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KEY HIGHLIGHTS OF ECONOMIC SURVEY 2021-22 » Bhajpa Ki Baat

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KEY HIGHLIGHTS OF ECONOMIC SURVEY 2021-22 » Bhajpa Ki Baat

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KEY HIGHLIGHTS OF ECONOMIC SURVEY 2021-22 » Kamal Sandesh

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:

The Indian economy is 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 is poised for a pickup in private sector investment with the financial system in a good position to provide support for the 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 are expected to grow by 3.9 percent; industry by 11.8 percent and services sector by 8.2 percent in 2021-22.
On the demand side, consumption is 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 an adequate buffer against possible global liquidity tapering in 2022-23.

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.
Repo rate was maintained at 4 per cent in 2021-22.
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:
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.
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.
Net Non-Performing Advances ratio declined from 6 percent to 2.2 per cent during the same period.
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.
The Return on Assets and Return on Equity for Public Sector Banks continued to be positive for the period ending September 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.
The decline in retail inflation was led by easing of food inflation.
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.
Effective supply-side management kept prices of most essential commodities under control during the year.
Proactive measures were taken to contain the price rise in pulses and edible oils.
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).
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:
The divergence peaked to 9.6 percentage points in May 2020.
However, this year there was a reversal in divergence with retail inflation falling below wholesale inflation by 8.0 percentage points in December 2021.
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

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.

Agriculture and Food Management:

The Agriculture sector experienced buoyant growth in the past two years, accounting for a sizable 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 the 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 the 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.
The Government has further extended the coverage of food security network through schemes like PM Gareeb Kalyan Yojana (PMGKY).

Industry and Infrastructure:

The 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.
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.
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.
Net profit to sales ratio of large corporates reached an all-time high of 10.6 percent 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.
Overall service Sector GVA is expected to grow by 8.2 percent in 2021-22.
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.
During the first half of 2021-22, the service sector received over US$ 16.7 billion FDI – accounting for almost 54 percent of total FDI inflows into India.
IT-BPM services revenue reached US$ 194 billion in 2020-21, adding 1.38 lakh employees during the same period.

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.
With the revival of the economy, employment indicators bounced back to pre-pandemic levels during the last quarter of 2020-21.
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).

(News Source -Except for the headline, this story has not been edited by Bhajpa Ki Baat staff and is published from a BJP KS feed.)

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