In this combo photo, Finance Minister Nirmala Sitharaman and Leader of the Opposition in the Rajya Sabha Mallikarjun Kharge speak in the House on July 24, 2024. Photo: Sansad TV via PTI

In both Houses of Parliament, the Opposition attacked the government, accusing it of presenting a “discriminatory budget” that excluded the non-National Democratic Alliance (NDA)-ruled States. Finance Minister Nirmala Sitharaman issued a strong rebuttal to this in Rajya Sabha, hitting out at the Opposition for deliberately maligning the government, and giving a wrong impression that some States had been left out.

The Rajya Sabha saw a sharp exchange of words between the two sides on Wednesday morning. The Opposition staged a walkout in protest. Congress president and Leader of the Opposition in the Rajya Sabha Mallikarjun Kharge said that only two States had benefited from the Union Budget, presented on Tuesday. He said it was a budget aimed solely at safeguarding the Bharatiya Janata Party (BJP)-led NDA government. “I condemn all this. Opposition party-ruled States have been neglected. How will development happen if there is no balance? I condemn this and all the parties condemn this type of attitude,” Mr. Kharge said.

Ms. Sitharaman reacted strongly to the accusation, saying that all the States could not be named in the budget, and the Congress, which had been in power for long, should know better than to make such an allegation. The finer details about scheme-wise allocations were available for all to see in the budget documents, she said.

“The Cabinet, under the leadership of Prime Minister Narendra Modi, decided to set up a port at Vadhavan (in Maharashtra’s Palghar district), but Maharashtra’s name was not included in the budget [speech] yesterday. Does this mean that Maharashtra should feel ignored?” she said, adding that ₹76,000 crore had been allocated for this project.

“This is a deliberate attempt of the Opposition parties led by the Congress to give the people the wrong impression that their States were not allocated funds or schemes,” Ms. Sitharaman said. “I would challenge the Congress party to show that in every budget speech they have delivered, all the States have been listed out. This is an outrageous allegation,” she added.

Later in the afternoon, initiating the debate, former Finance Minister and Rajya Sabha MP P. Chidambaram criticised the special treatment to Andhra Pradesh and Bihar in the budget. “I don’t grudge at all that you are giving relief to Andhra Pradesh or Bihar, but what about the other States? We are a federal country. This is the death knell of federalism if you pick and choose among States. You are the Union of India, you are the Union government, you are the government of all the States. You cannot pick and choose one State and deny relief to another State,” Mr. Chidambaram said.

While unemployment is the biggest challenge for the government, Mr. Chidambaram said that the government’s latest employment-linked scheme did not instil confidence and will be another election jumla (insincere promise).

On inflation, he said the Finance Minister had dismissed the subject in 10 words. “Is inflation such a trivial subject?” Mr. Chidambaram asked, citing data from the government on inflation. He said the bank rate set by the Reserve Bank of India is a good measure to know where inflation is moving, and added that the Centre was unable to reach the target of 4% inflation in the last four years.

“I think what the Chief Economic Advisor said in the Economic Survey [on inflation] is injury, and the honourable Finance Minister dismissing the subject in 10 words is adding insult to injury,” he said, and added that the Centre was not taking inflation seriously. “If you don’t take inflation seriously, you will be punished more,” he said, citing the recent Assembly bypoll results.

In the Lok Sabha, too, the Opposition levelled a similar charge. Initiating the debate in the Lok Sabha, Congress MP Kumari Selja termed the budget a collection of “jumlas”, cautioning NDA members Nitish Kumar and N. Chandrababu Naidu that they, “may celebrate today for getting a large share” but time could change.

“I would like to caution these two States… Nitish-ji has been with us for a long time, serving in 10th Lok Sabha term, and Naidu-ji is also very experienced. Do not be swayed by their (the Centre’s) words. It may seem today that they have given a lot, but it doesn’t take long for the tide to turn. Therefore, I want to caution them (Janata Dal-United or JD-U and Telugu Desam Party or TDP) as well. They may celebrate today, but it doesn’t take long for times to change,” she said.

