Economy to grow at 9.2% in current fiscal, 8-8.5% in FY23: Economic Survey

It has been reported that The Economic Survey 2022 projected a GDP growth of 8-8.5% for FY23, while it is expected to grow 9.2% in the current financial year, according to the Survey tabled in the Lok Sabha by Finance Minister Nirmala Sitharaman.

According to the Survey, the growth projection is mainly on account of 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 Economic Survey 2022 said.

“With the vaccination programme having covered the bulk of the population, economic momentum building back and the likely long-term benefits of supply-side reforms in the pipeline, the Indian economy is in a good position to witness GDP growth of 8.0-8.5 per cent in 2022-23, the report said.

Second Wave

The current fiscal growth projection is in line with the advance estimates that suggest that the economy is expected to witness real GDP expansion of 9.2% in FY22, after contracting in 2020-21, implying that overall economic activity has recovered past the pre-pandemic levels, Survey pointed out.

Almost all indicators show that the economic impact of the “second wave” in Q1 was much smaller than that experienced during the full lockdown phase in 2020-21 even though the health impact was more severe.

The Survey said that the growth forecast is based on the assumption that there will be no further debilitating pandemic related economic disruption.

It highlighted that the government’s immediate response worked as a bouquet of safety-nets and provided cushioning to vulnerable sections of society and the business sector. Further it suggested a capex push on infrastructure to build back medium-term demand for fiscal expansion, the report said.

The Survey

Unlike the previous years, has one volume comprising eleven chapters, highlighting the importance of process reforms undertaken by the government during the successive waves of the pandemic.

Sector-wise, agriculture and allied sectors have been the least impacted by the pandemic and the sector is expected to grow by 3.9% in the current fiscal after growing 3.6% in the previous year.

Advance estimates suggest that the GVA of Industry (including mining and construction) will rise by 11.8% in 2021-22 after contracting by 7% in 2020- 21.

The services sector however has been the hardest hit by the pandemic, especially segments that involve human contact. This sector is estimated to grow by 8.2% this financial year following last year’s 8.4% contraction.


On fiscal front, the support given to the economy as well as to the health response caused the fiscal deficit and government debt to rise in 2020-21. However, a strong rebound in government revenues in 2021-22 has meant that the government will comfortably meet its targets for the year while maintaining the support, and ramping up capital expenditure, the report said.

The strong revival in revenues (revenue receipts were up over 67% YoY in April-November 2021) means that the Government has fiscal space to provide additional support if necessary.

Notably, India’s capital markets, like many global markets, have done exceptionally well and have allowed record mobilization of risk capital for Indian companies, the report said

More significantly, the banking system is well capitalized and the overhang of bad loans seem to have structurally declined even allowing for some lagged impact of the pandemic, it said.

CPI inflation

The Survey raised concerns over Inflation, saying it reappeared as a global issue in both advanced and emerging economies. Citing CPI inflation, Survey said that it is at 5.6% YoY in December 2021 which is within the targeted tolerance band. Wholesale price inflation, however, has been running in double-digits. Although this is partly due to base effects that will even out, India does need to be wary of imported inflation, especially from elevated global energy prices, the report said.

Earlier in the day, President Ram Nath Kovind kick-started the Budget Session with an address to a joint House. The president highlighted the achievements of the Modi government’s mega vaccination drive, and noted that 150 crore doses were administered to the country’s citizens in a record time. (Economic Times)