New Delhi: At least three shocks have hit the global economy since 2020, Economic Survey for 2022-23 has noted.
In general, global economic shocks in the past were severe but spaced out in time. This changed in the third decade of this millennium.
It all started with the pandemic-induced contraction of the global output, followed by the Russian-Ukraine conflict leading to a worldwide surge in inflation. Then, the central banks across economies led by the Federal Reserve responded with synchronised policy rate hikes to curb inflation.
The rate hike by the US Fed drove capital into the US markets causing the US Dollar to appreciate against most currencies. This led to the widening of the Current Account Deficits (CAD) and increased inflationary pressures in net importing economies.
The rate hike and persistent inflation also led to a lowering of the global growth forecasts for 2022 and 2023 by the IMF in its October 2022 update of the World Economic Outlook.
The frailties of the Chinese economy further contributed to weakening the growth forecasts.
Slowing global growth apart from monetary tightening may also lead to a financial contagion emanating from the advanced economies where the debt of the non-financial sector has risen the most since the global financial crisis, the Survey said.
With inflation persisting in the advanced economies and the central banks hinting at further rate hikes, downside risks to the global economic outlook appear elevated.
There has been an increase in the construction of National Highways (NHs) and roads over time, with 10,457 km of roads constructed in FY22 as compared to 6,061 km in FY16.
In FY23 (until October 2022), a total of 4,060 km of NHs and roads were constructed, which was around 91 per cent of the achievement in the corresponding period of the previous financial year, said the Economic Survey on Tuesday.
Total budgetary support for investment in the sector has been increasing rapidly in the last four years and stood at around Rs 1.4 lakh crore during FY23 (as of October 31, 2022).
The Survey said that road infrastructure in the form of a network of national highways, state highways, district roads, rural roads, and urban roads acts as a major mode of transportation and connectivity for the country's diverse population of consumers and businesses. Roads supplement the other modes of transport through last-mile connectivity to the far-flung regions of the country.
The Economic Survey also pointed out that in line with the vision of monetisation of public sector assets, National Highways Authority of India (NHAI) launched its InvIT in FY22 not only to facilitate monetisation of roads but also to attract foreign and domestic institutional investors to invest in the roads sector. So far, NHAI InvIT has raised more than Rs 10,200 crore from high quality foreign and Indian institutional investors (up to December 2022).
Due to aggressive and synchronised monetary tightening, global economic growth has started to slow, and so has world trade, the Economic Survey for 2022-23 has warned.
As per United Nations Conference on Trade and Development (UNCTAD) the latest global trade update, global trade growth turned negative during the H2:2022, and geopolitical frictions, persisting inflationary pressures, and subdued demand are expected to suppress global trade further in 2023.
This is likely to affect many countries, including India, with the prospects of sluggish exports continuing into FY24, compared to the promise shown at the beginning of the current year, the Survey said.
For many countries around the world, including India, 2021 was a period of recovery for health and economies from the impact of the pandemic.
For the advanced economies, in particular, the enormous fiscal stimulus earlier injected by their governments supported a strong demand revival. Growth in world trade subsequently followed, of which India was also a beneficiary.
India's exports surged in FY22, and the momentum lasted up to the first half of FY23. Export growth was strong enough to increase India's share in the world market of merchandise exports.
Rising inflation and monetary tightening led to a slowdown in global output beginning in the second half of 2022. The global PMI composite index has been in the contractionary zone since August 2022, while the yearly growth rates of global trade, retail sales, and industrial production have significantly declined in the second half of 2022.
The consequent dampening of the global economic outlook, also compounded by expectations of a further increase in borrowing costs, was reflected in the lowering of growth forecasts by the IMF in its October 2022 update of the World Economic Outlook (WEO).
The common narrative of Indian women's low (Labour Force Participation Rate) LFPR misses the reality of working females integral to the economy of the household and the country, the Economic Survey for 2022-23 said.
There is a need to broaden the horizon of measuring work, which constitutes the whole universe of productive activities alongside employment.