Earlier in the day, before the two Houses sat down for business, the Indian National Developmental, Inclusive Alliance (INDIA) bloc members staged a protest. Members of Parliament held placards with slogans, including ‘We want India budget not NDA budget’ and ‘NDA betrays India in Budget’.

The shift to renewable energy could lead to new vulnerabilities in the supply chains for solar panels and critical minerals, the Economic Survey 2023-24 said. File (representational image)
| Photo Credit: K. Murali Kumar

India’s path to sustainable development is fraught with challenges, as the country grapples with the twin imperatives of meeting burgeoning energy demands and reducing carbon emissions, the Economic Survey 2023-24 revealed on July 22.

Also Read:Economic Survey 2023-24 LIVE updates

Tabled in the Parliament, the Survey underscores the complexities of India’s green transition, emphasizing the need for a diversified energy portfolio to achieve ambitious growth targets while adhering to climate commitments.

“Balancing development needs with a low-carbon pathway is a tightrope, especially when financed predominantly through domestic resources,” the Survey noted, highlighting the financial strain of pursuing cleaner energy alternatives.

Click here to download Economic Survey 2023-24

The document stressed the critical role of non-fossil fuel sources in meeting India’s Nationally Determined Contributions (NDCs) and Net Zero goals. However, it also pointed out the challenges associated with renewable energy, including intermittency issues, waste management concerns for nuclear and solar technologies, and the potential impact of biofuel production on food security.

Acknowledging the importance of energy security, the survey advocated for a multi-pronged approach. It suggested diversification of energy sources, including renewables, nuclear, and biofuels; continued reliance on thermal power, particularly coal, to provide baseload support for renewable deployment; promotion of clean coal technologies like gasification and carbon capture, and enhanced international cooperation in R&D for emerging green technologies.

The Survey cautioned against over-reliance on imports, noting that while India’s dependence on petroleum imports is well-known, the shift to renewable energy could lead to new vulnerabilities in the supply chains for solar panels and critical minerals.

On a positive note, the report highlighted India’s significant progress in its mission-mode approach to addressing climate change. As of May 31, 2024, the share of non-fossil sources in installed electricity generation capacity has reached 45.4%, putting India on track to meet its updated NDC target of 50% by 2030.

The Survey called for a “more balanced approach” to climate change, suggesting policymakers focus on “nearer-term policy goals of improving human welfare” rather than being “excessively preoccupied” with long-term global climate management.

While acknowledging India’s achievements, the survey emphasized the need for financial support from developed countries.

With financing needs estimated at $2.5 trillion (at 2014-15 prices) for meeting NDC targets till 2030, access to finance and technology at reasonable costs is crucial to ease the resource constraints.

The agriculture insurance sector is likely to register growth from 2024 onwards. File
| Photo Credit: K.V.S. Giri

The agriculture insurance sector is likely to register growth from 2024 onwards, with an average real premium growth of 2.5% over the medium term, according to the Economic Survey 2023-24.

Also Read:Economic Survey 2023-24 LIVE updates

The survey, tabled in Parliament on July 22, noted that agriculture insurance, accounting for about 12% of the non-life insurance market, witnessed flat growth in FY23 due to a sharp decline in premium rates in the Kharif cropping season.

“However, this decline was more than offset by increased insured land area and farmer enrolments during the season,” it added.

Click here to download Economic Survey 2023-24

“Agriculture premiums will likely rise from 2024 onwards, with an average real premium growth of 2.5% cent over the medium term, supported by improvements in insurance infrastructure such as mobile applications and remote sensing for crop loss monitoring,” the survey said.

To address current concerns around crop insurance, the government has launched various technological initiatives. These include the YES-Tech Manual, WINDS portal, and enrolment app AIDE/Sahayak to assess crop damage via satellite-based advanced technologies.

The survey also highlighted door-to-door enrolment initiatives aimed at making crop insurance more accessible to farmers.

