Economic Survey 2021 Highlights: The Budget Session of the Parliament began today and Finance Minister tabled the Economic Survey 2020-21 in the Lok Sabha. The annual document by the Ministry of Finance under the guidance of Chief Economic Advisor KV Subramanian provides a summary of annual economic development across the country during the financial year 2020-21.
According to the document, the government sees the Indian economy growing at 11 per cent in the financial year 2021-22 (FY22). However, the GDP growth rate is estimated at minus 7.7 per cent for the ongoing fiscal.
“The estimated real GDP growth for FY 2022 at 11 per cent is the highest since independence,” the Economic Survey said.
Here are the highlights of Economic Survey 2020-21:
– “Real growth rate for FY21 is taken as -7.7 per cent (MoSPI) and the real growth rate for FY22 is assumed as 11.5 per cent based on IMF estimates,” Economic Survey 2020-21 document said.
– The survey projected a V-shaped recovery: While the lockdown resulted in a 23.9 per cent contraction in GDP in Q1, the recovery has been a V-shaped one as seen in the 7.5 per cent decline in Q2 and the recovery across all key economic indicators.
– Despite the hardhitting economic shock created by the global pandemic, India is witnessing a V-shaped recovery with a stable macroeconomic situation aided by a stable currency, comfortable current account, burgeoning forex reserves, and encouraging signs in the manufacturing sector output.
– Together, prospects for robust growth in consumption and investment have been rekindled with the estimated real GDP growth for FY 2021-22 at 11 per cent.
– India’s mature policy response to this “once-in-a-century” crisis thus provides important lessons for democracies to avoid myopic policymaking and demonstrates the significant benefits of focusing on long-term gains.
– India’s real GDP is projected to record a growth of 11.0 per cent in 2021-22 and nominal GDP by 15.4 per cent.
– Based on trends available for April to November 2020, there is likely to be fiscal slippage during the year
– India expected to witness current account surplus during the current financial year after a gap of 17 years
– India’s sovereign credit ratings do not reflect its fundamentals, the Survey says
– An Asset Quality Review exercise must be conducted immediately after the forbearance is withdrawn.
– Economic growth has a far greater impact on poverty alleviation than inequality. Therefore, given India’s stage of development, India must continue to focus on economic growth to lift the poor out of poverty by expanding the overall pie, the document said.
– Reforms in tax administration have set in motion a process of transparency, accountability and more importantly, enhancing the experience of a tax-payer with the tax authority, thereby incentivising tax compliance.
– “This Economic Survey is dedicated to all COVID warriors who upheld India. It also captures the resilience of the Indian economy. Keeping with the times, this year’s Survey is being delivered in e-book format, with an official app for it. Chapter 1 is about India’s policy response to COVID-19 and Saving Lives And Livelihoods amidst a once-in-a-lifetime crisis,” CEA Subramanian said.
– India’s policy response to COVID-19 was guided by the realization that GDP growth will come back, but not lost human lives. Early intense lockdown saved lives, helped faster recovery. Both on COVID-19 cases & deaths, India has done really well, the CEA said.
– CEA Subramanian presented an analysis of performance of states in averting COVID cases & deaths: Maharashtra -> under performer on both counts. UP, Gujarat, Bihar -> over performers in cases. Kerala, Telangana, AP -> over performers in deaths.
– The CEA explained the strong correlation of lockdown with the decline in cases & deaths found across states. “Even without lockdown, COVID-19 would have created a significant economic impact. But lockdown ensured a coordinated response, enabling saving lives and livelihoods,” he said.
– KV Subramanian said that India was the only country to announce structural reforms. “India focused on saving lives and livelihoods; took short term pain for long term gain. Recognized that GDP growth will recover, lost human lives cannot be brought back,”
– He said that Economic Survey calls for counter-cyclical fiscal policy to be an important point of emphasis, where the government steps in when the private sector does badly and steps back when the private sector does well.
– Is India’s debt sustainable? Subramanian said “Even if India were to have the real GDP growth rate as low as 3.8 per cent from FY23 to FY29, debts will still come down. Economic Survey highlights potential of public investment, especially in a slowdown; calls for fiscal policy to support growth.”