According to the latest ILO standards, limiting productive work to labour force participation is narrow and only measures work as a market product.
It does not include the value of women's unpaid domestic work, which can be seen as expenditure-saving work such as collecting firewood, cooking, tutoring children, etc., and contributes significantly to the household's standard of living, the Economic Survey said.
Thus, a wholesome measurement of "work" may require improved quantification through redesigned surveys.
That said, there is further significant scope to nullify the gender-based disadvantages to enable free choice of women to join the labour market. Ecosystem services, including affordable creches, career counselling/handholding, lodging and transportation, etc., can further help unlock the gender dividend for inclusive and broad-based growth.
Use of overly broad categories clubbing productive work (collection of firewood, poultry farming, etc.) with domestic duties can in one sweep shift a significant proportion of women in the labour force into the out-of- labour-force category, the Survey said.
For example, unless the production of primary goods is identified as the main activity by the respondent, the PLFS questionnaire would categorize women who do both domestic activities and primary goods production/collection into out-of-the-labour-force.
Adding the proportion of women in Activity code 93 to the official LFPR yields an "Augmented Female LFPR" of 46.2 per cent for FY21 for ages 15 years and above, much higher than the 32.5 per cent estimated by the conventional definition (PLFS data for usual status).
A similar attempt has been made in an International Labour Organisation (ILO) research paper20, arriving at a female LFPR of 56.4 per cent in India for 2012, against the far lower official estimate of 31.2 per cent for 2012, the Survey said.
Increase in infrastructure investment provides a critical push to the potential growth of the economy. The government, in recent years, provided an increased impetus for infrastructure development and investment through the enhancement of capital expenditure.
As per the Economic Survey released on Tuesday, this push has happened at a time of crisis when the capital expenditure by the private sector has been subdued. The outlay (target) for capital expenditure in 2022-23 (BE) was increased sharply by 35.4 per cent from Rs 5.5 lakh crore in the previous year (2021-22) to Rs 7.5 lakh crore, of which approximately 67 per cent has been spent from April to December 2022.
The result of the efforts is visible in Ministries'/ Departments' Capex spending till December 2022, which has been Rs 5 lakh crore (around 67 per cent has been achieved against the Budgeted Capex of 7.5 lakh crore) as against Rs 3.9 lakh crore for the same period in FY22 (i.e., till December 2021). The actual expenditure in FY23 is also 28 per cent higher than the expenditure in FY22 for the corresponding period, said the Survey.
The steady increase in public capital expenditure has helped support economic growth while laying the foundation for the future growth as capital assets boost economic efficiency and potential growth. It could also crowd in private investment, as the IMF observed in the case of India. This is evident from the fact that capacity utilisation in the private sector has been recovering, said the Survey.
While the NIP and the NMP would provide the much-needed impetus for stepping up infrastructure investment, the NLP will address the gaps in services, digital infrastructure and skills in the logistics workforce.
PM GatiShakti, with a multimodal approach, is designed to fill the gaps in physical infrastructure and to integrate existing and proposed infrastructure development initiatives of different agencies.
As physical infrastructure requires continuous support over its long gestation period, the government has also set up National Bank for Financing Infrastructure and Development (NaBFID) as a development financial institution to set in motion a virtuous investment cycle. An institutional mechanism to fast-track investments has been put in place, in the form of Project Development Cells (PDCs) in all concerned Ministries/ Departments of Government, said the Survey.
"The government's vision for infrastructure does not stop here. As India has already submitted its Long-Term Low Emission Development Strategy at COP27, the next leap would be towards advanced infrastructure, which is more energy efficient, incorporates the idea of a circular economy and transitions towards low carbon development.
"The amount of investment that may be needed for putting in place climate resilient and climate resistant infrastructure might be too vast to be provided for by either the public sector or the private sector alone. Both financing and the creation of such infrastructure are likely to require Public-Private Partnership, a topic to which we turn next," it said.
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