The Economic Survey of 2021-22 was recently tabled in the Parliament by the Finance Minister. This year’s survey has focused on showcasing the agile approach the country is taking towards infrastructural growth. The Economic Survey is an annual document that provides a detailed account of the state of India’s economy over the past year, with it being addressed to both houses of Parliament. Prepared under the supervision of the Chief Economic Advisor, this report is followed by the Union Budget. The first Economic Survey was presented in 1950-51.
The State of Economy according to Economic Survey 2021-22
The Indian economy is anticipated to grow by 9.2% in real terms in 2021-22, following a contraction of 7.3% in 2020-21. The GDP is projected to increase by 8-8.5% in 2022-23. IMF’s latest World Economic Outlook projections indicate that India will be the fastest-growing major economy in the world for the next three years. A combination of Foreign Exchange Reserves, sustained FDI, and climbing export earnings is expected to provide a buffer against potential global liquidity tapering in 2022-23.
Fiscal Developments
The Fiscal Deficit for April to November, 2021 was contained at 46.2% of Budget Estimates due to sustained revenue collection and a targeted expenditure policy. There has been a significant growth in Gross Tax Revenue during April to November, 2021. The government is expected to meet the fiscal deficit target of 6.8% of GDP for the current year (2021-22) through the buoyant tax revenues and government policies.
External Sectors
India’s merchandise exports and imports have exceeded pre-Covid levels during the current financial year. As of November 2021, India was the fourth largest forex reserves holder in the world trailing behind China, Japan, and Switzerland. The balance of net capital flow was higher at USD 65.6 billion in the first half of 2021-22, due to continued inflow of foreign investment.
Monetary Management and Financial Intermediation
There was a surplus of liquidity in the system in 2021-22, with the Repo rate maintained at 4%. The banking system has managed to withstand the economic shock of the pandemic, with bank credit growth gradually accelerating in 2021-22.
Industry and Infrastructure
The Index of Industrial Production (IIP) witnessed a significant growth during April-November 2021. Notably, both the Indian railways and the road construction sector have shown marked improvements in 2020-21. The introduction of the Production Linked Incentive (PLI) scheme along with infrastructural support should help in sustaining the pace of recovery.
Agriculture and Food Management
The Agriculture sector accounted for 18.8% (2021-22) in Gross Value Added (GVA) of the country, posting a growth of 3.6% in 2020-21 and 3.9% in 2021-22. Allied sectors like animal husbandry, dairying and fisheries are becoming high growth sectors and major drivers of overall growth in the agriculture sector.
Social Infrastructure and Employment
Employment indicators rebounded to pre-pandemic levels during the last quarter of 2020-21. The social infrastructure expenditure by Centre and States as a proportion of GDP increased from 6.2% in 2014-15 to 8.6% in 2021-22 (BE).
Sustainable Development and Climate Change
India’s overall score on the NITI Aayog Sustainable Development Goals (SDG) India Index improved in 2020-21. In 2020, India ranked third globally in increasing its forest area over the last decade. The country is also making efforts to reduce plastic waste and pollution levels.
Services
The GVA of services crossed pre-pandemic level in the July-September quarter of 2021-22. Major government reforms include removing telecom regulations in IT-BPO sector and opening up of the space sector to private players. A marked growth was witnessed in the services exports during January-March quarter of 2020-21.
