ECONOMIC SURVEY PREDICTION

ECONOMIC SURVEY PREDICTION

Subject: Economics

Context : After an estimated 7.7 per cent contraction in 2020-21, the Finance Ministry’s Economic Survey projects that India’s real GDP would record a growth of 11 per cent in 2021-22.

Concept:

• The nominal GDP growth has been estimated at 15.4 per cent, implying an assumption of 4.4 per cent inflation during the year.

Basis for Growth Projections

• One of the factors is the low base while calculating the year-on-year inflation rate, given the contraction this fiscal.
• The Survey noted that the “conservative estimates” of growth in FY22 “reflect upside potential that can manifest due to the continued normalisation in economic activities as the rollout of Covid-19 vaccines gathers traction”.
• This will further be supported by a supply-side push from reforms and easing of regulations, push to infrastructural investments, boost to manufacturing sector through the Productivity Linked Incentive Schemes, recovery of pent-up demand for the services sector, increase in discretionary consumption subsequent to the roll-out of the vaccine and pick up in credit given adequate liquidity and low-interest rates, the survey noted.
• This path would entail a growth in real GDP by 2.4 per cent over the absolute level of 2019-20 – implying that the economy would take two years to reach and go past the pre-pandemic level.
• India is expected to emerge as the fastest growing economy in the next two years as per IMF, the Survey has noted.