Day 4 – Q 3. What are the key observations of the latest economic survey on India’s growth performance? Discuss. (15 Marks)

3. What are the key observations of the latest economic survey on India’s growth performance? Discuss. (15 Marks)

भारत के विकास प्रदर्शन पर नवीनतम आर्थिक सर्वेक्षण के प्रमुख अवलोकन क्या हैं? चर्चा करें।

Approach-

Candidates need to discuss the key observations of the latest economic survey on India’s growth performance. 

Introduction–

The Economic Survey (2021-22) while pegging India’s growth at 8-8.5% for 2022-2023 and estimates a dip in financial debt to 46.2% of the budget, real growth of 2021-22 at 9.2% and growth in tax revenue, investments and surplus liquidity in the market. 

Body

The key observations of the latest economic survey on India’s growth performance includes: 

The government sees the Indian economy growing at 8-8.5 per cent in the financial year 2022-23 (FY23). 

The projection was comparable with World Bank and Asian Development Bank’s latest forecasts of real GDP growth of 8.7 per cent and 7.5 per cent respectively for 2022-23.

As per IMF’s latest World Economic Outlook projections, India’s real GDP is projected to grow at 9 per cent in 2021-22 and 2022-23 and at 7.1 per cent in 2023-2024, which would make India the fastest-growing major economy in the world for all 3years.

The GDP growth rate for the ongoing financial year 2021-22 (FY22) is estimated at 9.2 per cent. 

In order to achieve USD 5 trillion GDP by FY’25, India needs to spend about USD 1.4 trillion over this period on infrastructure, according to the Economic Survey. 

Agriculture and allied sectors are expected to grow by 3.9 per cent; industry by 11.8 per cent and the services sector by 8.2 per cent in 2021-22.

On-demand side, consumption is estimated to grow by 7.0 percent, Gross Fixed Capital Formation (GFCF) by 15 per cent, exports by 16.5 percent and imports by 29.4 percent in 2021-22.

Macroeconomic stability indicators suggest that the Indian Economy is well placed to take on the challenges of 2022-23.

Combination of high foreign exchange reserves sustained foreign direct investment, and rising export earnings will provide an adequate buffer against possible global liquidity tapering in 2022-23.

The year ahead poised for a pickup in private sector investment with the financial system in good position to provide support for economy’s revival.  

Agriculture and allied sectors expected to grow by 3.9 per cent; industry by 11.8 per cent and services sector by 8.2 per cent in 2021-22.

On demand side, consumption estimated to grow by 7.0 per cent, Gross Fixed Capital Formation (GFCF) by 15 per cent, exports by 16.5 per cent and imports by 29.4 per cent in 2021-22.

Combination of high foreign exchange reserves, sustained foreign direct investment, and rising export earnings will provide adequate buffer against possible global liquidity tapering in 2022-23. 

The economic impact of the “second wave” was much smaller than that during the full lockdown phase in 2020-21, though the health impact was more severe.

The revenue receipts from the Central Government (April to November 2021) have gone up by 67.2 per cent (YoY) as against the expected growth of 9.6 per cent in the 2021-22 Budget Estimates (over 2020-21 Provisional Actuals).

Conclusion

The last two years have been difficult for the world economy on account of the COVID-19 pandemic. Repeated waves of infection, supply-chain disruptions and, more recently, inflation have created particularly challenging times for policy-making. 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.