India's flagship economic document, the Economic Survey 2022-23, projected domestic growth at 6.5 percent for 2023-24, lower than the 7 percent estimated growth of this fiscal and 8.7 percent in 2021-22 while it asserted India remains the fastest growing major economy in the world.
The Survey said GDP in nominal terms will be 11 percent in the next fiscal, i.e. FY24. Real GDP growth may be 6-6.8 percent the next fiscal year depending on global economic and political developments.
The market appears to be happy with the projections made by the Survey as the key indices ended in the green after the Survey was tabled in Parliament.
While the Sensex and the Nifty ended with slim gains, mid and smallcaps clocked strong gains, indicating that the Survey boosted investor sentiment.
Sensex ended 49 points, or 0.08 percent, up at 59,549.90 while the Nifty50 ended the day at 17,662.15, up 13 points, or 0.07 percent.
The BSE Midcap index rose 1.47 percent while the Smallcap index jumped 2.21 percent.
Here's what top analysts have to say about the Economic Survey 2022-23:
Analyst: Nilesh Shah, Managing Director, Kotak Mahindra Asset Management Company
The survey correctly predicts that pitch is becoming easy with nascent recovery in global macros, lower energy prices/inflation and revival in private sector investment in days to come.
It also highlights an odd doosra ball which needs to be managed in the form of a balance of payment deficit and support to the consumption at the bottom of the pyramid.
India from being a coach (follower) to global growth has become the engine (leader) for global growth. The Economic Survey presents the direction of that journey. The speed of that journey will be determined by the execution on the ground.
Analyst: Lakshmi Iyer, CEO-Investment Advisory, Kotak Investment Advisors
The Economic Survey has projected FY24 growth at 6-6.8 percent. This seems a tad stretched given the fact that there is a global slowdown, specifically in global exports.
It also comes at a time when domestic demand is slowing down initially and we need to be fiscally prudent, especially after almost three years of the fiscal breach (globally too) due to the pandemic phase.
The survey also alludes to the fact that the tightening cycle may remain prolonged, which means higher interest rates for a longer period of time.
All eyes are now on the Budget which could determine the trajectory of growth as also the direction of interest rates given the borrowing programme that will be announced tomorrow.
Key to watch will be the gross borrowing numbers, which we estimate, should be ₹16 lakh crore.
Analyst: Apurva Sheth, Head of Market Perspectives & Research, SAMCO Securities
As per the Advanced Estimates, the Indian GDP grew 7 percent in FY22-23 and now as per the Economic Survey, the government forecasts India would grow 6 percent to 6.8 percent in the coming financial year.
The forecast is towards the conservative side as the government would expect the slowdown in exports to be a continuing trend.
India’s current account deficit was 4.4 percent of GDP in the September quarter, higher than 1.3 percent in the previous year.
The pressure on the current account deficit (CAD) is expected to sustain as the buyout domestic consumption would continue to attract imports while the exports would take more time to recover.
An interesting statement made in the survey was the inflation was not high enough to deter private consumption nor low enough to weaken investment, even though it remained above the central bank's target range of 2 percent to 6 percent in 2022/23.
The GDP as per the Survey would dip in FY24 but in the medium term, it is expected to strengthen and rise to 7-8 percent levels as the global situation improves.
Analyst: Vinod Nair, Head of Research, Geojit Financial Services
The Economic Survey is optimistic that India will continue to grow at a healthy rate in the medium term, led by consumption and capital expenditure and the growth can expand to as high as 7 to 8 percent in the future.
The fundamentals of the Indian economy are solid, however, in the short to medium-term, widening the current account deficit for an extended period is a concern that could have an implication for the growth and depreciation of the rupee.
For the Budget, it is going to be a challenge in FY24 to plan out the expenditures due to a short-term slowdown in the economy, high core inflation, and fiscal deficit.
Analyst: Mitul Shah, Head of Research, Reliance Securities
Overall, the Economic Survey is positive for the market as an upgrade in FY23 GDP growth expectation to 7 percent augurs well, while FY24 inflation of below 6 percent, within RBI’s targeted range, provides major relief.
However, FY24 GDP growth of 6-6.8 percent is a tad below desired 7 percent+ range.
The preference for growth over fiscal deficit would be the key trigger for market sentiment going ahead.
Other parameters in terms of GST collection, direct taxes and other revenues are encouraging in this challenging global economic environment.
Analyst: Manish Chowdhury, Head of Research, Stoxbox
The Economic Survey 2022-23 is a testament to India's specific triggers aligned in the right direction of sustained economic growth.
Despite the global headwinds, India is projected to log a growth rate of 6-6.8 percent in FY24 which would be the fastest among the major global economies.
We believe that many structural factors like PLIs, FTAs, alternate technologies/fuels, domestic demand, and healthy balance sheets of consumers, corporates and banks are likely to propel economic growth in the long term.
With inflation off from its peak, the demand side of the story looks intact, further helped by the private capex cycle revival along with growing public sector investments.
We believe that if India is able to steer through the elevated risks arising from higher inflation and slowing growth in advanced economies, we may usher into a new era of growth which may drive us closer to the $5 trillion GDP in the near term.
Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of MintGenie.