Economic Survey 2022: Highlights and Growth Projections for Future

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On 31.1.2022, just a day before presenting the paperless Union Budget 2022-23, Finance Minister Nirmala Sitharaman tabled the Economic Survey 2021-22 immediately after the President’s address to both Houses of Parliament was over. The Economic survey details the state of economy and the steps that should be undertaken to accelerate economic growth of the country. MBAUniverse.com presents important highlights of this important GD Topic - Economic Survey 2021. 

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The two years of COVID-19 pandemic witnessed the global economy plunging into uncertainty, causing disruptions in supply-chain, return of inflation across the world. The Economic Survey 2022 relates to the art and science of policymaking under conditions of this uncertainty. For the purpose of understanding, the highlights as shared below, of Economic Survey 2022 are split into two parts-what happened and how the Indian economy has performed during last fiscal year and what are the growth projections for future 

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Part-1: Economic Survey 2022: How has Indian Economy Performed so far..
The Indian economy has been staging a sustained recovery since the second half of 2020-21. Although the second wave of the pandemic in April-June 2021 was more severe from a health perspective, the economic impact was muted compared to the national lockdown of the previous year. Key highlights of performance of Indian Economy in last fiscal as per Economic Survey 2022 are shared below:

  • Agricultural sector was the least impacted by the pandemic. It is estimated to grow 3.9 percent in 2021-22 on top of 3.6 percent and 4.3 percent, respectively, in the previous two years
  • The growth of industrial sector went through a big swing. It was first reduced to 7 percent in 2020-21 and then expanded to 11.8 percent in 2021-22.
  • Startups in India have grown remarkably over the last six years. India has now become the third largest startup ecosystem in the world after the US and China.
  • Unified Payments Interface (UPI) is currently the single largest retail payment system in the country in terms of volume of transactions, with 4.6 billion transactions worth Rs 8.26 lakh crore carried out in December 2021.
  • The top five sectors which capture around 83 percent of the aggregate pipeline value include: Roads (27 percent) followed by Railways (25 percent), Power (15 percent), oil & gas pipelines (8 percent) and Telecom (6 percent).
  • The Economic Survey has highlighted that privatisation of Air India has been particularly important for boosting the privatisation drive and garnering disinvestment proceeds.
  • Primary markets has seen a boom in fundraising through IPOs by many new age companies in the year 2021-22 so far. Rs 89,066 crore was raised via 75 IPO issued in April-November 2021.
  • With large part of contribution by Government spending, the  Consumption has grown to 7% in 2021-22
  • Middle-class borrowing to own houses remains well below the 21.1% growth year-on-year; also below the level of the last four years
  • Pandemic, job uncertainty continues to make people wary of EMIs, with home loans registering 8% growth in November 2021, 0.4% below 2020
  • Railways make Rs 65,157 crore capital expenditure from April to November 2021.
  • Capex outlay in the ongoing financial year is at Rs 2.15 lakh crore, which is five times the 2014 level.
  • Delhi saw 5,000 new startups versus 4,514 in Bengaluru between April 2019 and December 2021
  • India sees 44 unicorns in 2021, a new record.
  • In April-November 2021 Rs 89,066 crore was raised via 75 IPO issues versus 29 companies which raised Rs 14,733 crore in the same period in 2020
  • Forex, low current account deficit and capital inflows are keeping external sector well supported
  • Share of individual investors in total NSE turnover increases to 44.7%
  • 221 lakh individual Demat accounts added between April-November 2021

Part-2: Economic Survey 2022: Growth Projections
As per the survey, the growth in 2022-23 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. Key projections are:

  • India’s GDP growth rate is projected in the range of 8.0-8.5 percent in 2022-23 in real terms
  • Growth projections based on oil price projection of $70-75 per barrel next fiscal, against current price of $90
  • Disruptions in the global container market not yet over; will continue to impact the global sea trade.
  • Indian economy is expected to grow at 9.2 percent in the current fiscal
  • Industrial sector, overall is estimated to grow by 8.2 percent in 2021-22.
  • Imports are expected to grow by 29.4 per cent in 2021-22, surpassing corresponding pre-pandemic levels.
  • As per the Economic Survey 2022, climate finance will remain critical to successful climate action for India to achieve its Net Zero Carbon Emission target by 2070.
  • Crop diversification towards oilseeds, pulses and horticulture needs to be given priority
  • Economic Survey flags global resurgence of inflation, warns of imported inflation
  • Expenditure on social services rises by 9.8% to Rs 71.61 lakh crore in FY 22
  • Government consumption is estimated to grow by a strong 7.6% surpassing pre-pandemic levels.
  • India’s total exports are expected to grow by 16.5% in 2021-22 surpassing pre-pandemic levels.
  • Imports are expected to grow by 29.4% in 2021-22

GD Topic: Economic Survey 2021 – Top Highlights

On 29.1.2021, Finance Minister Nirmala Sitharaman tabled the Economic Survey 2020-21 which is authored by Chief Economic Adviser Krishnamurthy Subramanian. MBAUniverse.com presents important highlights of this important GD Topic - Economic Survey 2021.

