pursued by the government on economic growth. We would have seen the results already. But for these successive one of shocks on the back of a fairly large credit boom that turned into a bust, the reforms of the last eight years which I just not mentioned to you basically spans multiple dimensions. It is not purely about economic reforms for higher growth. It is also about inclusive growth, financial inclusion, banking, clean up, the creation of the digital public infrastructure with charting. I'm gonna talk about a bit later as well and contribution to help the India ease of living and continuing on to the next life physical infrastructure creation, facilitating investments, transparent taxes and tax administration, ease of doing business and farmers welfare. So broadly speaking, about 10 areas we have covered here These reforms were happening even as the banking cleanup was going on, and this episode between 2014 and 2022 has a lot of parallel to what happened between 98 2002 as well. Then as now, the banking system was coming out of an NPA crisis and there were sanctions on India after the nuclear device was tested in Pokhara in 98 and de leveraging was getting on in the banking on corporate sector, there were two successive droughts. The technology boom ended. Internet boom ended in 1999 2000 and the U. S recession for load 9 11 happened. But amidst all these shocks, interest rates were deregulated, privatisation was pursued vigorously and the first foundations of the insolvency and bankruptcy regime was laid with the asset recovery mechanisms. The F R B M act was introduced and today's digital, which we talk about the foundation for that was laid with telecom reforms in that era. But obviously there is a large defect for these reforms to show through in the data because underlying conditions had to turn favourable. We talk of public digital infrastructure. I think it's not enough if I just look at the screen right, I was reminded off what economists John Robinson said in the 19 sixties about India. Whatever you say about India, the opposite is equally to that's what she said. And so, anyway, the parallels to the 1998 2002 period to this period is that even as a crisis was being addressed, economic reforms were pursued, and when underlying conditions turn favourable, the lagged effect of reforms showed through. That's exactly what is reflected, for example, in the IMF forecast, and that is what we expect the medium term as well. The lagged effect of the reforms will show through because in the last several years the full effect of the reforms could not be felt in the data because of successive one of shocks. And we talk about the medium term growth magnets for the economy. The entire philosophy of economic management revolves around making it easier for people to pursue their economic activities in individual lives or in for businesses, and ultimately leading to efficient resource allocation and more important, more importantly, enhancing the potential of the economy to grow at a higher rate. And that includes, obviously, it is indicative lists and not a complete list. Agricultural growth, eh? Trust based governance, model public goods for inclusive growth both infrastructure, digital and physical and many other things come into that involving the private sector and, more importantly, managing the energy transition, reducing our dependence on also addressing climate change issues as well. It is not about the government doing things for the people, but also involving people in the process. Everybody is a participant in the development process. That is why the SABC, Assad, SABC, Abacha's. So it is not just government being an enabler, but government being a partner to economic growth, firstly deal, but one of the pillars at the cultural growth this times too many of the initiatives which you see around the slide. What you see is that the share of private sector investment or capital formation and agriculture has reached a level which is higher in the last 12 years. Since 2013 14 9.3% of overall gross capital for nation is contributed by the private sector in agricultural sector, and it has been facilitated by the creation of the Agricultural Infrastructure Fund. National agriculture market, which has linked farmers with direct fires. FT was was taken to account organic forming options as well and more importantly, for the farmer income support as well as risk management through crop insurance. All of these things have paved the way for greater participation of the private sector in capital formation in the agricultural sector. This sector is no longer about being a primary sector. It is also it also has tremendous export potential, as we have been observing lately in our merchandise goods data for the last several years. What about the trust based governance model? Second pillar of the development and growth strategy? The insolvency Bankruptcy Court restores trust between the bar over and the land of the bar over has an exit option and soreness the lender. And that is the key to this. And and the important thing is more than seven lock cases even before they come into the process actually got in the sore before they enter the process, and that is the most important thing which doesn't get captured in the data. The usefulness of IBC is in ensuring bar over payment culture even before the Internet, to a resolution process. Ease of doing business. One illustrative example is the real estate development regulation at which has ensured trust between developers and buyers, making them more transparent and cheque based transactions rather than relying on Blackman. Effective governance is about making sure that the public don't feel threatened by legislations and rules and regulations, and every time they commit a mistake innocuously, it need not be deemed a criminal offence. So decriminalisation of many provisions of companies Act and several other economic offences restores trust between the governing and the governor as well. And in terms of the trust with respect to public accounts and public money, there are many dimensions. It is not just about the quality of expenditure that has gone up in recent years. Of course capital expenditure government budget has gone up from 12% to 19% in the last five years and revenue expenditure share has gone down. However, he does not just about the quality of expenditure improvement, the way the government has become more transparent with respect to the budget deficit numbers. The Prudential A sanctions being made for budget deficit calculations, etcetera, expenditure management, making sure that public procurement has been is transparent and enables everyone to compete and have a fast shot at becoming a supply AC the government. All these things are part of fiscal and public expenditure management now going on to the more macro dimension of it. If you look at the last 16 years, that is much talk about today of India's high deficit debt to GDP ratio. You can see that among the countries that saw very little increase in the public debt to GDP ratio, India is one of them. India, Germany and Indonesia. In the last 69 inside embassy is the survey in Chapter three, we have Donna exercised a counterfactual exercise in 2019 2020 21 21 22. Instead of the actual nominal GDP growth raise which we experienced, you've only the economy had continued to grow at the rate of 10% nominal tops. The fiscal deficit and debt ratios would be a lot lower than bad day up today. The point is because of India's growth dynamics and the cost of capital being lower than the nominal GDP growth. There is enough score for the fiscal parameters to prove in the coming years. Once we achieve sustained and study growth as we expect, and that you will see in Chapter three on the fiscal side, creating public goods for inclusive wrote. That is the third pillar and it is not only about physical infrastructure, although it is an important part of it in terms of the amount of kilometres of highways completed, electricity installed capacity. This is our be showing that in 2011, if you put them as index value of 100 where they stand today in 2020. Accepting the case of railway track because much of it was laid already and therefore even a 14% improvement in nine years in terms of 8000 kilometres added is a very big number, but in every other case national highways or cargo handling capacity. That growth rate is 80% or doubled in the last 10 years or so. And on the softer policy side, apart from physical milestones, you have public private partnerships, the National Infrastructure Pipeline, the National Monetisation five improve economic efficiency, as I mentioned earlier, and the PM catty Shakti, which is still in its early years. The underlying purpose of it is to make sure that public investment projects get completed without cost and time overruns, and that is synergy between various departments such a way. The sequencing happens naturally, ideologically, and therefore delays are many mice. A funeral battle Shakti is about reducing information, estimate trees and making sure that government projects are executed on time and within cost estimates. The national logistics policy is an important cog in the wheel of an export. Competitiveness is hampered by the fact that logistics cost constitute 14 to 15%. The goal is to half it and bring it down to international levels. And this national logistics policy will play a very important part in that the public digital infrastructure, about which now there is lot of justified optimism on India, not only in the country but outside as well. The initial face of reforms started with the identity and then the Jan Jan Johanna financial inclusion. Odd are and Opie. And then it moved on to unify payment interface, which allows even payment as small as ₹2 through a barcode common service centres. For it enabled services P M d Sha Digital, a digi locker, Bharat Neck and Services at a click. Now they have set the stage for New age reforms, which is now going to make sure that he does to neglected segments of society. Low income households and micro businesses get a fair shot at accessing national and international markets and getting funded by financial institutions. These digital developments allow all of them to leave that digital footprint, which creates a credit history for them so that they are able to access finance as well as access markets. And that is the potential of digital infrastructure, even though it's almost 56 years old since the beginning for well, Study of how much digital infrastructure contributes to growth is yet to be undertaken. But it is my belief that India's improved balance sheets and the distance infrastructure together will add anywhere between 60 to 100 basis points to India's potential GDP growth, which is what we were missing in the course of the second this ace and alleviation and enhancement in India's potential GDP growth, because the baseline is assumed to be around 6% by many international organisations. But what is important is we have a financial cycle that was disrupted in the second decade that is coming back and we have the new development public digital infrastructure that is adding another 32 50 basis points. So together, these two developments add award 50 to 100 basis points to the trend growth, which many organiz stations picked for India at 6%. And that is why my optimism is that in the coming decade rest of the decade, the potential GDP growth without taking into account export potential. Because global economy is still rife with uncertain nitty, the growth rate could be around 600 half to 7% rather than between six and 6.5. Ultimately, economic growth is only a means to an end. And what is that? The end is prosperous and dignified, living for citizens and therefore basically the chapter of the social sector. In a departure from the previous economic service, we have actually brought it to the front of the economic survey after the initial state of the economy, medium term outlook, fiscal and monetary affairs. Inflation. The sixth chapter in the survey is on social sector, and perhaps it is of longest under biggest chapter in the entire economic survey this year, and there is a reason for it both in terms of his placement and its size, because the interventions made by the government have been substantial and it is to make sure that no one is left behind. This is about inclusive, wrote and, as you can see here and the survey, not only the full document, but the highlights also captured the elements of this with outcomes as well, ranging from electricity, healthcare, food security, affordable housing, drinking water and sanitation all the way to cooking fuel. All weather roads and skill development outlays have become outcomes, and they are covered in detail in the social chapter. More specifically, in terms of outcomes within sees your general government spending both union and state governments put together education spending has gone up from 5.3 lakh, 7.6 lakh crores and health almost more than doubled in the last three years. And other than health and education, we have gone up from 4.86 lakh coast of 8.3 LA course approximated the outcomes are seen on the right side. Primary school dropout rate has come down from around 4.7% down to 1.5. The pupil to teacher ratio has improved from 24 to 26 they're gonna be 14,500 PM Shri schools to be established in the next four for years. And while we are seeing the people to teacher ratio, improvement happens. It is a matter of time before they also shop with respect to the cognitive and non government is still proficiency, ease of our students in the primary and middle school, health and education or two important pillars of any people any family's life. So the gamut of health initiative starting from the national health policy on your bottom Left continuing all the way in 2022 up to Pradhan Montri TB Book Bharat Abby on to NTB by 2025 National Telly Mental Health Programme Of course, it will be a travesty if I leave out the successful Corbett vaccination programme. You only have to look at several other countries to understand how much how important a role this has played in ensuring a quick turnaround of the economy and restoration of normalcy in our daily activities. 2.2 billion doses and self counting. And that is the success of the not only the vaccination planning and execution, but also its role in economic recovery process. Again, it is not enough just to speak about the policies but also important to mention the outcomes Maternal mortality ratio has come down in the last seven years, 1 67 to 97 child mortality ratio has dropped from 45. 30 true and under five mortality issue has dropped from 39 28 because of these and because of damage health insurance programmes. A family that you spend nearly two thirds of health expedition on its wall is now spending only 48% and stunting under in under five Children is down by about 3% points and institutional delivery births have gone up from 79% to 89% in the country, which is a good sign, which means it naturally have an important role in reducing both in front and under five mortality as well as more and more institutional birds happen. What about the private sector participation while the tax cuts of 2019 played a big role in ensuring that the private sector was able to repair its balance sheets quickly and consider investing award which I will show the evidence later and this also has paved the way for production linked incentive scheme to be implemented. This scheme is a very important strategy decision. If you look at the history of East Asia, there was active industrial policies have played a big road in them, joining the first gold Winton space of a symbol generation, an industrial policy that that's not so much as reward winners but punished the laggards is what East Asia dead. And today India sees an opening in the global supply chain. Countries are willing to diversify not only because of pandemic, but also because of political reasons. Just in time, inventory management has given way to just in case inventory management. And it is about frank shoring, etcetera and therefore India season opportunity. There was a top of India having prematurely be industrialised. I would say that India simply had not industrialised enough. There was never a premature deindustrialisation. Infrastructure was missing and manufacturing at scale was missing. The these two missing gaps have been now blood, with the creation of physical and digital infrastructure and the P L I policy, which basically ensures that India is able to create global scale for local manufacturing for export markets. And the important thing to remember is Pioli is a portfolio approach and there is no payment in anticipation of performance. Payment of incentives happens after the units perform and deliver excess production over and about their benchmark. If they don't produce, they don't get the incentive. So it is the payment against performance are not payment in anticipation of performance. National Monetisation Pipeline is going to unlock the productivity of public assets through leasing or outright sale and this investment you saw in the privatisation of Air India. And it is clear that the government also articulated its policy towards public sector enterprises, hoping to retain its presence one Lian core sectors and exiting non core sectors. Foreign investment licencing norms have been liberalised. There is automatic route for more sectors, now 100% automatic d and there is a single window facilitation portal. The outcome of it is seen in the actual gross FDI inflows. The blue light shows you as a percentage of GDP as well. It has gone up from 2.2% to 2.6% of GDP and ultimately the various investments mother in his domestic or foreign have to translate into employed urban unemployment ratio has come down during the pandemic peak of around 20% down to 7% and the worker population ratio has picked up from a low of around 25% back to around 45%. Fo payroll data which tracks new workers joining the scheme with salaries of 15,000 or below in 22 23 their levels, are running well about the previous three years and in terms of the facilitation of employment, the issue, um portal provides a bridge between employers and informal workers, and the National Career Service has registered 2.8 crore job seekers and 6.8 lakh employers as well. So what is going to happen is that as the private sector investment begins to kick in and as the construction sector comes back to life with Herbert with rural migrants getting back to the urban employment opportunities, the employment scenario will pick up asset did in the first decade as well. In the first decade, the capital expenditure resulted in employment generation, and that is a face that India is looking ahead to in the coming years as well Micro and small businesses we, although that India has a preponderance of micro businesses, but the recent changes in changing the three short and also adding a new criteria tone over apart from investment and more importantly, the provision of emergency connect line guarantee steam during the pandemic have enabled that this sector remains in good health and the evidence of it is what we see. GST, paid by micro, small and medium enterprises didn't really flag or Slaton in the pandemic ear. They kept up. If anything, they registered gradual increases of 18 19 all the way to 21 22 as well. Energy transition This is both a matter of security, energy, security as well as ensuring that India deals with climate change. India is well ahead of its target for renewable energy mixed in the overall energy mixed balance, and we have a admission's now addressing climate concerns. We updated our nationally defined contributions in pop 27 and there is a national green hydrogen mission launched and the sovereign green one. The first tranche of $1 billion was just option. We got a better yield. They were able to sell the green bond at the six basis point lower than the conventional sovereign borrowing cost, and there will be one more coming in the current financial year. All these issues are covered our part from the global dynamics of climate change, etc. In the chapter on climate and environment. Of course, for most of you, while the medium term picture is important for some of you, obviously what is interesting and what is exciting from the point of view of near term attention is what is the growth rate that the survey projects for the the next financial year. So we are now after having discussed the medium term prospects which are now looking good because cleaned up balance sheets and reforms are going to have a lad pay back where we are today. Is that the numbers which we have up to the end of second quarter in September, July to September? The momentum is continuing in the economy. If you look at the industrial production, consumer durables, infrastructure and construction goods and manufacturing, they are running at a raid better than they were in the previous two years, and the middle portion is very important. 10 out of 10 sectors. The private listed companies space all these sectors investments undertaken by companies in the first half of 22 23 is higher than what it was in the first half of 21 22. On the right side, what you see is a proxy for contact based services, leisure, tourism, hospitality, domestic and foreign travel. All of them we are trying to proxy with this one number showing that by and large we are passenger and cargo traffic are now running at more than 90% of the pre pandemic levels. And as I mentioned earlier, credit growth is picking up across different sectors. M S M's, large industry services and non food credit. All of them are growing at more than double digit rates and even N b F. C s. As you can see on the right side there, cadet dispersal is also rising, and in general, credit to M. S. Amis is now on an average has grown other on 30% since January 2022 not only the banking system, but also the non banking financial corporations. They're non performing assets or lower than they were 15 months ago for 18 months ago. Therefore, the survey projects the economic growth rate to be 6.5% for the next financial year and the range we have projected for the outcomes is between six and 6.8%. Baseline is 6.5. The range is 6 to 6.8. Some of you might think the Rangers esta metric in nature and it is deliberate because we do understand that the global political and economic environment reminds still rife with uncertain nitty. We have many known unknowns as well as unknown unknowns, and we also do not know how the speed with which global economy recovers will lead to the kind of inflation pressures that we saw last year. China re opened fire Lee rapidly and as of how the United States economy looks set to avoid a full fledged formal recession and therefore this January, already we have seen crude oil prices and industrial metal prices higher than they were at the end of December. From the Indian standpoint, moderate to somewhat significant global economic slowdown will be on balance, a better outcome because it would lead to lower commodity prices and and association of interest rate tightening in the developed world, weaker dollar, etc. Therefore, in order to make sure that we fully accommodate the downside risks. The ban has been kept at 6 to 6.8 and the baseline number at 6.5%. This number is very much in line with what international organisations of predicted, including what the IMF said this morning. So therefore, ladies and gentlemen, we have basically come to the end of the visitation and in this last side as a mention at the very beginning, what more can be done to ensure that the potential GDP growth does not stop at 6.5 to 7% but goes beyond that? Even if global growth and export prospects remained somewhat moderate, India has the potential to enhance its GDP growth by attending to many of the domestic challenges in itself, including starting with administrative reforms and enforcement of contracts leading to what I always say. Divesting from Life Insurance Corporation is one thing, but divesting from licence inspection and compliance that is more important. So that has to happen at the level of union government, state governments on local governments and finally, our aspiration to become a global manufacturing powerhouse will not be served unless we are able to ensure affordable, reliable and economically viable power supply throughout the country. And we have to make sure that we reduce the dependence on fossil fuels and ensured availability of rare earths and critical minerals to make the switch to renewable energy. And no country that is developed today has managed to reach this far without having a viable metal start the small medium enterprise sector. So we have to continue to pursue what we have been doing in the last several years, ensuring that the M S M e sector becomes more and more formalised. The Skilling and education and be synched under the new education policy has to be pursued because 21st century challenges are going to be different from the previous century. Old S K elder care, mental health, living with the green economy. All these things are not something that our education system was prepared for earlier. Therefore, that has to be addressed as well, and we have to make sure that women are able to contribute as much to economic productivity and activity as they are capable of. And today's Republic Day this this year's presentation focus very much on Ari Shakti as well, and even in the economic space. We have to make sure that whatever is feasible legislatively and in terms of law and order, physical security, work from home and child care, or whatever governments need to do, they have to do to be able to let our women make the choice for themselves between working and addressing their family priorities as well. And they're issued in be in a position to having to choose between the two. They should be able to perform both those activities if they decided to do so, and that is what will enhance economic growth as well. So overall, if we are able to address these pending issues as well, our future up to the Centenary of India's independence and beyond will be brighter than what it has ever been. So this year's economic survey comes to you in three volumes. The main document, the Statistical Appendix and more importantly, in economic survey highlights giving some of the statistical information. And many of the charts on the tables, which are there will be uploaded as Axl files as well for you to download and look at the data yourself and make use of them. So I hope this presentation has given you a glimpse of what the survey contains. Hand has bettered your appetite to dive deeper into the parent documents. Thank you for your patient listening. 45. Many congratulations on the presentation. Just one. Your predecessor and the last presentation had said very categorically about oil prices and affected in the last time round the bend with the economic survey when Mr Sanyal had presented had talked about the oil prices. And what is the projection in terms of growth today of giving a 6.826 where you see the oil prices and how much will that be affected in the overall situation? No, it is difficult for us to give a prediction for the oil price. RBI takes a number that is below $100 per barrel, and we can live with that number and be able to achieve the growth rates that we have projected in the survey. So therefore, at this point, it will be difficult for me to come up with the precise number because the uncertainties with respect to the isle market or tremendous we can only talk about as long as they stay at a number that is less than $100 per barrel. I think the real GDP growth projections will remain undisturbed. The inflation projections that the Bank of India has made is that it will come to lower than the 5% range in the course of the next financial year. But there again, I would submit inside my advice er cycle. Sarka has returned an article which will probably appear tomorrow. There again, I think the baseline, we expect if the global economy slows down as IMF and many people project, then commodity prices should retreat because on the fund the back of the monetary tightening that has happened in 2022. In that case, inside, if in voters, many of the analyst in in the Indian financial community are expecting a much lower wholesale price index, inflation, et cetera, in the course of next financial year. So the baseline assumption is that inflation should not be as big a problem as it was in 2022 but we would concede that the uncertainty still remains high. You want to add anything cycle faces. Actually, we have seen we have seen the Consumer price Index having combined come down. I mean for the last 34 months consistently and it is below the RBI tolerance limit of 6% and we hope that it will come down further because some after commodities prices of some of the communities are coming down. Another thing is the wholesale price index it is it has come down below 5% that is four point. It has come down to 4.95% in December and wholesale price index because there are it is related to input costs and so that has a lack defect on the consumer price index. So we have. We are also hopeful that this past true will happen.
