Overall Gross Value Added moves up by 3.7 pct in first half of FY23: Economic Survey

The Economic Survey tabled in the Parliament stated that Industry sector witnessed modest growth of 4.1 per cent in FY23 compared to the strong growth of 10.3 per cent in FY22.

It explained that this is likely on account of input cost-push pressures, supply chain disruptions and the China lockdown impacting the availability of essential inputs and slowing the global economy.

The Survey highlighted that the PLI schemes are set to unlock manufacturing capacity, boost exports, reduce import dependence and lead to job creation for both skilled and unskilled labour.

The Survey was optimistic that easing input prices and conducive demand conditions will support overall Industrial growth.

Private Final Consumption Expenditure (PFCE) as a share of GDP in H1 of FY23 was the highest among all half years, H1 or H2, since FY15, the Survey stated. The Survey optimistically expressed that with world commodity prices on a downward trajectory and showing up in declining rates of India’s wholesale inflation, core retail inflation is expected to relent, making domestic consumption demand much stronger to further induce industrial growth in the country.

Economic Survey stated that the strong export performance of FY22 continued somewhat in the first half of FY23 while exports of goods and services as a share of GDP have been the highest since FY16 during H1 of FY23.

The Survey warned that export growth may slow further in the second half of the current financial year and remain weak beyond that, too, if the global economy falls into recession. It added that however, the strong domestic consumption growth and investment revival is expected to keep industrial production humming.

The Survey emphasized that New Investment announced in the manufacturing sector during April-December of FY23 was five times the corresponding level in FY20. The Survey analyzed this increase in investment demand was triggered by the augmented capex of the central government in the current and the previous year as compared to the pre-pandemic years.

The leap also has crowded in private investment, already upbeat on the pent-up demand, export stimulus, and strengthening of the corporate balance sheets. It added that Capacity utilization in the manufacturing sector has been rising which bodes well for new investment activity in creating additional capacity.

Purchaser’s Manufacturing Index (PMI) manufacturing has remained in the expansion zone for 18 months since July 2021, and its sub-indices indicate an easing of input cost pressures, improving supplier delivery times, robust export orders, and future output, highlighted the Survey.

The Survey highlighted that the credit to industry started recovering from January 2022 and has been growing in double digits since July 2022.

It added that Credit to MSMEs has also seen a significant increase in part, assisted by the introduction of the Emergency Credit Linked Guarantee Scheme (ECLGS).

The Survey stated that the impact of ECLGS on increasing the growth of credit to MSME was felt most during the pandemic impacted years of 2020 and 2021. It continued in 2022 as the scheme was extended to March 2023.

Further it added, growth in credit to MSME was buttressed by rebounding consumption levels, particularly in the services sector. Consequently, the share of MSMEs in gross credit offtake to the industry rose from 17.7 per cent in January 2020 to 23.7 per cent in November 2022.

The Survey expressed that robust growth in credit demand combined with rising capacity utilization and investment in manufacturing underscores businesses’ optimism regarding future demand.