Eco Survey Projects Growth at 8 percent plus in Coming Year o Low Covid Hit 2020-21 Base
Key Highlights of the Economic Survey 2021-22
·
9.2 PERCENT GROWTH EXPECTED IN REAL TERMS IN 2021-22
·
GDP PROJECTED TO GROW 8.0-8.5 PERCENT IN 2022-23
·
PANDEMIC: GOVERNMENT’s SUPPLY SIDE REFORMS PREPARING
ECONOMY FOR SUSTAINED LONGTERM EXPANSION
·
CAPEX GROWS BY 13.5 PERCENT (YoY) DURING APRIL-NOVEMBER,
2021
·
FOREIGN EXCHANGE RESERVES TOUCH US$ 633.6 BILLION ON 31st DECEMBER, 2021
·
MACROECONOMIC STABILITY INDICATORS SUGGEST ECONOMY WELL
PLACED TO TAKE ON CHALLENGES OF 2022-23
·
MASSIVE GROWTH IN REVENUE RECEIPTS
·
SOCIAL SECTOR: EXPENDITURE ON SOCIAL SERVICES AS PROPORTION
OF GDP INCREASES TO 8.6 PERCENT IN 2021-22 (BE) AS COMPARED TO 6.2 PERCENT IN 2014-15
·
WITH REVIVAL OF ECONOMY, EMPLOYMENT INDICATORS BOUNCED
BACK TO PRE-PANDEMIC LEVELS DURING LAST QUARTER OF 2020-21
·
MERCHANDISE EXPORTS AND IMPORTS REBOUND STRONGLY AND
SURPASS PRECOVID LEVELS
·
BANK CREDIT ACCELERATES TO 9.2 PERCENT AS ON 31st DECEMBER,
2021
·
Rs 89,066 CRORE RAISED
VIA 75 IPOs; SIGNIFICANTLY HIGHER THAN IN ANY YEAR IN LAST DECADE
·
CPI-C INFLATION MODERATES TO 5.2 PERCENT IN 2021-22 (APRIL-DECEMBER)
·
FOOD INFLATION AVERAGES AT A LOW OF 2.9 PERCENT IN 2021-22
(APRIL-DECEMBER)
·
EFFECTIVE SUPPLY SIDE MANAGEMENT KEEPS PRICES OF MOST
ESSENTIAL COMMODITIES UNDER CONTROL
·
AGRICULTURE: GVA REGISTERS BUOYANT GROWTH OF 3.9% IN
2021-22
·
RAILWAYS: CAPITAL EXPENDITURE SEES SUBSTANTIAL INCREASE
TO Rs. 155,181 CRORE IN 2020-21; BUDGETED TO FURTHER INCREASE
TO Rs. 215,058 CRORE IN 2021-22, A FIVE TIMES INCREASE
COMPARED TO 2014 LEVEL
·
PER DAY ROAD CONSTRUCTION INCREASES TO 36.5 KMS IN 2020-21
– RISE OF 30.4 PERCENT COMPARED TO THE PREVIOUS YEAR
·
SDGs: OVERALL SCRORE ON NITI AAYOG DASHBOARD IMPROVES
TO 66 IN 2020-21
The Union Minister for Finance & Corporate
Affairs, Smt. Nirmala Sitharaman presented the Economic
Survey 2021-22 in Parliament on 31 January, 2022. The highlights of the Economic
Survey are as follows:
State of the Economy:
·
Indian economy estimated to
grow by 9.2 percent in real terms in 2021-22 (as per first advanced estimates) subsequent
to a contraction of 7.3 percent in 2020-21.
·
GDP projected to grow by 8-
8.5 percent in real terms 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.
·
Projection comparable with
World Bank and Asian Development Bank’s latest forecasts of real GDP growth of 8.7
percent and 7.5 percent respectively for 2022-23.
·
As per IMF’s latest World
Economic Outlook projections, India’s real GDP projected to grow at 9 percent in
2021-22 and 2022-23 and at 7.1 percent in 2023-2024, which would make India the
fastest growing major economy in the world for all 3years.
