The Economic Survey 2020-21, tabled in the Parliament by Finance Minister Nirmala Sitharaman on Friday, has forecast India's FY22 real GDP growth at 11 percent. The nominal GDP growth is estimated at 15.4 percent.
This year's Economic Survey captures the impact of COVID-19-induced lockdown on the economy.
Among the key figures in the Survey are gross domestic product (GDP) growth projections for 2021-22 and estimates for the current year (2020-21) as these reflect the pace at which the government expects the economy to show a firm recovery. The Survey outlines a roadmap for the rival of the Indian economy.
India’s economy is expected to contract 7.7 percent in the financial year ending March 31, 2021, primarily hit by the pandemic and nationwide lockdown that followed, states the Economic Survey 2020-21. The Economic Survey 2020-21’s estimate comes mostly in line with the forecasts by the central bank, and experts.
The Reserve Bank of India (RBI) had in December made an upward revision in the GDP contraction for the year ending March 21 to 7.5 percent from a 9.5 percent contraction.
The Survey sees a 'V' shaped economic recovery supported by a mega vaccination drive going ahead. