India to remain fastest-growing major economy in world during 2021-24: Economic Survey, cites World Bank, IMF

New Delhi: The Economic Survey 2021-22, released on Monday, said that India will remain the fastest-growing major economy in the world during 2021-24, as per the projections of the World Bank, Asian Development Bank and International Monetary Fund.

The growth projection for 2022-23 is based on the assumption that there will be no further debilitating pandemic related economic disruption, monsoon will be normal, withdrawal of global liquidity by major central banks will be broadly orderly, oil prices will be in the range of USD70- USD75/bbl, and global supply chain disruptions will steadily ease over the course of the year, according to the survey.

Union Minister for Finance and Corporate Affairs Nirmala Sitharaman, who tabled the Economic Survey 2021-22 in Parliament on Monday, stated that the year ahead is well poised for a pick-up in private sector investment with the financial system in a good position to provide support to the revival of the economy.

According to the annual survey, the above projection is comparable with the World Bank`s and Asian Development Bank`s latest forecasts of real GDP growth of 8.7 per cent and 7.5 per cent respectively for 2022-23. 

As per the IMF`s latest World Economic Outlook (WEO) growth projections released on 25 January 2022, India`s real GDP is projected to grow at 9 per cent in both 2021-22 and 2022-23 and at 7.1 per cent in 2023-24. This projects India as the fastest-growing major economy in the world in all these three years.

Referring to First Advance Estimates, the Survey states that the Indian economy is estimated to grow by 9.2 per cent in real terms in 2021-22, after a contraction of 7.3 per cent in 2020-21. Almost all indicators show that the economic impact of the "second wave" in Q1 was much smaller than that experienced during the full lockdown phase in 2020-21, even though the health impact was more severe.

The Survey states that Agriculture and allied sectors have been the least impacted by the pandemic and the sector is expected to grow by 3.9 per cent in 2021-22 after growing by 3.6 per cent in the previous year. The area sown under Kharif and Rabi crops, and the production of wheat and rice has been steadily increasing over the years.

The manufacturing, construction and mining sub-sectors went through the same swing although the utilities segment experienced a more muted cycle as basic services such as electricity and water supply were maintained even at the height of the national lockdown. The share of industry in GVA is now estimated at 28.2 per cent.

The Survey states that the services sector has been the hardest hit by the pandemic, especially segments that involve human contact. This sector is estimated to grow by 8.2 per cent this financial year following last year`s 8.4 per cent contraction. 

Both the finance/ real estate and the public administration segments are now well above pre-COVID levels.However, segments like travel, trade and hotels are yet to fully recover. There has been a boom in software and IT-enabled services exports even as earnings from tourism have declined sharply.

The total consumption is estimated to have grown by 7.0 per cent in 2021-22 with government consumption remaining the biggest contributor as in the previous year. Government consumption is estimated to grow by a strong 7.6 per cent surpassing pre-pandemic levels. Private consumption is also estimated to have improved significantly to recover 97 per cent of the corresponding pre-pandemic output level and it is poised to see a stronger recovery with rapid coverage in vaccination and faster normalization of economic activity.

According to the Survey, Investment, as measured by Gross Fixed Capital Formation (GFCF) is expected to see strong growth of 15 per cent in 2021-22 and achieve full recovery of pre-pandemic level.

On the exports and imports front, merchandise exports have been above USD30 billion for eight consecutive months in 2021-22. From a demand perspective, India`s total exports are expected to grow by 16.5 per cent in 2021-22 surpassing pre-pandemic levels. 

Imports are expected to grow by 29.4 per cent in 2021-22 surpassing corresponding pre-pandemic levels. Further, the Survey points out that despite all the disruptions caused by the global pandemic, India`s balance of payments remained in surplus throughout the last two years. 

India's foreign reserves touched USD 633.6 bn as of Dec 31, 2021: Survey

India`s foreign reserves have crossed USD600 billion in the first half of 2021-22 and touched USD 633.6 billion as of December 31, 2021, as per the Economic Survey, which said that India`s merchandise exports and imports rebounded strongly and surpassed pre-COVID levels during the current financial year.

According to the annual survey, there was a 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 USD 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 USD 593.1 billion at the end-September 2021, from USD 556.8 billion a year earlier, reflecting additional SDR allocation by IMF, coupled with higher commercial borrowings.

India was the fourth-largest forex reserve holder in the world after China, Japan and Switzerland, by end-November 2021.

Industrial sector likely to grow by 11.8% this fiscal: Survey

Gradual unlocking of the economy, record vaccinations, improvement in consumer demand, continued policy support towards industries by the Government in the form of Atma Nirbhar Bharat Abhiyan and further reinforcements in 2021-22 have led to an upturn in the performance of the industrial sector, the Economic Survey tabled in Parliament said on Monday. 

According to the Survey, initiatives under AatmaNirbhar Bharat including structural and procedural reforms reinforce the performance of the industrial sector, expected to grow by 11.8 per cent in this financial year.

It said, "Investor-friendly FDI policy sets up new records in FDI inflows registering highest-ever annual FDI inflow of 81.97 billion US $ in 2020-21," adding that the gross bank credit to the industrial sector has recorded growth of 4.1 per cent.

Production Link Incentive schemes help reduce transaction costs and improve ease of doing business, said the Survey, adding that the government has approved an outlay of Rs 76,000 crore for the development of the semiconductors and display manufacturing ecosystem.

Construction of National Highways and roads has registered an increase of 30.2 per cent over the previous year, it said, adding that the growth of the industrial sector in the first half of 2021-22, was 22.9 per cent vis a vis the corresponding period of 2020-21 and is expected to grow by 11.8 per cent in this financial year. 

(With ANI Inputs)