·
Agriculture and allied sectors
expected to grow by 3.9 percent; industry by 11.8 percent and services sector by
8.2 percent in 2021-22.
·
On demand side, consumption
estimated to grow by 7.0 percent, Gross Fixed Capital Formation (GFCF) by 15 percent,
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 adequate buffer against possible global liquidity tapering in 2022-23.
·
Economic impact of “second
wave” was much smaller than that during the full lockdown phase in 2020-21, though
health impact was more severe.
·
Government of India’s unique
response comprised of safety-nets to cushion the impact on vulnerable sections of
society and the business sector, significant increase in capital expenditure to
spur growth and supply side reforms for a sustained long-term expansion.
·
Government’s flexible and
multi-layered response is partly based on an “Agile” framework that uses feedback-loops,
and the use of eighty High Frequency Indicators (HFIs) in an environment of extreme
uncertainty.
Fiscal Developments:
·
The revenue receipts from
the Central Government (April to November, 2021) have gone up by 67.2 percent (YoY)
as against an expected growth of 9.6 percent in the 2021-22 Budget Estimates (over
2020-21 Provisional Actuals).
·
Gross Tax Revenue registers
a growth of over 50 percent during April to November, 2021 in YoY terms. This performance is strong compared to pre-pandemic
levels of 2019-2020 also.
·
During April-November 2021,
Capex has grown by 13.5 percent (YoY) with focus on infrastructure-intensive sectors.
·
Sustained revenue collection
and a targeted expenditure policy has contained the fiscal deficit for April to
November, 2021 at 46.2 percent of BE.
·
With the enhanced borrowings
on account of COVID-19, the Central Government debt has gone up from 49.1 percent
of GDP in 2019-20 to 59.3 percent of GDP in 2020-21, but is expected to follow a
declining trajectory with the recovery of the economy.
External Sectors:
·
India’s merchandise exports
and imports rebounded strongly and surpassed pre-COVID levels during the current
financial year.
·
There was significant pickup
in net services with both receipts and payments crossing the pre-pandemic levels,
despite weak tourism revenues.
·
Net capital flows were higher
at US$ 65.6 billion in the first half of 2021-22, on account of continued inflow
of foreign investment, revival in net external commercial borrowings, higher banking
capital and additional special drawing rights (SDR) allocation.
·
India’s external debt rose
to US $ 593.1 billion at end-September 2021, from US $ 556.8 billion a year earlier,
reflecting additional SDR allocation by IMF, coupled with higher commercial borrowings.
·
Foreign Exchange Reserves
crossed US$ 600 billion in the first half of 2021-22 and touched US $ 633.6 billion
as of December 31, 2021.
·
As of end-November 2021, India
was the fourth largest forex reserves holder in the world after China, Japan and
Switzerland.
Monetary Management and Financial
Intermediation:
·
The liquidity in the system
remained in surplus.
o Repo rate was maintained at 4 per cent in 2021-22.
o RBI undertook various measures such as G-Sec Acquisition Programme and Special Long-Term Repo Operations to provide further
liquidity.
·
The economic shock of the
pandemic has been weathered well by the commercial banking system:
o YoY Bank credit growth accelerated gradually in 2021-22 from 5.3
per cent in April 2021 to 9.2 per cent as on 31st December 2021.
o The Gross Non-Performing Advances ratio of Scheduled Commercial Banks
(SCBs) declined from 11.2 per cent at the end of 2017-18 to 6.9 per cent at the
end of September, 2021.
o Net Non-Performing Advances ratio declined from 6 percent to 2.2
per cent during the same period.
o Capital to risk-weighted asset ratio of SCBs continued to increase
from 13 per cent in 2013-14 to 16.54 per cent at the end of September 2021.
o The Return on Assets and Return on Equity for Public Sector Banks
continued to be positive for the period ending September 2021.
·
Exceptional year for the capital
markets:
o Rs. 89,066 crore was raised
via 75 Initial Public Offering (IPO) issues in April-November 2021, which is much
higher than in any year in the last decade.
o Sensex and Nifty scaled up to touch peak at 61,766 and 18,477 on
October 18, 2021.
o Among major emerging market economies, Indian markets outperformed
peers in April-December 2021.
