Growth Projected at 7%, Household Investing in Stock Markets on Rise: CEA

News Delhi: The Economic Survey for 2023-24 has projected a prudent growth rate of 6.5-7 percent for the current financial year, contingent upon the progress of the monsoon, Chief Economic Advisor (CEA) V Anantha Nageswaran said on Monday.

Addressing the media after Finance Minister Nirmala Sitharaman tabled the Economic Survey in Parliament, Nageswaran said that while the economic growth rate of 7 percent is achievable, it heavily depends on monsoon performance.

"We want to be prudent in projecting the growth rate, which is why we have projected the country's economic growth at 6.5 to 7 percent in FY24," he said, highlighting the ongoing momentum in the economy and the pickup in private capital expenditure.

Nageswaran noted that India's external debt ratio remains significantly lower compared to other emerging economies. He also assured that inflationary pressures are under control, with core inflation running well below 4 percent.

Focus on Job Creation and Investment

The CEA highlighted the pressing need for job creation, stating that India needs to generate 80 lakh jobs per annum to sustain its economic momentum. He also pointed out that the Production Linked Incentive (PLI) scheme is beginning to deliver substantial results in key sectors.

Nageswaran addressed concerns about household financial health, saying that households are increasingly investing in financial assets. The Economic Survey revealed that the registered investor base at the National Stock Exchange (NSE) has nearly tripled from March 2020 to March 2024, reaching 9.2 crore as of March 31, 2024. The surge potentially translates into 20 percent of Indian households channelling their savings into financial markets.

"Households are not in distress," Nageswaran asserted. "They are investing in financial assets which have done very well. Also, savings in physical assets have improved, rising from 10.8 percent in fiscal 2020-21 to 12.9 percent in 2022-23."

Nageswaran explained that the national income data do not fully capture the market value of these financial investments, leading to a perception that financial liabilities are growing faster than financial assets. However, he emphasized that households are doing quite well, as evidenced by the lack of distress signals in small-ticket loan default statistics.

The Economic Survey 2023-24, prepared by Nageswaran and his team, highlights the need for continued vigilance in economic management, particularly in job creation and private sector investment. It also highlights the resilience and adaptability of Indian households in leveraging financial markets to build their wealth.