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Analysis of Sansad TV Discussion: ”Economic Survey 2021-22: The State of the Indian Economy”

Context

Finance Minister Nirmala Sitharaman tabled the Economic Survey 2021-22 in Parliament on the first day of the Budget Session.

What Does the Survey Say about the Status of the Economy?

  • The survey says that Overall economic activity has recovered to pre-pandemic levels & the economy is well-poised for FY 2022-23.
  • The survey says that overall macro-economic stability indicators suggest that the Indian Economy is well placed to take on the challenges of 2022-23.
  • According to the economic survey, India will witness GDP growth of 8.0-8.5 per cent in 2022-23, supported by various factors such as 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.
  • For the current fiscal the survey estimates 9.2 per cent GDP growth in real terms. This includes a sharp rebound in the services and industrial sector which were hit very hard by the COVID-19 pandemic.
  • Investment is also expected to see strong growth of 15 per cent in this fiscal year.

Sectorwise Status of the Economy

Government Finances

• Strong rebound in government revenues in FY22.
• Govt will comfortably meet fiscal targets without cutting scheme spending or CAPEX.

External Sector

  • High forex reserves, sustained FDI and rising exports provide an adequate buffer against possible global liquidity tapering in 2022-23.

Analysis of Sansad TV Discussion: "Economic Survey 2021-22: The State of the Indian Economy"_40.1

Financial Sector

  • The banking system is well capitalised and the overhang of NPAs seem to have structurally declined.
  • Capital markets are robust, allowing risk capital mobilisation.

The agriculture sector

  • The agriculture sector is expected to witness a growth of 3.9 per cent in comparison to 3.6 per cent last year.
  • The Economic Survey also says that emphasis on supply-side reforms rather than a total reliance on-demand management has been a distinguishing feature of India’s economic response during the pandemic.

Key Challenges & Risks

• Demand weakness, full recovery in exports, government consumption and gross fixed capital formation.
• Private consumption still struggling because of the impact of the pandemic
• Among sectors, services trade, hotels, transport, and communication are still below pre-pandemic levels.
• Consumer inflation within the target; high wholesale inflation is partly due to base effect and should ease out.
• Imported inflation is a concern, especially from high energy prices.
• Global environment uncertain, Omicron sweeping across the world.
• Inflation has jumped across many countries.
• Global central banks beginning to withdraw liquidity.
• High energy prices.

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