These measures are expected to enhance the efficiency of crop damage assessment and improve the overall accessibility of agricultural insurance in the country.

Currently, the government is implementing Pradhan Mantri Fasal Bima Yojana and the Weather Based Crop Insurance Scheme.

The concept of green steel promotes the production of steel using green energy sources and minimizing the usage of fossil fuels. File (representational image)

Green steel will play an important role in reshaping the future of the industry as the world moves towards a low-carbon economy, the Economic Survey for 2023-24 said.

The concept of green steel promotes the production of steel using green energy sources and minimizing the usage of fossil fuels.

Also Read:Economic Survey 2023-24 LIVE updates

“As the world moves towards a low-carbon economy, green steel is poised to play a pivotal role in reshaping the future of the steel industry,” said the Survey tabled in Parliament on July 22.

“India’s steel sector accounts for 12% of India’s greenhouse gas emissions with an emission intensity of 2.5 tonnes of CO2 per tonne of crude steel compared to the global average of 1.9 tonnes of CO2 per tonne of crude steel,” it said.

The Survey also said, “India remained a net importer of steel during the first, second and third quarters of FY24 because of price differentials between international and domestic prices of finished steel.”

“Low prices in the international markets led to reduced profit margins for exports and made imports more affordable, affecting the trade balance in the steel sector,” it said.

Click here to download Economic Survey 2023-24

“The import dependence on coking coal, an essential raw material for steel production also went up from 56.1 MT in FY23 to 58.1 MT in FY24,” the Survey said.

The Survey also highlighted that many technologies required for global net zero are commercially unavailable, such as hydrogen-fuelled steel/cement, steel and aluminium production with (Carbon Capture, Utilization, and Storage) CCUS, etc.

“There is a need to enhance international cooperation in R&D, especially in the domains of distributed RE, offshore wind, geothermal, tidal energy, biofuels, compressed biogas, green hydrogen, energy storage, electrolysers, and nuclear power [including small modular reactors SMR],” it said.

An auction window is created under the NRS for making coal available for new coal gasification plants
| Photo Credit: G. N. Rao

The initiatives of the government for cleaner fuel such as coal gasification mission and exploring coal to hydrogen need to be promoted to reduce emission and increase environmental sustainability, the Economic Survey on July 22 said.

While phasing in renewables to the extent possible is crucial, in the short to medium term, the focus should also be on actively adopting clean coal technologies.

“With the arrival of ultra super-critical technologies for coal-fired power plants, it would be possible to bring down emissions and achieve higher efficiency,” the Economic Survey 2023-24 tabled in the Parliament said.

Also Read:Economic Survey 2023-24 LIVE updates

“In exploring the landscape for ensuring energy security, it has become evident that risks are not merely obstacles but also harbingers of opportunities. While uncertainties loom, they present avenues for innovation, adaptation, and growth for India. While phasing in renewables to the extent possible is imperative, in the short to medium term, the focus should also be on actively adopting clean coal technologies,” it said.

The government has launched the National Coal Gasification Mission to achieve coal gasification and liquefaction of 100 million tonne of coal by 2030. In line with the mission document, Coal India Ltd has signed pacts with BHEL, GAIL and IOCL to take up coal gasification projects in the country.

Click here to download Economic Survey 2023-24

To promote coal gasification, the coal ministry has formulated a policy wherein, a provision has been made for a 50% rebate in revenue share for all future commercial mines auctions for the coal used in gasification purposes provided the quantity of dry fuel used for gasification is at least 10% of total coal production.

Further, a separate auction window under the Non-Regulated Sector (NRS) has been created for making coal available for new coal gasification plants.

Image for representational purposes only
| Photo Credit: Reuters

As per the latest Economic Survey tabled in Parliament on July 22, India’s focus on maintaining macroeconomic stability ensured external challenges had “minimal impact” on the economy. It held that the economy carried forward the momentum it built in the preceding financial year into FY2024. The survey emphasised India’s real GDP growth by 8.2% in FY2024 – exceeding the 8% mark in three of the four quarters. 

