Ahead of the Union Budget 2022, to be presented on February 1, Finance Minister Nirmala Sitharaman tabled the Economic Survey 2021-22 along with Statistical Appendix in the Lok Sabha today-the first day of the Budget session of Parliament.
The pre-budget Economic Survey, which is tabled in Parliament ahead of the Union Budget to present the state of the economy and suggest policy prescriptions emphasized on the signs of recovery shown by the world’s third-largest economy.
After a contraction of 7.3 percent in 2020-21, the first Advance estimates suggest that the Indian economy is estimated to witness a real GDP expansion of 9.2 percent in 2021-22.
The Economic Survey noted that economic activity has recovered to pre-pandemic level and is well placed to take on challenges in 2022-23.
After the two tiresome years caused by the repeated waves of covid infection, supply-chain disruptions, and, more recently, inflation the policymakers base their projection with hopes that there will be no further debilitating pandemic-related economic disruption, monsoon will be normal, withdrawal of global liquidity by major central banks will be orderly.
The annual economic survey also showed, India’s forecasted economic growth to be 8% to 8.5% for the coming fiscal year that starts in April.
“The Growth in 2022-23 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,” said the Economic Survey.
Robust export growth
Despite the multiple downside risks the Resilience of India’s exports is expected to drive growth revival in 2022-23.
The Survey drew attention to a major rebound in India’s merchandise exports and imports over a short period, which had not been expected by policymakers earlier.
“This is remarkable given moderation in global trade growth, elevated shipping rates, and persistent problem of container shortages,” the Survey noted.
Knee jerk reactions to the price rise of essential commodities like pulses and edible oils through frequent import duty/tariff revisions through providing immediate relief to the consumers in the way of lower prices, send wrong signals to domestic producers, and create an environment of uncertainty.
The government has taken steps in this direction and signed five-year MoUs with Myanmar for annual import of 2.5 LMT of Urad and 1 LMT of Tur, with Malawi for annual import of 1 LMT of Tur, and MoU with Mozambique for annual import of 2 LMT Tur has been extended by another five years- ensuring the predictability in the number of pulses being produced abroad and exported to India, thus benefiting both India and the pulse exporting country.
Aiming to meet the goal of having a $5 trillion economy by 2024-25, India is required to spend about $1.4 trillion over these years on infrastructure. During FYs 2008-17, India has invested about $1.1 trillion in infrastructure. However, the challenge is to step up infrastructure investment substantially.
However, to meet the goal the nation needs to step up its infra investments, for which, National Infrastructure Pipeline (NIP) was launched with a projected infrastructure investment of around Rs 111 lakh crore ($ 1.5 trillion) during FY 2020-2025 to provide world-class infrastructure across the country. The project envisages improving project preparation and attracting investment, both domestic and foreign in infrastructure.
The nation has taken several supply-side reforms including deregulation of numerous sectors, simplification of processes, removal of legacy issues like ‘retrospective tax’, privatization, production-linked incentives, and so on.
Even the sharp increase in capital spending by the Government can be seen both as a demand and supply enhancing response as it creates infrastructure capacity for future growth.
This year’s survey particularly highlights the importance of process reforms in several sectors.