Prices and Inflation:
·
The average headline CPI-Combined
inflation moderated to 5.2 per cent in 2021-22 (April-December) from 6.6 per cent
in the corresponding period of 2020-21.
o The decline in retail inflation was led by easing of food inflation.
o Food inflation averaged at a low of 2.9 per cent in 2021-22 (April
to December) as against 9.1 per cent in the corresponding period last year.
o Effective supply-side management kept prices of most essential commodities
under control during the year.
o Proactive measures were taken to contain the price rise in pulses
and edible oils.
o Reduction in central excise and subsequent cuts in Value Added Tax
by most States helped ease petrol and diesel prices.
·
Wholesale inflation based
on Wholesale Price Index (WPI) rose to 12.5 per cent during 2021-22 (April to December).
o This has been attributed to:
§ Low base in the previous year,
§ Pick-up in economic activity,
§ Sharp increase in international prices of crude oil and other imported
inputs, and
§ High freight costs.
·
Divergence between CPI-C and
WPI Inflation:
o The divergence peaked to 9.6 percentage points in May 2020.
o However, this year there was a reversal in divergence with retail
inflation falling below wholesale inflation by 8.0 percentage points in December
2021.
o This divergence can be explained by factors such as:
§ Variations due to base effect,
§ Difference in scope and coverage of the two indices,
§ Price collections,
§ Items covered,
§ Difference in commodity weights, and
§ WPI being more sensitive to cost-push inflation led by imported inputs.
o With the gradual waning of base effect in WPI, the divergence in
CPI-C and WPI is also expected to narrow down.
Sustainable Development and
Climate Change:
·
India’s overall score on the
NITI Aayog SDG India Index and Dashboard improved to 66
in 2020-21 from 60 in 2019-20 and 57 in 2018-19.
·
Number of Front Runners (scoring
65-99) increased to 22 States and UTs in 2020-21 from 10 in 2019-20.
·
In North East India, 64 districts
were Front Runners and 39 districts were Performers in the NITI Aayog North-Eastern Region District SDG Index 2021-22.
·
India has the tenth largest
forest area in the world.
·
In 2020, India ranked third
globally in increasing its forest area during 2010 to 2020.
·
In 2020, the forests covered
24% of India’s total geographical, accounting for 2% of the world’s total forest
area.
·
In August 2021, the Plastic
Waste Management Amendment Rules, 2021, was notified which is aimed at phasing out
single use plastic by 2022.
·
Draft regulation on Extended
Producer Responsibility for plastic packaging was notified.
·
The Compliance status of Grossly
Polluting Industries (GPIs) located in the Ganga main stem and its tributaries improved
from 39% in 2017 to 81% in 2020.
·
The consequent reduction in
effluent discharge has been from 349.13 millions of litres per day (MLD) in 2017 to 280.20 MLD in 2020.
·
The Prime Minister, as a part
of the national statement delivered at the 26th Conference of Parties
(COP 26) in Glasgow in November 2021, announced ambitious targets to be achieved
by 2030 to enable further reduction in emissions.
·
The need to start the one-word
movement ‘LIFE’ (Lifestyle for Environment) urging mindful and deliberate utilization
instead of mindless and destructive consumption was underlined.
Agriculture and Food Management:
·
The Agriculture sector experienced
buoyant growth in past two years, accounting for a sizeable 18.8% (2021-22) in Gross
Value Added (GVA) of the country registering a growth of 3.6% in 2020-21 and 3.9%
in 2021-22.
·
Minimum Support Price (MSP)
policy is being used to promote crop diversification.
·
Net receipts from crop production
have increased by 22.6% in the latest Situation Assessment Survey (SAS) compared
to SAS Report of 2014.
·
Allied sectors including animal
husbandry, dairying and fisheries are steadily emerging to be high growth sectors
and major drivers of overall growth in agriculture sector.
·
The Livestock sector has grown
at a CAGR of 8.15% over the last five years ending 2019-20. It has been a stable
source of income across groups of agricultural households accounting for about 15%
of their average monthly income.
