By Venkatachari Jagannathan

Chennai, Jan 31 (IANS): The government should act quickly on reforms so that the optimistic picture painted by the Economic Survey 2022-23 can become a reality, said a top economist with CARE Ratings.

She added that there could be some fizzling out of pent-up demand in FY24 that is seen in the current fiscal and given the volatile geo-political situation, caution should be exercised on the external situation.

The Economic Survey was placed in the Parliament on Tuesday.

"Overall, the survey paints an optimistic picture that definitely can become the reality if the government acts quickly on some of the reform measures and takes steps to grab the geo-political opportunity," Rajani Sinha, Chief Economist, CARE Ratings, told IANS.

She said the Survey has reaffirmed India's economic resilience in the midst of the global slowdown.

"In the baseline scenario, a growth of 6.5 per cent is expected in FY24, higher than our expectation of 6.1 per cent. We feel that while India will maintain healthy growth momentum, there is a need to be cautious given the slowing global growth. Moreover, in FY24, we are also expecting some fizzling out of the pent-up demand seen in the current fiscal," Sinha added.

Referring to the Survey talking about potential gross domestic product (GDP) growth of 7-8 per cent per annum in the medium term, Sinha said this higher potential growth is achievable if some of the reforms required to improve productivity and improve ease of doing business are implemented in a timely manner.

"Moreover, there is a need to focus on inclusive growth, hence investment in human capital and support for the unorganised sector and MSME segment becomes critical," Sinha remarked.

According to Sinha, the survey highlights that overall inflationary pressure could be expected to ease in FY24 from the levels seen during this year.

"This is in line with our expectation of average CPI inflation moderating to 5.1 per cent in FY24 from 6.5 per cent in FY23," she said.

"In the midst of concerns around the global economy, the Survey highlights that the external situation is manageable given our high forex reserves and low external debt. With export slowing, we expect CAD to remain high at around 2.2 per cent of GDP in FY24, but much lower than the estimated 3.5 per cent of GDP in FY23. We feel that given the volatile and uncertain global environment, there is a need to remain cautious on the external sector," Sinha said, sounding caution.

According to Nilesh Shah, Managing Director, Kotak Mahindra Asset Management Company, the Survey presents a cautiously optimistic forecast.

"The Survey correctly predicts that the pitch is becoming easy with nascent recovery in global macros, lower energy prices/inflation and revival in private sector investment in days to come. It also highlights an odd 'doosra' ball which needs to be managed in the form of balance of payment deficit and support to the consumption at the bottom of the pyramid," Shah said.

According to him, India from being a coach (follower) to global growth has become the engine (leader) for global growth. The Economic Survey presents the direction of that journey. The speed of that journey will be determined by the execution on the ground.