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The Indian economy, pummelled by the coronavirus outbreak, is expected to see a strong comeback in the next financial year, according to the Economic Survey 2020-21, which was tabled in the Parliament on January 29.
The Survey noted the country’s real GDP growth is likely to expand by 11% in FY22. On the other hand, it estimated that the economy is likely to contract by 7.7% in FY21 on account of a sharp 15.7% dip in the first half and a modest 0.1% fall in the second half.
“The V-shaped economic recovery is supported by the initiation of a mega vaccination drive with hopes of a robust recovery in the services sector. Together, prospects for robust growth in consumption and investment have been rekindled with the estimated real GDP growth for FY 2021-22 at 11 per cent,” the survey said.
Authored by a team led by Chief Economic Adviser Krishnamurthy Venkata Subramanian, the survey details the state of different sectors of the economy as well as reforms that should be undertaken to accelerate growth.
It further added that agriculture was largely insulated from the lockdown in India as timely and proactive exemptions from Covid-induced lockdowns to the sector facilitated uninterrupted harvesting of rabi crops and sowing of kharif crops. The sector witnessed a growth of 3.4% in both Q1 and Q2 of FY21.
On the other hand, the survey further said that industry and services sectors are estimated to contract by 9.6% and 8.8%, respectively, in FY21.
Commenting on the survey, VK Vijayakumar, Chief Investment Strategist, Geojit Financial Services said: “Economic Survey 2021 argues for more counter-cyclical measures from the government. If the government goes along the suggestions from the Survey, more government spending particularly on infrastructure can be expected. GDP growth rate of 11% for FY22 is realistic. The Survey also bats for accelerated privatisation. This is in tune with the Atmanibhar package announced by the govt in May. If the focus of the Survey gets reflected in the budget, we are likely to get a reformist budget.”
Anirudha Taparia, Executive Director, IIFL Wealth said: “India’s quick V-shaped recovery has surprised people in most quarters. However, it is prudent to remain cautious and understand that this recovery remains fragile and vulnerable to externalities. The Economic Survey has justifiably recognised this and shared forward-looking insights that can potentially put India’s growth on firm ground. To that end, the survey’s focus on healthcare, innovation and R&D, and the start-up community can be viewed as a positive.”
Here are the other key highlights of the Economic Survey:
— Economic survey projects V-shaped recovery in 2021-22
— Official app for Economic Survey launched
— Covid-19 posed most formidable challenge to the world
— Agriculture sector remained the silver lining amid crisis
— India’s Stringent lockdown was critical to saving lives
— Fundamentals of the economy remain strong
— Atmanirbhar Bharat mission places economy on revival path
— Healthcare takes centrestage, finally.
— India’s sovereign credit rating doesn’t reflect its fundamentals
— India’s forex reserve can cover additional 2.8 standard deviation negative event
— Never in history of sovereign ratings, 5th largest economy rated lowest investment grade (BBB-/Baa3)
— Current account surplus of 2% of GDP likely in FY21- After 17 years