Stark differences among global economies 

The survey stated that the Indian economy recovered and expanded in an “orderly fashion” post the coronavirus pandemic. It mentioned the real GDP in FY 2024 was 20% higher than the levels attained in FY 2020. The survey described it as a feat that “only a very few major economies achieved”. 

Read the full Economic Survey 2023-24

The survey goes on to state that growth prospects for the ongoing financial year “look good”, subject to geopolitical, financial market and climate risks. 

Referring to the International Monetary Fund (IMF)’s World Economic Outlook (April 2024) the survey observed that the global economic growth had been 3.2% in 2023. The outlook had also noticed “diverging growth patterns” among countries which were on account of domestic structural issues, uneven exposure to geopolitical conflicts and impact(s) from the tightening of monetary policies. In its latest edition published in July, IMF retained the outlook for FY 2024 and 3.2% for FY 2025. With respect to India, IMF revised upward the forecast for growth this year to 7%. This was attributed to the carryover trends and improved prospects for private consumption, particularly in rural areas. 

The investment thrust 

Gross fixed capital formation increased 9% in real terms in FY 2023-24, the survey mentioned. It argued that the government’s thrust on capital expenditure and sustained momentum in private investment boosted the capital formation growth. “Moving forward, healthier corporate and bank balance sheets will further strengthen private investment. The positive trends in residential real estate market indicate that the household sector capital formation is increasing significantly,” it held separately.

The survey further informed about fiscal balances of governments, both at the centre and state, improving “progressively” notwithstanding expansionary public investment. Tax compliances too have gained because of procedural reforms, expenditure restraint and increased digitisation, it argued. 

External balances subdued 

However, the report enumerated concerns about India’s external balance pressured by “subdued global demand for goods”, but claimed strong services export largely counterbalanced the scenario. As a result of the paradigm, current account deficit stood at 0.7% of the GDP in the now-concluded FY2024, improving from the 2% deficit (of the GDP) in the preceding financial year. For perspective, current account documents a certain country’s international transactions with the rest of the world. Trade is an important component of this indicator. 

Photo used for representation purpose only.
| Photo Credit: Getty Images/iStockphoto

The outlook for India’s financial sector appears bright, but it needs to brace for likely vulnerabilities, said Economic Survey 2023-24 tabled in Parliament on July 22.

The Indian financial sector is at a “turnpike moment”, it said, adding that the dominance of banking support to credit is being reduced, and the role of capital markets is rising.

Economic Survey 2023-24 LIVE updates

For a country that aspires to be a developed nation by 2047, this is a long-awaited and welcome development, it said.

“Being reliant on and exposed to the capital market, however, comes with its challenges and trade-offs. As India’s financial sector undergoes this critical transformation, it must also brace for likely vulnerabilities and prepare itself with regulatory and government policy levers to intervene and hedge, as required,” it said.

Even as banks, non-banks and corporates battled balance-sheet excesses, the consequences of the credit boom of the first decade of the new millennium and the inevitable bust that followed in the second decade, the broad industry kept advancing the cause of financial inclusion and financial deepening, it said.

“Moving forward, healthier corporate and bank balance sheets will further strengthen private investment. The positive trends in the residential real estate market indicate that the household sector capital formation is increasing significantly,” it said.

Economic Survey 2023-24: India’s growth back to pre-COVID trends, 7%-plus growth possible in medium term 

As India embarks on the vision to become a developed country by 2047, it is imperative that financial intermediation costs decline globally, the Survey prepared by Chief Economic Adviser V Anantha Nageswaran and his team said.

It further said the financial sector needs to support capital formation and promote trade, business, and investments in MSMEs, enabling them to scale.

“It also needs to provide insurance protection and retirement security to all citizens. The share of insurance and pension fund assets in GDP stands at 19 per cent and 5 per cent, respectively, in India, compared to a high of 52% and 122% in the U.S. and 112% and 80% in the U.K., leaving scope for further improvements,” it added.

