Economic Survey 2022: Even though the economy has come out of the slowdown associated with COVID-19, private consumption, which is considered important for economic growth, has still not reached pre-pandemic levels. This has been said in the Economic Survey 2021-22.
The review tabled in Parliament on Monday said, “The new advance estimates show that in 2021-22, all demand related components have shown improvement except for private consumption. Compared to pre-pandemic levels, there was a significant recovery in exports, followed by government consumption and gross fixed capital formation.
Private consumption contributes the most to GDP
Private consumption refers to the amount of money spent on goods and services purchased by consumers in the country. It registered an increase of 6.9 per cent in 2021-22. Thus private consumption is at a level of 97 per cent as compared to the pre-pandemic levels. Given the largest contribution of private consumption to GDP, a growth rate of 6-7 per cent without any favorable base is crucial. But with household income falling due to the pandemic, this state of private spending is not surprising.
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Significant increase in export of goods and services
In addition, the survey said that India’s exports of goods and services registered a significant increase in 2021-22. Merchandise exports exceeded $30 billion for the 8th consecutive month in 2021-22, despite rising trade costs due to global supply constraints. Both exports and imports have remained above pre-pandemic levels, up 11 per cent since then.
will increase further
“With a sharp increase in vaccination coverage, a strong recovery in private consumption is anticipated to be visible going forward,” the review said. It argued that HFIs like IIP consumer durables are confident of strong strong support.
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The review points to a significant increase in digital transactions, especially UPI payments, in the wake of the pandemic, which also indicates an improvement in consumer sentiment. According to the National Payments Corporation of India (NPCI) data, there were 456 crore UPI transactions worth about Rs 8.27 lakh crore in December, compared to 422 crore transactions worth Rs 7.71 lakh crore in October.
“The overall consumption is projected to grow by 7.0 per cent in 2021-22 with the highest contribution from government consumption,” the survey said.
growing investment
Investments, as measured by Gross Fixed Capital Formation (GFCF), are projected to grow 15 per cent in 2021-22 and have reached pre-pandemic levels.
The government’s policy of increasing capex and infrastructure spending led to increased capital formation in the economy and the ratio of investment to GDP at 29.6 per cent in 2021-22, the highest in seven years.
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