·
Government facilitates food
processing through various measures of infrastructure development, subsidized transportation
and support for formalization of micro food enterprises.
·
India runs one of the largest
food management programmes in the world.
·
Government has further extended
the coverage of food security network through schemes like PM Gareeb Kalyan Yojana
(PMGKY).
Industry and Infrastructure:
·
Index of Industrial Production
(IIP) grew at 17.4 percent (YoY) during April-November 2021 as compared to (-)15.3 percent in April-November 2020.
o
Capital expenditure for the
Indian railways has increased to Rs. 155,181 crores in
2020-21 from an average annual of Rs. 45,980 crores during
2009-14 and it has been budgeted to further increase to Rs.
215,058 crores in 2021-22 – a five times increase in comparison to the 2014 level.
o
Extent of road construction
per day increased substantially in 2020-21 to 36.5 Kms
per day from 28 Kms per day in 2019-20 – a rise of 30.4
percent.
o
Net profit to sales ratio
of large corporates reached an all-time high of 10.6 percent in in July-September
quarter of 2021-22 despite the pandemic (RBI Study).
·
Introduction of Production
Linked Incentive (PLI) scheme, major boost provided to infrastructure-both physical
as well as digital, along with measures to reduce transaction costs and improve
ease of doing business, would support the pace of recovery.
Services:
·
GVA of services crossed pre-pandemic
level in July-September quarter of 2021-22; however, GVA of contact intensive sectors
like trade, transport, etc. still remain below pre-pandemic level.
o
Overall service Sector GVA
is expected to grow by 8.2 percent in 2021-22.
o
During April-December 2021,
rail freight crossed its pre-pandemic level while air freight and port traffic almost
reached their pre-pandemic levels, domestic air and rail passenger traffic are increasing
gradually – shows impact of second wave was much more muted as compared to during
first wave.
o
During the first half of 2021-22,
service sector received over US$ 16.7 billion FDI – accounting for almost 54 percent
of total FDI inflows into India.
o
IT-BPM services revenue reached
US$ 194 billion in 2020-21, adding 1.38 lakh employees during the same period.
o
Major government reforms include,
removing telecom regulations in IT-BPO sector and opening up of space sector to
private players.
o
Services exports surpassed
pre-pandemic level in January-March quarter of 2020-21 and grew by 21.6 percent
in the first half of 2021-22 - strengthened by global demand for software and IT
services exports.
o
India has become 3rd
largest start-up ecosystem in the world after US and China. Number of new recognized
start-ups increased to over 14000 in 2021-22 from 733 in 2016-17.
o
44 Indian start-ups have achieved
unicorn status in 2021 taking overall tally of unicorns to 83, most of which are
in services sector.
Social Infrastructure and
Employment:
·
157.94 crore
doses of COVID-19 vaccines administered as on 16th January 2022; 91.39
crore first dose and 66.05 crore second dose.
o
With revival of economy, employment
indicators bounced back to pre-pandemic levels during last quarter of 2020-21.
o
As per the quarterly Periodic
Labour Force Survey (PFLS) data up to March 2021, employment
in urban sector affected by pandemic has recovered almost to the pre-pandemic level.
o
According to Employees Provident
Fund Organisation (EPFO) data, formalization of jobs continued
during second COVID wave; adverse impact of COVID on formalization of jobs much
lower than during the first COVID wave.
o
Expenditure on social services
(health, education and others) by Centre and States as a proportion of GDP increased
from 6.2 % in 2014-15 to 8.6% in 2021-22 (BE)
o
As per the National Family
Health Survey-5:
·
o Total Fertility Rate (TFR) came down to 2 in 2019-21 from 2.2 in
2015-16
o Infant Mortality Rate (IMR), under-five mortality rate and institutional
births have improved in 2019-21 over year 2015-16
o Under Jal Jeevan Mission (JJM), 83 districts
have become ‘Har Ghar Jal’ districts.
·
Increased allotment of funds
to Mahatma Gandhi National Rural Employment Guarantee Scheme (MNREGS) to provide
buffer for unorganized labour in rural areas during the
pandemic.