Why in the News?

The Union Minister for Finance and Corporate Affairs Smt. Nirmala Sitharaman tabled the Preface of the Economic Survey 2024-25 in the Parliament.

What’s in Today’s Article?

• Background (Context of the Article)
• Key Components of the Economic Survey

Background:

• The Economic Survey 2024-25, tabled in Parliament by Finance Minister Nirmala Sitharaman, highlights deregulation, strategic investments, artificial intelligence (AI), climate adaptation, and inclusive policies as key pillars for economic growth.
• The report underscores the need for private-sector-led innovation, ease of doing business, and a shift in regulatory mindset to propel India’s economy forward.

Deregulation as a Growth Stimulus:

• The Survey advocates a "Deregulation Stimulus", urging the government to minimize bureaucratic red tape and allow businesses to focus on innovation. It calls for:
  • Shifting from a "guilty until proven innocent" regulatory approach to a trust-based system.
  • Simplifying policies to make them more transparent and accessible.
  • Enabling businesses to scale up without excessive compliance burdens.
• The Survey predicts that a deregulation-driven economic environment will help unlock India’s demographic dividend and sustain growth over the next two decades.

Boosting Strategic Investments for Economic Competitiveness:

• With global trade growth slowing down, the Survey emphasizes domestic and foreign investments to maintain India’s economic momentum. It highlights:
  • Encouraging private sector investments to strengthen domestic supply chains.
  • Attracting foreign capital to enhance competitiveness.
  • Developing infrastructure and industrial ecosystems to support long-term growth.
• The Survey underscores that domestic growth levers will play a more significant role than external trade in the coming years.

Climate Change: Focus on Adaptation Over Mitigation

• India’s energy transition strategy must prioritize adaptation rather than just emission reduction, according to the Survey. Key recommendations include:
  • Diversifying energy sources while balancing economic and environmental sustainability.
  • Expanding public transportation as an efficient alternative to private electric mobility.
  • Avoiding over-reliance on imported resources for energy security.
• With India’s vast geography and resource constraints, the Survey argues that localized adaptation strategies will be more effective than global climate policies.

Artificial Intelligence: Driving India’s Tech Innovation

• Recognizing AI’s potential, the Survey suggests:
  • Establishing AI Centres of Excellence (CoE) in top educational institutions.
  • Creating a ₹1 lakh crore financing corpus to support AI research and private-sector innovation.
  • Acknowledging that AI may not be a universal solution for a labor-intensive economy like India.
• The Survey promotes a balanced approach to AI adoption, ensuring employment preservation while leveraging automation for economic gains.

Health and Nutrition: Tackling Processed Food Consumption

• The report raises concerns about the rising consumption of ultra-processed foods (High in Fat, Salt, and Sugar - HFSS) among Indian youth. It recommends:
  • Stricter front-of-pack labeling to inform consumers.
  • Government regulations over self-regulation in food standards.
  • Policies to promote healthier eating habits and physical well-being.
• The Survey emphasizes that public health policies must align with economic growth strategies to ensure a healthier workforce.

Inclusive Development: Women, Farmers, and Youth Empowerment

• For inclusive growth, the Survey highlights:
  • Women’s Participation: Removing legal and regulatory barriers to increase labor force participation.
  • Farmers’ Welfare: Supporting income growth and agricultural modernization.
  • Youth Development: Investing in education, skill-building, and mental health.
  • Poverty Reduction: Advancing economic inclusion through targeted welfare programs.
• The Survey calls inclusive participation the litmus test of effective economic policies.

Industrial Growth and Ease of Doing Business

• The Survey identifies a direct link between industrial activity and business-friendly policies. It notes:
  • States with high "Ease of Doing Business" scores have stronger industrial growth.
  • Aspiring states must improve industrial policies to attract investments.
  • The success of the Production-Linked Incentive (PLI) scheme in sectors like air-conditioner manufacturing proves the impact of government intervention.
• The Survey suggests expanding PLI incentives to other critical sectors.

External Trade and Economic Challenges:

• The Survey warns of potential trade restrictions that could impact India’s export growth. Key risks include:
  • Rising global protectionism affecting market access.
  • Widening current account deficit due to import dependencies.
  • Geopolitical uncertainties influencing trade agreements.
• To mitigate these risks, India must focus on self-reliance in strategic sectors and expanding domestic consumption.

Conclusion: Towards "Viksit Bharat 2047"

• The Economic Survey 2024-25 presents a bold vision for India's growth, focusing on deregulation, investment-driven expansion, AI innovation, climate adaptation, and inclusive development.
• By fostering a trust-based business environment, promoting private sector-led growth, and addressing climate and social challenges, India aims to build a competitive and resilient economy on its path to "Viksit Bharat 2047".