Economic Survey calls global climate change strategies ‘flawed’: 30 top points

The Economic Survey's projection of growth is below the RBI's projection of 7.2 per cent.

Finance Minister Nirmala Sitharaman on Monday tabled the Economic Survey 2023-24 in the Lok Sabha. The annual document, which presents an overview of the state of the economy, predicts that India's economy will likely grow at 6.5% to 7% in the current financial year ending March 2025.

Union finance minister Nirmala Sitharaman speaks in the Lok Sabha during the first day of Parliament’s Budget Session on Monday. (PTI)

The Economic Survey's projection of growth is below the RBI's projection of 7.2 per cent. The report on the state of the economy, authored by Chief Economic Adviser V. Anantha Nageswaran and his team in the finance ministry, said that with risks evenly balanced, there could be slower growth in private investments.

Here are the highlights of this year's Economic Survey.

1. The survey noted that the global economic growth had been 3.2 per cent in 2023. It said there had been diverging growth patterns among countries on account of "domestic structural issues, uneven exposure to geopolitical conflicts and the impact of monetary policy tightening".
2. However, India's economy maintained the momentum it built in FY 24, despite external economic challenges. In FY 2024, India's real GDP grew by 8.2 per cent, exceeding the 8 per cent mark in three out of four quarters of FY24.
3. It attributed India's robust economic growth despite external challenges to "focus on maintaining macroeconomic stability".
4. The survey said positive trends in the residential real estate market indicate that the household sector capital formation is increasing significantly.
5. Double-digit and broad-based growth in bank credit, gross and net non-performing assets at multi-year lows, and improvement in bank asset quality highlight the government’s commitment to a healthy and stable banking sector, the survey said.
6. It also lauded the government's strategy of financial inclusion. It said the emphasis on the usage of accounts by enhancing direct benefit transfer flows through these accounts, and promoted digital payments using RuPay cards, and UPI.
7. It cautioned commercial banks and insurance companies to avoid over lending, and mis-selling, keeping in mind levels of financial literacy in the country. It said India's financial sector must brace for vulnerabilities originating globally or locally.
8. The Central government's policy interventions and RBI's price stability measures helped maintain retail inflation at 5.4 per cent - the lowest level since the pandemic hit Indian shores.
9. It said the Central government's decision to cut prices for LPG, petrol and diesel kept retail fuel inflation low in FY 2024. "In August 2023, the price of domestic LPG cylinders was reduced by ₹200 per cylinder across all markets in India. Since then, LPG inflation has been in the deflationary zone, starting from September 2023. Similarly, in March 2024, the Central Government lowered the prices of petrol and diesel by ₹2 per litre. Consequently, retail inflation in petrol and diesel used in vehicles also moved to the deflationary zone in March 2024".
10. The survey, however, raised concerns over the food inflation. It said the food inflation increased from 6.6 per cent in FY 2023 to 7.5 per cent in FY 2024 "Within India, the agriculture sector faced challenges due to extreme weather events, depleted reservoirs, and crop damage, which impacted farm output and food prices.
11. It noted that unfavourable weather conditions in FY24 constrained food production. "Tomato prices rose due to region-specific crop disease, early monsoon rains, and logistical disruptions. Onion prices spiked because of rainfall during the last harvest season affecting rabi onion quality, delayed sowing of Kharif onion, prolonged dry spells impacting Kharif production, and trade-related measures by other countries," it said.
12. It said the government's administrative actions like dynamic stock management, open market operations, subsidised provision of essential food items and trade policy measures are helping to mitigate food inflation.
13. The document noted that inflation is likely to come down further. To manage food inflation, it suggested that the government should “assess the progress in developing modern storage and processing facilities for fruits and vegetables is crucial to manage seasonal price spikes.”
14. It also advised the authorities to strengthen monitoring mechanisms and market intelligence as well as focused efforts to increase the domestic production of essential food items like pulses and edible oils.
15. The Economic Survey pointed out that India's current account deficit narrowed by 0.7 per cent in FY24 due to the moderation in merchandise imports and rising services exports.
