Overview of Economic Survey for 2022-23
The survey highlighted that at least three shocks had hit the global economy since 2020: the Covid Pandemic, the Russian-Ukraine conflict, and the worldwide surge in inflation. Despite the global growth projections declining in 2023, the Indian economy has fully recovered and is expected to continue its growth momentum.
Economy
(a) The rate hike by the US Fed drove capital into the US markets causing Current Account Deficits (CAD) and increased inflation in net importing economies as their currency weakened. The widening of the CAD to continue due to global inflation in commodity and growth in Indian economy and weak exports. Global growth expected to decline in 2023 and beyond, which may push down global commodity prices and improve India’s CAD in FY24.
(b) Indian economy, has recovered in FY22 and will further grow in FY23 despite challenge of inflation. RBI has projected headline inflation at 6.8% in FY23, which is outside its target range which is not high enough to deter private consumption and not so low to weaken the inducement to invest.
(c) The survey projects a baseline GDP growth of 6% to 6.8% in real terms in FY24.
(d) Capex of the Union grew by 63.4% in the first eight months of FY23 is growth driver of the Indian economy. Capex has increased from a long-term average of 1.7% of GDP (FY09 to FY20) to 2.5% of GDP in FY22 PA.
(e) Support for economic growth will come from the expansion of public digital platforms, PM Gati Shakti, the National Logistics Policy, PLI schemes to boost manufacturing output.
(f) E-governance based services to enable the vision of $1 trillion digital economy by 2025.
Stock Market
(a) Mutual Funds witnessed lower net inflows, yet AuM grew by 8.1% YoY basis.
(b) FPIs recorded a net outflow of US$ 2.5 billion during April-December 2022 against an outflow of US$ 0.6 billion a year ago.
(c) IPO’s increased by 37%. SME listing doubled and raised funds three times compared to last year.
(d) In April-December 2022, Indian stock market gave a return of 3.7% compared to decline in global indices.
(e) LIC IPO is largest ever in the history of India and the sixth biggest IPO globally in 2022.
Direct Tax
(a) By eliminating outdated laws, abolishing the angel tax, and ending retrospective taxation on offshore indirect transfers of assets in India, the government demonstrates its commitment to a non-hostile policy environment, improving investor confidence and enhancing growth prospects.
(b) As the pandemic-related uncertainties and disruptions ease, the effects of tax reforms, such as the corporate tax cut, the corporate tax collections for April to November 2022 was 21.1%, compared to an average YoY growth of 10.3% for the same period from FY13 to FY19.
(c) The increased revenue buoyancy has been achieved due to the implementation of technology-driven tax governance reforms aimed at simplifying tax procedures, increasing compliance, and enhancing fraud detection.
Indirect Taxes
(a) GST has become a crucial revenue source for both Central and State governments. The gross GST collections from April to December 2022 rose 24.8% YoY. GST registration numbers increased from 70 lakhs in 2017 to over 140 lakhs in 2022.
(b) GST has boosted government revenues and improved income reporting with positive impacts on income tax collection and overall economic activity.
(c) GST collections have grown at a CAGR of 10.9%, demonstrating a GST collection buoyancy of around 1.1 despite the decline in the effective GST rate from 14.4% in 2017 to 11.6% in 2019.
(d) To meet the shortfall in GST compensation for States, the government borrowed Rs. 2.69 lakh crore in FY21 and FY22 and passed it on to states as compensation in addition to regular payments from the fund.
(e) High imports in the current year have resulted in a 12.4% YoY increase in customs collection from April to November 2022, surpassing the average growth for the same period from FY13 to FY19.
(f) India is currently negotiating new FTAs and reviewing existing FTAs with several trading partners.
Corporate and other Laws
(a) At the end-November 2022, India was the world’s sixth-largest foreign exchange reserves holder.
(b) India has the largest emigrant population with remittances anticipated to reach a milestone of US $100 billion in 2022.
(c) With the highest FinTech adoption rate, India has gained 3rd place in digital payments only after US and China.
(d) After decriminalising minor economic offences under the Companies Act 2013, default cases have been decided without resorting to the court with companies rectifying past defaults to avoid penalties.
(e) The RERA contributed towards the speedy redressal of disputes and enabled a single window clearance for timely approvals to the developers which incentivises more investments into the sector.
(f) The trading volume in G-Secs (including T-Bills and SDLs) reached a two-year high which reflects the depth in the market.
(g) Green bonds raise funds to support climate and environmental projects and carry a relatively lower cost of capital. As per SEBI, from 2017 to September 2022, 15 Indian corporates issued green bonds of Rs 4,539 crores. The RBI has notified the calendar for issuing Sovereign Green Bonds (SGrBs) of Rs 16,000 crores for the fiscal year 2022-23.
(h) To make India an energy-independent nation and to de-carbonise critical sectors, the government approved the National Green Hydrogen Mission with an initial outlay of Rs 19,744 crore. The Mission will facilitate demand creation, production, utilisation, and export of Green Hydrogen and mobilisation of over Rs 8 lakh crore of investment by 2030.
(i) Until 30th September 2022, 23,417 applications for initiating the Corporate Insolvency Resolution Process (CIRP) of corporate debtors having underlying defaults of Rs. 7.3 lakh crore were disposed of before their admission into CIRP.
(j) In FY 22, the total amount recovered by the Banks through IBC has been the highest compared to other channels.
(k) The asset quality of Banks has been improving. The Gross NPA ratio has decreased from 8.2% in March 2020 to a seven-year low of 5% in September 2022, while Net NPA has dropped to a ten-year low of 1.3% of total assets.
(l) The continuous improvement in asset quality is seen in the declining GNPA ratio of NBFCs from the peak of 7.2% recorded during the second wave of the pandemic (June 2021) to 5.9% in September 2022, reaching close to the pre-pandemic level. With the decline in GNPAs, the capital position of NBFCs also remains robust, with a CRAR of 27.4% in end-September 2022, slightly lower than 27.6% in March 2022.
(m) Credit extended by NBFCs is gaining momentum, with the aggregate outstanding amount at Rs. 31.5 lakh crore as of September 2022.
Click here to download the PDF file.