Finance minister Nirmala Sitharaman tabled the Economic Survey 2022 in the Lok Sabha on Monday, January 31. It projected an 8 per cent to 8.5 per cent growth rate for the Indian economy in 2022-23 fiscal year. “With the vaccination programme having covered the bulk of the population, economic momentum building back and the likely long-term benefits of supply-side reforms in the pipeline, the Indian economy is in a good position to witness GDP growth of 8.0-8.5 per cent in 2022-23,” the Economic Survey 2022 said. All the indicators suggested the Indian economy is well-placed to take on the challenges of 2022-23, said the annual report.
Growth will be supported by “widespread vaccine coverage, gains from supply-side reforms and easing of regulations, robust export growth, and availability of fiscal space to ramp up capital spending,” the Economic Survey suggested.
While estimating the growth, the Economic Survey assumed that there will be no further disruption in the Indian economy due to Covid-19 pandemic. The monsoon will be normal while the withdrawal of global liquidity by major central banks will be broadly orderly. “The global oil prices will be in the range of US$70-$75/bbl, and global supply chain disruptions will steadily ease over the course,” the survey pointed.
Indian economy is likely to witness a real GDP expansion of 9.2 per cent in 2021-22 fiscal year, according to the advance estimates, the Economic Survey mentioned. This implied that overall economic activity has recovered past the pre-pandemic levels. “Almost all indicators show that the economic impact of the second wave in first quarter was much smaller than that experienced during the full lockdown phase in 2020-21 even though the health impact was more severe,” the survey said.
Total Consumption to Grow More
Total consumption is estimated to have grown by 7.0 per cent in 2021-22. The government consumption remained the biggest contributor as in the previous year. Private consumption improved significantly to recover 97 per cent of corresponding pre-pandemic output level, it said. “This is supported by a sharp rebound in HFIs like IIP Consumer Durables,” the survey mentioned. “Private consumption is poised to see stronger recovery with rapid coverage in vaccination and faster normalisation of economic activity,” it further predicted.
“According to the economic survey tabled today, the economy is likely to witness a strong recovery of 9.2 per in FY 2021-22 and between 8 per cent and 8.5 per cent next year. The projections by the Economic survey are in line with Deloitte’s in-house forecasts as we too are upbeat about the growth outlook in the years ahead. Exports and investment will be the biggest drivers, while consumer demand will pick up with a lag,” said Rumki Majumdar, economist, Deloitte India.
“We are cognisant of the fact that the prolonged infection, monetary policy tightening by central banks of advanced economies, high commodity prices, and geopolitical tensions may create a less-conducive growth environment. Global liquidity squeeze may result in capital outflows and put depreciating pressures on the Indian rupee. The lopsided growth among industries and rising inequality between the haves and have nots may add to the woes,” Majumdar added.
It is a longstanding tradition to present a Economic Survey a day before the Union Budget. The Economic Survey provides a glance at how Indian economy has performed in last one year. It was first presented in 1950-52 and submitted a along with the Union Budget until 1964. From the year 1964, the ministry started to release the survey a day before Budget day.
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