Recognized Start-Ups Cross 1.25 Lakh: Economic Survey

The country has moved to knowledge and innovation backed economic growth on the back of rapid rise in patents and start-ups. The Economic Survey 2023-24, tabled today by Union Minister of Finance and Corporate Affairs Nirmala Sitharaman at the Parliament presents a strong case for a holistic innovation driven industrial ecosystem. The Survey notes that there has been an advancement of industrial research and development in recent years as evident from India’s consistent improvement in the Global Innovation Index.

India holds the top rank globally in the domestic market scale indicator of the index. The Survey states that the number of patents granted increased seventeen-fold from 5,978 in 2014-15 to 1,03,057 in 2023-24. The Survey also highlights that registered designs rose from 7,147 in 2014-15 to 30,672 in 2023-24. It also states that the Government aims to set up Anusandhan National Research Foundation (ANRF) with an estimated cost of ₹ 50,000 crore during 2023-28, to serve as an apex body which would provide high level strategic direction for scientific research in Indian industry.

Highlighting the vibrant Start-Up ecosystem of India, the Survey notes that more than 45 per cent of Start-Ups emerged out of Tier 2 and Tier 3 cities and the number of DPIIT-recognised start-ups increased to more than 1.25 lakh by March 2024 from 300 in 2016. The Survey states that over 13,000 of these start-ups are working in diverse thematic areas like artificial intelligence, the internet of things, robotics, and nanotechnology. Indian start-ups are spear-heading innovation in the country with start-ups filing more than 12,000 patent applications from 2016 to March 2024, mentions the Economic Survey.

As per the Survey, 135 Alternative Investment Funds have invested more than ₹18,000 crore in start-ups by the end of FY24 while the Bharat Start Up Knowledge Access Registry is bringing together diverse stakeholders in the Start Up ecosystem.

Real GDP To Grow At 6.5–7 Per Cent

India’s real GDP is projected to grow between 6.5–7 per cent in 2024-25. The Indian economy recovered swiftly from the pandemic, with its real GDP in FY24 being 20 per cent higher than the pre-COVID, FY20 levels. This was stated by the Economic Survey 2023-24 presented in Parliament today by the Union Minister of Finance and Corporate Affairs Nirmala Sitharaman. Showing resilience, India’s real GDP grew by 8.2 Percent in FY 24, exceeding 8 percent mark in three out of four quarters of FY 24, says the Economic Survey. The Survey indicates that manufacturing sector grows by 9.9 per cent in FY 24 while construction activities also register a growth of 9.9 per cent.

The Survey points out that the domestic growth drivers have supported economic growth in FY24 despite uncertain global economic performance. It also adds that during the decade ending FY20, India grew at an average annual rate of 6.6 per cent, more or less reflecting the long-run growth prospects of the economy.

The Survey, however cautions that any escalation of geopolitical conflicts in 2024 may lead to supply dislocations, higher commodity prices, reviving inflationary pressures and stalling monetary policy easing with potential repercussions for capital flows. This can also influence RBI’s monetary policy stance. The global trade outlook for 2024 remains positive, with merchandise trade expected to pick up after registering a contraction in volumes in 2023.

The Survey highlights that leveraging the initiatives taken by the government and capturing the untapped potential in emerging markets; exports of business, consultancy and IT-enabled services can expand. Despite the core inflation rate being around 3 per cent, the RBI, with one eye on the withdrawal of accommodation and another on the US Fed, has kept interest rates unchanged for quite some time, and the anticipated easing has been delayed.

Within the industrial sector, manufacturing GVA shrugged off a disappointing FY23 and grew by 9.9 per cent in FY24, as manufacturing activities benefitted from reduced input prices while catering to stable domestic demand. Similarly, construction activities displayed increased momentum and registered a growth of 9.9 per cent in FY24 due to the infrastructure build out and buoyant commercial and residential real estate demand.

Service Sector Doing Well

Various high-frequency indicators reflect the growth in the services sector. Both Goods and Services Tax (GST) collections and the issuance of e-way bills, reflecting wholesale and retail trade, demonstrated double-digit growth in FY24. Financial and professional services have been a major driver of growth post the pandemic, the survey added.

Gross Fixed Capital Formation (GFCF) continues to emerge as an important driver of growth. GFCF by private non-financial corporations increased by 19.8 per cent in FY23. There are early signs that the momentum in private capital formation has been sustained in FY24. As per data provided by Axis Bank Research, private investment across a consistent set of over 3,200 listed and unlisted non-financial firms has grown by 19.8 per cent in FY24.

The Survey says, it is also incumbent upon the private sector to take forward the momentum in capital formation on its own and in partnership with the Government. Their share in addition to the capital stock in terms of machinery and equipment, started growing robustly only since FY22, a trend that needs to be sustained on the strength of their improving bottom-line and balance sheets in order to generate high-quality jobs.

The Survey says, the all-India annual unemployment rate (persons aged 15 years and above, as per usual status) has been declining since the pandemic and this has been accompanied by a rise in the labour force participation rate and worker-to-population ratio. From the gender perspective, the female labour force participation rate has been rising for six years, i.e., from 23.3 per cent in 2017-18 to 37 per cent in 2022-23, driven mainly by the rising participation of rural women.

On the global economic scenario the Survey says that after a year marked by global uncertainties and volatilities, the economy achieved greater stability in 2023. While uncertainty stemming from adverse geopolitical developments remained elevated, global economic growth was surprisingly robust. The Survey states as per the World Economic Outlook (WEO), April 2024 of the International Monetary Fund (IMF), the global economy registered a growth of 3.2 per cent in 2023.