India Economic Survey 2021-2022

The Economic Survey is an annual report of the Indian economy for the year gone by (FY 2021-22). The survey summarises the state of the economy, reveals prospects of the Indian economy in the near term, highlights the policy initiatives and evokes new suggestions.

On 31 January 2022, Mrs. Nirmala Sitharaman, Indian Finance Minister presented the fourth Economic Survey in the Parliament for the Modi 2.0 government.

The survey also forms the basis for key figures in the India budget – announced on 1 February 2022. The theme of the Economic Survey this year relates to the art and science of policymaking under conditions of extreme uncertainty. To realise the ambition of US$5 trillion GDP by 2025, India needs to spend about US$1.4 trillion over this period on infrastructure.

Key highlights of the survey:

The Survey points out that the financial sector is always a possible area of stress during turbulent times. However, India’s capital markets have done exceptionally well and have allowed record mobilization of risk capital of Indian companies. The Sensex and Nifty scaled up to touch its peak at 61,766 and 18,477 on October 18, 2021. Moreover, the banking system is well capitalized and NPAs seems to have structurally declined.

The Survey expresses that another distinguishing feature of India’s economic response has been an emphasis on supply-side reforms rather than a total reliance on demand management. The sharp increase in capital spending by the Government can be seen as both demand and supply response as it creates infrastructure capacity for future growth.

There are two common themes in India’s supply-side strategy:

• Reforms that improve flexibility and innovation to deal with the long-term unpredictability of the post-Covid world. This includes factor market reforms; deregulation of sectors like space, drones, geospatial mapping, trade finance factoring; process reforms like those in government procurement and in telecommunications sector; removal of legacy issues like retrospective tax; privatization and monetization, creation of physical infrastructure, and so on.
• Reforms aimed at improving the resilience of the Indian economy. These range from climate/environment related policies; social infrastructure such as public provision of tap water, toilets, basic housing, insurance for the poor, and so on; support for key industries under Atmanirbhar Bharat; a strong emphasis on reciprocity in foreign trade agreements, and so on. Conclusion The Survey is quite optimistic that overall macro-economic stability indicators suggest that the Indian Economy is well placed to take on the challenges of 2022-23 and one of the reasons that the Indian Economy is in good position is its unique response strategy. Sakshi Jain Head – CBI India and Senior Policy Adviser Confederation of British Industry

State of the Economy in 2021-22: A Macro View

• India projected as fastest growing major economy to grow in real terms by 8.0-8.5% in 2022-23. The economy is expected to grow at 9.2% in the current fiscal.
• Growth projections based on oil price projection of $70-75 per barrel next fiscal, against current price of $90.
• The agricultural sector was the least impacted by the pandemic. It is estimated to grow 3.9% in 2021-22.
• Industrial sector went through a big swing by first contracting by 7% in 2020-21 and then expanding by 11.8% in this financial year.
• Services sector is estimated to grow by 8.2 percent in 2021-22.
• India’s total exports are expected to grow by 16.5% and imports by 29.4% in 2021-22 surpassing pre-pandemic levels.
• The top five sectors which capture around 83% of the aggregate pipeline value include: Roads (27%) followed by Railways (25%), Power (15%), oil & gas pipelines (8%) and Telecom (6%).
• Foreign Exchange Reserves Stood at US$ 634 billion as on 31 December 2021. India’s balance of payments remained in surplus throughout the last two years.
• India’s Consumer Price Index inflation stood at 5.6% YoY in December 2021 which is within the targeted tolerance band. Wholesale price inflation, however, has been running in double-digits.
• Disruptions in the global container market not yet over; will continue to impact the global sea trade.
• Expenditure on social services rises by 9.8% in the 2022 Fiscal Year (FY)
• Government consumption is estimated to grow by a strong 7.6% surpassing pre-pandemic levels. Consumption has grown 7% in 2021-22.
• Share of individual investors in total National Stock Exchange of India (NSE) turnover increases to 44.7%
• India sees 44 unicorns in 2021, a new record. Delhi saw 5,000 new start-ups versus 4,514 in Bengaluru between April 2019 and December 2021