Eco Survey pegs growth at 9.2% in 2021-22, to reach pre-Covid level
Despite the Covid-19’s looming shadow over the global finances, India’s economy is on the path of recovery and is well poised to reach the pre-pandemic level, according to the pre-Budget Economic Survey tabled by Finance Minister Nirmala Sitharaman in Parliament on Monday.
The survey estimated the economy to grow by 8-8.5 per cent in the fiscal beginning April 1. As per the survey, the economy is well placed to meet the future challenges on the back of widespread vaccine coverage, supply-side reforms and easing of regulations.
The Economic Survey 2021-22 expects the economy to grow by 9.2 per cent during the current financial year, indicating a recovery to the pre-pandemic level.
The economy had contracted by 7.3 per cent in 2020-21 on account of the impact of the Covid pandemic and subsequent nationwide lockdowns to check the spread of coronavirus.
The rosy economic scenario painted by the survey revived the stock market sentiments. Equity benchmarks notched up solid gains on Monday after a two-session sliding streak. A robust recovery in the rupee further boosted the market.
The 30-share BSE Sensex opened on a firm footing and kept its momentum throughout the session. It finally closed at 58,014.17, clocking a gain of 813.94 points or 1.42 per cent. Likewise, the broader NSE Nifty rallied 237.90 points or 1.39 per cent to end at 17,339.85.
“Overall, macro-economic stability indicators suggest that the Indian economy is well placed to take on the challenges of 2022-23. One of the reasons that the Indian economy is in a good position is its unique response strategy,” the survey said.
The Indian economy, as seen in quarterly estimates of GDP, has been staging a sustained recovery since the second half of 2020-21. Although the second wave of the pandemic in April-June 2021 was more severe from a health perspective, the economic impact was muted compared to the national lockdown of the previous year.
“Advance estimates suggest that GDP will record an expansion of 9.2 per cent in 2021-22. This implies that the level of real economic output will surpass the pre-Covid level of 2019-20,” the survey said.
While the survey has flagged concern over “imported inflation”, especially from elevated global energy prices, it expects private sector investment to pick as the financial system is in a good position to provide support necessary for speedy revival of the economy.
The survey said the fiscal support given to the economy as well as the health response caused the fiscal deficit and Government debt to rise in 2020-21. However, there has been a strong rebound in revenues in 2021-22 so far.
As per the survey, the Government has the fiscal capacity to maintain the support, and ramp up capital expenditure when required. The strong revival in revenues also provides the Government with fiscal space to provide additional support as well, if necessary, it added.
Also, the banking system is well capitalised and the overhang of non performing assets (NPAs) seems to have structurally declined even allowing for some lagged impact of the pandemic.
Referring to the price situation in the country, the survey said “although the high WPI inflation is partly due to base effects that will even out, India does need to be wary of imported inflation, especially from elevated global energy prices”.
“Overall, macro-economic stability indicators suggest that the Indian economy is well placed to take on the challenges of 2022-23.
The growth in 2022-23, it said 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 year ahead is also well poised for a pick-up in private sector investment with the financial system in a good position to provide support to the revival of the economy. Thus, India’s GDP is projected to grow in real terms by 8.0-8.5 per cent in 2022-23,” it said.
The projection, according to the survey, is based on the assumption 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 broadly orderly, oil prices will be in the range of USD 70-75 per barrel, and global supply chain disruptions will steadily ease over the course of the year.
The survey also said India’s external sector is resilient to face any unwinding of the global liquidity arising out of the likelihood of faster normalisation of monetary policy by systemically important central banks, including the Fed, in response to elevated inflationary pressures.
Interestingly, the survey showed that more people WERE now opting for a pension amount of Rs 1,000 per month, under the government-run Atal Pension Yojana (APY), and the scheme WAS ALSO gaining popularity among youngsters.
APY, the flagship social security scheme of the government, was launched on May 9, 2015, to provide old-age income security particularly to the citizens in the unorganized sectors.
As per the Economic Survey, more people are now opting for a pension
amount of Rs 1,000 per month. “As of September 2021, around 78 percent subscribers have opted for Rs 1,000 per month pension amount, as compared to 38 percent subscribers as of March 2016,” it said.
As many as 8 percent of the subscribers have opted for the pension subscription category of Rs 1,000/ 3,000/ 4,000 per month, while 14 percent have opted for Rs 5,000 per month pension, it noted.
The APY scheme is being distributed through more than 250 active APY service providers including all banks and post offices.
Citing the age-profile related data of the APY subscribers, the survey said, as of September 2021, more than 43 percent of subscribers
were between 18 and 25 years, as compared to 29 percent as of March 2016, suggesting increasing enrolments at a young age.
The Economic Survey also highlighted narrowing down of gender gap in APY enrolments. There is increased participation of female subscribers, which has increased from 37 percent as of March 2016, to 44 percent as of September 2021.
Uttar Pradesh, Bihar, West Bengal, Maharashtra, Tamil Nadu, Andhra Pradesh, Karnataka, Madhya Pradesh, Rajasthan, Gujarat, and Orissa are among the top states which have APY account enrolment of 10 lakh and more.
The latest survey has shifted from the two-volume format of recent years to a single volume plus a separate volume for statistical tables.