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Economic Survey predicts 11% growth in fiscal 2022

CEA says it’s time to swap fiscal gears from cautious stance to ‘counter-cyclical’ push; Rapid vaccine rollout can enhance ailing companies sectors, spur consumption and funding; India’s response to ‘once-in-a-century’ disaster a lesson for democracies to keep away from myopic coverage.

 

India’s economic system is firmly in the center of a V-shaped restoration and can bounce again to file 11% growth in 2021-22 after an estimated 7.7% contraction this yr, in accordance with a ‘conservative’ estimate in the Economic Survey for 2020-21. The Survey termed the growth a ‘lockdown dividend’ from the nation’s stringent response to the COVID-19 pandemic

Making a robust pitch for the federal government to loosen its purse strings to spur the economic system with a ‘counter-cyclical fiscal push’ until the nation returns to its pre-COVID growth path, the Survey tabled in Parliament on Friday defended the conservative fiscal stimulus in the course of the preliminary part of the pandemic, stating that pushing down on the accelerator whereas the brakes are clamped ‘only wastes fuel’.

Economic Survey 2021 | Highlights

Comparing the Indian economic system’s resurgence from the collapse in the primary two quarters of the yr to the nation’s latest cricketing fortunes, which recovered swiftly from the lows of being bowled out for 36 in the Adelaide check to register an unlikely collection win towards Australia, Chief Economic Advisor Krishnamurthy Subramanian indicated that it was time to modify fiscal gears to a extra aggressive strategy. 

“Like in cricket, even in the economy, timing matters. When the ball is swinging around a lot, there’s a lot of uncertainty, you need to play carefully and focus on survival and the essential items… you play like (Cheteshwar) Pujara. Once the swing is gone, you bat like Pant, which is what the Indian economy and policy makers are now focused on,” he mentioned. 

“Wait for one day, I am sure you will see both Pujara and Pant in action,” he mentioned at a press convention after the Survey was tabled, indicating that the Union Budget for 2021-22 may very well be cautiously expansionary.

Economic Survey predicts 11% growth in fiscal 2022

 

“The V-shaped economic recovery while avoiding a second wave of infections make India a sui generis case in this unique, synchronized global recession,” the Survey mentioned, including {that a} fast vaccination roll-out this yr might enhance restoration in the companies sectors in addition to fire up non-public consumption and funding. 

With India anticipated to emerge because the quickest rising economic system in the subsequent two years as per IMF, the Survey argued that the nation’s “mature policy response to this ‘once-in-a-century’ crisis provides important lessons for democracies to avoid myopic policy-making and demonstrates the significant benefits of focusing on long-term gains”.

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Slow course of 

While India’s absolute growth numbers could also be outstanding in 2021-22 because of the low base impact, returning to pre-pandemic growth and output ranges would take longer.

“The global economy, including India, has been set back in time by the pandemic induced crisis. In the five years before 2020-21, Indian economy grew at an average growth of 6.7%. In 2021-22, a sharp recovery of real GDP growth of 10%-12% is expected based on a low base effect and inherent strengths of the economy. It is assumed that the economy grows at its trend growth rate of 6.5% in 2022-23 and 7% in 2023-24, aided by the structural reforms,”the Survey famous.

“If two scenarios of 12% growth and 10% growth in 2021-22 are envisaged, India would be 91.5% and 90% below the trend level of output, respectively, by 2023-24,” it mentioned. 

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