India’s Gross Domestic Product growth rate is projected to grow by 8% to 8.5% in the next fiscal year of 2022-’23, the government said on Monday in the Economic Survey tabled in Parliament by Union Finance Minister Nirmala Sitharaman.
The finance minister will present the country’s annual Budget on Tuesday. The Economic Survey, presented a day ahead of the Budget, details the state of the country’s economy and suggests policy measures to accelerate growth. Though, the survey has often missed targets.
Meanwhile, the survey pegged GDP growth in this fiscal year (2021-’22) at 9.2%. This is in line with the first advanced estimate released by the government’s National Statistical Office earlier this month.
The government’s estimate of 9.2% growth for the current financial year was a bit lower than the Reserve Bank of India’s growth projection made during a policy review meeting in December. The central bank had projected the economy to grow at 9.5%, assuming that would be no resurgence of coronavirus infections in India.
The survey said that economic activity has recovered to pre-pandemic levels. “Almost all indicators show that the economic impact of the ‘second wave’ in Q1 was much smaller than that experienced during the full lockdown phase in 2020-’21, even though the health impact was more severe,” it added.
The survey said that growth in the next financial year will be supported by “widespread vaccine coverage, gains from supply-side reforms, easing of regulations, robust export growth and availability of fiscal space to ramp up capital spending”, PTI reported.
The growth projections for the next fiscal year are based on the projections that global oil price will come down to the range of $70-75, from the current price of $90, the survey stated. The government also added a caveat that the projection is based on the assumption that there will be no further debilitating economic disruption due to the coronavirus pandemic.
The report stressed that indicators of India’s overall macro economy show that it is “well placed to take on the challenges” of the coming fiscal year, helped by improving farm and industrial output growth.
The survey said that the privatisation of Air India was a key move in boosting the privatisation drive, and called for private participation in all sectors.
On January 27, the Centre handed over the debt-ridden Air India to Tata Sons after the conglomerate won the bid to acquire the airline for Rs 18,000 crore.
The Economic Survey noted that while the country’s consumer price index inflation was within the tolerance band at 5.6%, the wholesale price index inflation was in double digits.
The country needs to be cautious about imported inflation, particularly on account of high global energy prices, the survey stated.
The report, however, said that high wholesale price index inflation was partly due to the effect of a low base, which will even out.
Newly-appointed Chief Economic Advisor V Anantha Nageswaran addressed a press conference at 3.45 and said the growth projection made by Economic Survey is on the conservative side.
The survey is authored by a team led by Principal Economic Adviser Sanjeev Sanyal.
At the press briefing, Sanyal said that the agriculture sector was least-affected by lockdowns and is now about 8% above the pre-pandemic levels. The services sector, on the other hand, was the most hit by lockdowns and is yet to reach the earlier levels.
“The industrial sector did go through a contraction and now it is about 4.1% above pre-pandemic levels,” Sanyal said.
He added that the financial sector had “weathered” the pandemic rather well. “Bank credit has begun to tick up again, following a decline in the last two years,” Sanyal said.
The principal economic adviser said that exports have been major driver of India’s growth, while imports were also strong.
“Total consumption is just shy of where we were before pandemic,” Sanyal said while referring to the GDP forecast.
Earlier on Monday, the Budget session of Parliament commenced with President Ram Nath Kovind’s address to a joint sitting of the Lok Sabha and the Rajya Sabha. The first part of the Budget session will end on February 11, and the second part will be held from March 14 to April 8.