India’s economy is expected to grow at 9.2% in the financial year ending March, the pre-budget Economic Survey, tabled in parliament by Finance Minister Nirmala Sitharaman today, said.
This expansion comes on a low base after the economy contracted by a record 7.3% in the previous financial year, as harsh restrictions to curb the Covid-19 pandemic froze commercial activity, denting demand for goods and services, and upending supply chains.
The Economic Survey 2022 expects the economy to grow by 8% - 8.5% in the financial year starting April 1.
Growth 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 Survey said.
The Survey’s projection of 9.2% growth this fiscal year is a shade lower than the RBI’s forecast of a 9.5% expansion, but slightly higher than the International Monetary Fund’s latest estimate of 9% growth, which is lower than its October forecast of a 9.5% increase.
The IMF's World Economic Outlook, released last week, projects Indian economy to grow by an annual 9% in 2022 and 7.1% in 2023, ahead of China's 4.8% and 5.2, respectively. Given China’s economy is estimated to grow 8.1% in 2021, India becomes the fastest-growing major economy, snatching the tag from the world’s second-largest economy and keeping it for the next two years.
To be sure, the Indian economy had been on a downward trajectory even before the pandemic hit in March 2020, prompting the government to impose what was billed as the world’s strictest lockdown. Many experts attribute this to Prime Minister Narendra Modi government’s decision to cancel high-value currency notes in November 2016, purportedly to tackle corruption and curb terror financing. Since then, the GDP growth declined steadily, slipping to 4% in 2019-20, before the novel coronavirus swept the world.
The Economic Survey, which is tabled in Parliament ahead of the Union Budget, illustrates the state of the economy and suggests policy prescriptions.
The Survey is prepared under the supervision of the Chief Economic Adviser (CEA) to the Finance Ministry. The government on Friday named economist V. Anantha Nageswaran as the new CEA after K.V. Subramanian demitted office upon completing his three-year term and returning to academia.