Setting the context, preface of the survey says, “Economic Survey 2020-21 is an ardent tribute to the immortal human spirit of grit and compassion encapsulated by the tireless battle against the pandemic by our frontline COVID-19 warriors. In the midst of the most unfathomable global health emergency experienced in modern history, the resolve of each Indian helped find its way from the darkness of ‘lives vs livelihoods’to the glow of ‘#SavingLives&Livelihoods’. The foresight of our collective vision to battle this pandemic became evident when policy insights and implementation at the Centre, State and local level converged to initiate a V-shaped economic recovery.” Survey adds, “….after experiencing a sharp contraction of 23.9% in first quarter of 2020-21, India is expected to be the fastest growing economy in the next two years. Projections by various national and international agencies including the IMF project this resilience of the Indian economy.”  

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Key Highlights of the Survey

  • V-shaped economic recovery due to mega vaccination drive, robust recovery in the services sector and robust growth in consumption and investment
  • V-shaped recovery is due to resurgence in high frequency indicators such as power demand, rail freight, E-Way bills, GST collection, steel consumption, Etc
  • India to become the fastest growing economy in next two years as per IMF
  • India’s GDP is estimated to contract by 7.7% in FY2020-21
  • Agriculture to clock 3.4% Growth, while industry and services to contract by 9.6% and 8.8% respectively this year
  • India to have a Current Account Surplus of 2% of GDP in FY21, A historic high after 17 years
  • Net FPI Inflows recorded an all-time monthly high of 9.8 Billion Dollars in November 2020
  • Scores of lives saved and V-Shaped Economic Recovery bear testimony to India’s boldness in taking short-term pain for long-term gain.

Other highlights ofEconomic Survey 2021:

 

1. Economy To Go Past Pre-Covid Levels In Two Years
A rebound in economic activity and the government’s reforms can help the Indian economy go past its pre-Covid level in two years, the survey said. Further upside is also possible if economic activities normalise sooner due to the vaccine rollout.

 

2. GovernmentSpending should continue
The Economic Survey has batted for a continued expansionary fiscal stance by the government to ensure that growth returns to pre-Covid levels. A recovery in growth will boost revenue collections and help India get back on a sustainable fiscal path, it said.

 

3. Higher Growth Will Keep Debt In Check
The survey tried to cast away doubts about India’s debt levels saying that as long as GDP keeps growing, the country won’t have to worry about debt. The survey argues that over the last two-and-a-half decades, higher GDP growth causes the ratio of debt-to-GDP to decline in the case of India. The reverse, however, is not true, it said.

 

4. Banking sector needs Asset Quality Review 2.0
There is need for a fresh asset quality review of Indian banks as soon as the Covid-19 relief measures are lifted, the survey suggested. The chief economic adviser called for a clean-up of bank books to ensure mistakes of the past aren’t repeated.

 

5. An Eye On Core Inflation For Policy Making
The survey has suggested that a greater focus on core inflation is warranted to drive policy-making. It said that the sole focus on CPI inflation to set monetary policy may not be appropriate for four reasons.

 

6. Farm Lawsare good
The Economic Survey has said that the new farm laws, which are being widely opposed by farmer groups, will be beneficial for small and marginal farmers and herald Indian agriculture in a new free-market era.

 

7. Overregulation, a big issue.
More than lack of compliance or regulatory standards, India’s administrative process is suffering from overregulation, the survey noted. The root case is the government’s approach is one that attempts to account for every possible outcome, it said.

 

8. Say no to ‘Jugaad’
The Economic Survey made a case for higher research and development spending by the private sector to boost India's innovations. Relying on “jugaad innovation” risks missing the crucial opportunity to innovate our way into the future, the survey said. 

 

Hope this GD topic with important details and factual information on Economic Survey has helped you to prepare well on the topic for your final selection round. Since Economic Survey document is released by the Government just before the budget, it gives a holistic picture of the economy and prepares the base for the Budget for the forthcoming financial year.   Please note that while presenting your views in Group Discussion, the fact based information helps to give an edge to get through. 

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