Bhuvan Bhaskar
The picture of the country’s economy presented by the Economic Survey 2021-22, presented a day before the Union Budget 2022-23, has raised the expectations from the budget further. The bottom line of the survey is that Corona and its difficulties are a thing of the past and now the country is not ready to look back. The government has quoted the International Monetary Fund (IMF) as saying that India is set to emerge as the world’s fastest growing economy in the next two years. After the expectation of achieving a growth rate of 9.2% in the current year, now the economy is expected to grow at 8-8.5% in the next year i.e. 2022-23.
The agriculture sector is expected to grow at 3.9% this year as against 3.2% last year. This sector-based growth is broad-based and almost every sector is on track to register strong growth during 2021-22. The industrial sector is expected to grow at 11.8% during the current year as against a decrease of 7% in the previous year. The services sector is also expected to grow at 8.4% this year, as against a contraction of 8.2% during 2020-21. Not only this, the signs of 2021-22 in other sectors of the economy have also been quite encouraging.
The country’s total exports have reached a record level. While exports declined by 4.7% during 2020-21, it is expected to grow by 16.5% in the current year. However, more growth has been registered in imports than exports, which decreased by 13.6% last year, while this year it is expected to increase by 29.4%. The reason for such a tremendous increase in imports can be seen in the increase in consumption.
Overall consumption is expected to grow by around 7% in the current year. The special thing in this is that the government and the private sector have almost equal participation in increasing consumption. Government consumption is expected to increase to 7.6% this year from 2.9% last year, while the private sector, which reduced consumption by more than 9% last year, is consuming 6.9% more this year. This is about 97% of private sector consumption before covid.
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In addition to consumption, investment has also improved significantly. The investment, which is calculated as Gross Fixed Capital Formation (GFCF) and is a key factor in future income generation, is projected to grow by 15%, down from around 11% last year . Not only this, due to the government’s expenditure on capital expenditure and infrastructure, the ratio of investment to GDP has increased to 29.6% in 2021-22, which is the highest level in the last 7 years.
The position of foreign exchange reserves in the country is much better. India’s forex reserves stood at $634 billion as of December 31 last year, mainly due to India’s positive balance of payments in world trade during the last two financial years. This reserve is sufficient for 13.2 months of merchandise imports.
The survey also indicates that the situation on the fiscal deficit front is completely under control. The survey says that the fiscal deficit during April-November 2021 has reached only 46.2% of the budgeted estimate for the full year, due to continuous better revenue, while it is more than 135% during April-November 2020 and it is 114 during April-November 2019. % was over.
But amidst all these positive signs, the survey has also given a glimpse of the challenges of 2022-23. The survey has welcomed the huge growth in revenue collection by saying that the government has enough funds in case the government needs to provide more help for the economy. During April-November 2021, an increase of 67% has been registered in the revenue collection on a yearly basis. Along with this, referring to the position of foreign exchange reserves, the survey said that during 2022-23, India will be fully capable of managing its position in the event of liquidity running out of global financial markets.
Some basic conditions have also been enumerated for the growth goals announced in the survey. These include no further economic disruption from the pandemic, a normal monsoon, planned implementation of liquidity easing plans by banks around the world and crude oil expected to remain in the $70-75 a barrel range. Obviously, liquidity and crude oil (which has already crossed the $90 level) could pose a major challenge to the finance minister’s maths, barring the monsoon and the pandemic.
NITI Aayog Vice Chairman Rajiv Kumar said in a conversation with a private channel in the evening that he expects investment from the private sector to pick up during 2022-23 and this will create new employment opportunities. The government seems to be very excited by the disinvestment of Air India and hence the survey has also proposed a pipeline to raise funds from disinvestment by 2024-25, which is called the National Monetization Pipeline. It aims to raise Rs 6 lakh crore from the sale of government assets in the next 4 years. The top 5 sectors that have been counted under this are roads, rail, power, oil and gas pipelines and telecom, which will account for 83% of the total targeted fund.
Referring to employment generation, a special mention has been made of MGNREGA in the survey and it has been said that in 2020-21, Rs 1,11,171 crore was released under the scheme, while in 2021-22, Rs 68,233 crore wages were released from this scheme. Payment done.
(The author is an expert in agriculture and economic matters)
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