16. India’s services exports grew by 4.9 per cent to USD 341.1 billion in FY24, with growth largely driven by IT/software services and ‘other’ business services.
17. India is the top remittance recipient country globally, with remittances reaching a milestone of USD 120 billion in 2023.
18. At the end of March 2024, India’s forex reserves were sufficient to cover more than 10 months of its projected imports for FY25 and 98 per cent of its external debt.
19. It said the government must focus on reform. It said the key areas of policy focus in the short to medium term include job and skill creation, tapping the full potential of the agriculture sector, addressing MSME bottlenecks, and managing India’s green transition.
20. It also said the government must deftly deal with what it called the Chinese conundrum. It said the focus should also be on tackling inequality and improving our young population’s quality of health.
21. "The growth strategy for Amrit Kaal is predicated on six key areas. Firstly, there must be a deliberate focus on boosting private investment. Secondly, the growth and expansion of India’s Mittelstand (MSMEs) is a strategic priority. Thirdly, the potential of agriculture as an engine of future growth must be recognised and policy impediments removed. Fourthly, there is a need to secure the financing of green transition in India. Fifthly, the education-employment gap must be bridged. And finally, focused building of state capacity and capability is required for sustaining and accelerating India’s progress," it added.
22. It said India’s energy needs are expected to grow 2 to 2.5 times by 2047. Hence, the pace of energy transition would need to factor in alternative demands on the resources for improving resilience to climate change and for sustained social and economic.
23. It said India's unemployment rate declined to 3.2 per cent in 2022-23. It said the rising youth and female participation in the workforce presents an opportunity to tap the demographic and gender dividend.
24. It also mentioned artificial intelligence. It said steering technological choices towards collective welfare is key. "Employers owe it to themselves to strike a balance between deploying technology and labour," it added.
25. It said India's manufacturing sector achieved an average annual growth rate of 5.2 per cent in the last decade. India became a net exporter of finished steel over the past decade. The steel sector achieved its highest levels of production and consumption during FY24.
26. Coal production has accelerated over the past five years, reducing import dependence. India’s pharmaceutical market, currently valued at USD 50 billion, is the world's third-largest by volume. India is the world's second-largest clothing manufacturer and one of the top five exporting nations. In FY24, the export of textiles and apparel, including handicrafts, increased by 1 per cent. Domestic production of electronic items increased significantly to ₹8.22 lakh Crore, while exports rose to ₹1.9 lakh Crore in FY23. On infrastructure, it said over the past 10 years, the average pace of national highway construction increased by 3 times -- from 11.7 km per day in FY14 to 34 km per day by FY24.
27. The capital expenditure on Railways has increased by 77 per cent in the past 5 years, with significant investments in the construction of new lines, gauge conversion and doubling. In FY2024, 21 airports were operationalised, which led to an overall increase in passenger handling capacity by approximately 62 million passengers per annum.
28. It also noted that the current global strategies for climate change are flawed and not universally applicable. "The Western approach does not seek to address the root of the problem, i.e. overconsumption, but rather chooses to substitute the means to achieve overconsumption… The global pursuit of energy-guzzling technologies such as Artificial Intelligence and mining rare earth minerals in large quantities has only contributed to higher fossil fuel consumption. This is directly at odds with the stated objectives of climate change mitigation," it added.
29. It said the one-size-fits-all approach will not work, and the developing countries need to be free to choose their pathways. "Current global strategies for climate change are flawed and not universally applicable...Their practices ignore humans’ underlying relationship with nature, with other people, with materiality and with themselves," it said.
30. "India, despite significant strides in climate action, often faces criticism for not aligning with Western solutions. This criticism stems from a lack of appreciation for India's unique social and cultural fabric, which is already rich with sustainable development ideas," it added.