India’s economy has shown strong signs of recovery after suffering a contraction of 7.3 per cent last year due to the COVID-19 pandemic.
According to the Economic Survey for the current financial year, India’s economy grew by 9.2 per cent in 2021-22, indicating a return to pre-pandemic levels of economic activity.
Principal Economic Advisor Sanjeev Sanyal commented on the positive growth and emphasised the importance of supporting the economy’s recovery.
The key takeaway is that the Indian economy has shown strong signs of recovery after the COVID-19 pandemic and is approaching pre-pandemic levels of growth in almost every sector. The agriculture and allied services sector, which was among the least affected during the pandemic due to the higher concentration of COVID-19 cases in urban areas, have demonstrated robust recovery.
S&P Global and Morgan Stanley predicted that India would likely become the world’s third-largest economy in the coming years, overtaking Japan and Germany. S&P’s forecast is based on the projection that India’s annual nominal Gross Domestic Product (GDP) growth will average 6.3 per cent through 2030. Similarly, Morgan Stanley estimates that India’s GDP will likely double current levels by 2031.
These predictions suggest that India is expected to experience strong economic growth in the coming years, which could contribute to its rise in the global economic ranking.
It is unclear from the information provided what specific factors or circumstances may be driving this expected economic growth or how global economic developments may impact the Indian economy.
The Survey indicated that the recovery in this sector had exceeded 100 per cent compared to the financial year 2019-2020. This suggests that the agriculture and allied services sector has not only recovered from the negative impact of the pandemic but has also experienced growth beyond pre-pandemic levels.
Sanjeev Sanyal headed the committee responsible for preparing the Economic Survey for the current financial year 2021-2022. The Survey has been presented in two volumes this year. The first volume contains an overview of the macroeconomic and sectoral developments in the Indian economy, while the second is a dedicated and revamped statistical appendix.
The statistical appendix provides detailed data and analysis on various economic indicators, such as GDP, inflation, employment, trade, and financial markets. Including a revamped statistical appendix in this year’s Economic Survey reflects the importance of reliable and comprehensive data in informed decision-making and policy formulation.
‘Economy well placed to meet the future challenges ‘
The survey also predicted that the country’s Gross Domestic Product (GDP) would grow at a rate of 8-8.5 per cent in the next fiscal year. This optimistic forecast suggests the Indian economy is on track for strong growth in the coming year. In response to this forecast, it is expected that the Union Budget, the annual financial statement of the government, will focus on fiscal management and reforms to provide a boost to the economy and ensure that it continues to grow at a healthy rate.
This could include measures such as tax cuts, increased government spending, or regulatory reforms, among others. Overall, the focus of the Union Budget is likely to be on finding ways to support and accelerate the growth of the Indian economy, in line with the optimistic GDP forecast.
“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.
“The year ahead is also well poised for a pick-up in private sector investment with the financial system in a good position to support the revival of the economy. Thus, India’s GDP is projected to grow in real terms by 8.0-8.5 per cent in 2022-23.
“This projection is based on the assumption that there will be no further debilitating pandemic-related economic disruption, normal monsoon, withdrawal of global liquidity by major central banks will be broadly orderly, oil prices will be in the range of US$70-75/bbl, and global supply chain disruptions will steadily ease over the course of the year,” the survey note said.
According to the information provided, global rating firm Moody’s Investors Service revised its growth projection for India in 2022-23 downward from 7.7% to 7%, citing the weakening Rupee (India’s currency) and high oil prices as factors that are impacting the economy.
In addition, the firm has warned that India’s economic growth will decelerate further in 2023-24, with a projected growth rate of just 4.8 per cent.
This suggests that Moody’s expects the Indian economy to experience slower growth in the coming years, potentially due to the challenges posed by external factors such as the value of the Rupee and high oil prices. It is unclear from the information provided what specific actions or policies the Indian government or other stakeholders may take in response to this projection.
Furthermore, it has downgraded its growth forecasts for several G-20 countries, including the United States, China, Japan, India, and several European countries. The outlook predicts that the real Gross Domestic Product (GDP) of the G-20 economies, a group of the world’s largest economies, will decelerate from 2.5% in 2022 to just 1.3% in 2023, which is significantly lower than the agency’s previous estimate of 2.1 per cent.
This suggests that Moody’s expects these countries’ economic growth to slow significantly in the coming year. It needs to be clarified from the information provided what factors or circumstances may contribute to this expected slowdown or how individual countries or the global economy may be impacted.
It is difficult to predict with certainty what the outlook for India will be in 2023, as it will depend on a wide range of factors, including economic, political, and social developments both within the country and globally.
That being said, a few key issues and trends are likely to shape the Indian economy in the coming years and influence its overall outlooks, such as Demographic changes, urbanisation, manufacturing and export technology and digitalisation and infrastructure.