India will see economic growth of 8 to 8.5 per cent for the coming fiscal year, down from 9.2 per cent growth estimated in the current year, the annual Economic Survey predicted a day before the Budget.
The survey, tabled in parliament by Finance Minister Nirmala Sitharaman, projected an 8-8.5 per cent growth rate for the economy in the 2022-23 fiscal year (April 2022 to March 2023).
This is a dip from the 9.2 per cent GDP (Gross Domestic Product) expansion in the current year projected by the National Statistical Office (NSO).
The survey says at 9.2 per cent, economic activity has recovered past pre-pandemic levels.
Almost all indicators show that the economic impact of the “second wave” in the first quarter was much smaller than that experienced during the full lockdown phase in 2020-21 even though the health impact was more severe, the survey notes.
“With the vaccination programme having covered the bulk of the population, the economic momentum is 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,” said the survey.
“At the time of writing, a new wave in the form of the Omicron variant was sweeping across the world, inflation had jumped up in most countries, and the cycle of liquidity withdrawal was being initiated by major central banks. This is why it is especially important to look at India’s macro-economic stability indicators and their ability to provide a buffer against the above stresses,” it says.
Agriculture and allied sectors have been the least impacted by the pandemic and the sector is expected to grow by 3.9 per cent in 2021-22 after growing 3.6 per cent in the previous year, says the report.
According to the survey, the services sector has been worst hit by the pandemic, especially segments that involve human contact. This sector is estimated to grow by 8.2 per cent this financial year following last year’s 8.4 per cent contraction.
Total consumption is estimated to have grown by 7 per cent in 2021-22 with significant contributions from government spending.
The economy had contracted by 7.3 per cent during 2020-21 as against the projection of 6-6.5 per cent in the survey presented months before the outbreak of the Covid-19 pandemic in 2020.