Financial sector firms — public or privately owned — must become customer-centric. Without that, most quantitative metrics will remain elusive, it recommended.

Union Minister of State Anupriya Patel, Ramdas Athawale and JD(U) MP Dileshwar Kamait during the all-party meeting, at Parliament House in New Delhi on July 21, 2024.
| Photo Credit: ANI

The Janata Dal (United), a key BJP ally which heads the government in Bihar, has strongly argued for a special financial package for the State to be granted during the Budget Session of Parliament that begins from July 22, since the government has already ruled out the grant of special category status. The JD(U) made its demand at Sunday’s all-party meeting.

Also read | Monsoon Session: Government lists six new Bills; Lok Sabha Speaker Om Birla constitutes BAC

However, the BJP’s other major ally, the Telugu Desam Party (TDP), which is in power in Andhra Pradesh remained ambivalent on the issue, only seeking financial support from the Centre on various “legacy” issues dogging the State.

According to sources, back-channel talks are on between the BJP and its allies on this issue. With Bihar going to the polls in a year, the JD(U) has told the BJP in no uncertain terms that Bihar must get significant financial aid from the Centre for the ruling National Democratic Alliance to have a fair shot in next year’s Assembly election.

Reciprocity expected

The JD(U) already made a concession for the BJP, climbing down from its long-standing demand for special category status only. A resolution was passed at the JD(U)‘s last national executive meeting in Delhi, stating that Bihar needs either a special category status or a special financial package. The JD(U) now expects a reciprocal gesture from the BJP.

It was JD(U) leader Sanjay Jha who raised the issue during the all-party meeting. “We reiterated our demand for special category status in the meeting. Our leader and Bihar Chief Minister Nitish Kumar has addressed public rallies from Gandhi Maidan to Ramlila ground on the issue. We also said that if on some technical grounds, they are unable to accord Bihar this status, they should grant a special package. We hope that in the upcoming Budget, the government will consider it,” Mr. Jha said.

Lok Janshakti Party (Ram Vilas) president and Union Minister Chirag Paswan also raised the same demand at the all-party meet.

YSRCP-TDP tussle

Unlike the JD(U), the TDP did not explicitly spell out its demand for “special category status” or a “special package” for Andhra Pradesh, but spoke at length on the precarious economic condition that the State finds itself in. The TDP’s equivocation on the issue gave a handle to its political rivals, the YSR Congress Party, which has framed special category status as the “only solution for the development of Andhra Pradesh.”

“We want enough time, so that all the financial issues concerning Andhra Pradesh can be placed in Parliament. It is not a question of this or that demand. There are several legacy issues. We will be presenting a white paper on the dire financial condition that the State finds itself in so that every political party understands our situation,” Lavu Sri Krishna Devarayalu, the TDP’s parliamentary party leader told The Hindu.

Slamming the TDP’s attitude, YSRCP leader Vijay Sai Reddy told journalists that he had raised the need for “special category status” for Andhra Pradesh during the all-party meet. “We have been demanding special category status. It is not a new demand; we have been raising it right from the day it was promised by then-Prime Minister Manmohan Singh in the Rajya Sabha. It is the only solution for the development of Andhra Pradesh. The TDP ignoring the issue and asking for an incentive or additional funds is not acceptable,” he said.

‘No more special category States’

The Biju Janata Dal also raised the demand for special category status for Odisha during the all-party meeting. BJD leader Sasmit Patra said that was a two-decade-old demand that Odisha has been continuously pleading for. The concept of a ‘special category status’ was introduced in 1969 by the Planning Commission during the Fourth Five-Year Plan. It extends tax incentives for investors and also increases the Centre’s financial share in all centrally sponsored schemes, considerably lightening the State government’s burden. However, consecutive Finance Commissions have ruled out extending the status to any States beyond those who already enjoy it.