Economic Survey 2024 Highlights
Presented by Nirmala Sitharaman
On July 22, 2024, Union Finance Minister Nirmala Sitharaman presented the Economic Survey 2024 in the Parliament. The survey highlighted how the Central Government and the Reserve Bank of India (RBI) managed to keep retail inflation at 5.4% despite global challenges.
Key Points
During FY22 and FY23, the COVID-19 pandemic, geopolitical tensions, and supply disruptions caused global inflationary pressures. In India, prices of consumer goods and services rose due to international conflicts and adverse weather conditions.
However, in FY24, timely policy interventions and RBI’s measures helped maintain retail inflation at 5.4%, the lowest since the pandemic. The global energy price index fell sharply, and the government announced price cuts for LPG, petrol, and diesel, keeping fuel inflation low.
Fuel Price Reductions
In August 2023, the price of domestic LPG cylinders was reduced by Rs 200 per cylinder. In March 2024, petrol and diesel prices were lowered by Rs 2 per litre, moving fuel inflation into the deflationary zone.
Core Inflation Decline
Core inflation, which includes goods and services, declined to a four-year low in FY24. Core services inflation reached a nine-year low, and core goods inflation also decreased. Improved supply of key input materials helped reduce consumer durables inflation.
The RBI’s gradual increase of the repo rate by 250 basis points since May 2022 contributed to a four percentage point decline in core inflation between April 2022 and June 2024.
Food Inflation Challenges
Food prices were pressured by adverse weather conditions, leading to food inflation of 6.6% in FY23 and 7.5% in FY24. Tomato and onion prices rose due to crop diseases, early monsoon rains, and logistical disruptions. The government took actions like dynamic stock management and subsidized provision of essential food items to mitigate food inflation.
State-wise Inflation
In FY24, 29 out of 36 States and Union Territories recorded inflation rates below 6%. Rural areas experienced higher inflation due to the greater weightage of food items in their consumption basket.
Future Projections
The RBI projects inflation to fall to 4.5% in FY25 and 4.1% in FY26, assuming normal monsoon and no external shocks. The IMF and World Bank also forecast declining inflation and global commodity prices, which may help reduce domestic inflation in India.
Long-term price stability requires modern storage and processing facilities for fruits and vegetables, better price monitoring mechanisms, and increased domestic production of essential food items.
Doubts Revealed
Nirmala Sitharaman -: Nirmala Sitharaman is the Finance Minister of India. She is responsible for managing the country’s finances, including the budget and economic policies.
Economic Survey -: The Economic Survey is a report presented by the government that reviews the country’s economic progress over the past year. It helps in planning the budget and future economic policies.
RBI -: RBI stands for Reserve Bank of India. It is the central bank of India, which controls the money supply and interest rates to keep the economy stable.
Retail inflation -: Retail inflation is the rate at which the prices of goods and services bought by households increase over time. It affects how much things cost in the market.
LPG -: LPG stands for Liquefied Petroleum Gas. It is used as fuel for cooking in many Indian households.
Repo rate -: The repo rate is the interest rate at which the RBI lends money to commercial banks. Changing this rate helps control inflation and the economy.
Food inflation -: Food inflation is the increase in the prices of food items. It can be caused by factors like bad weather affecting crops.
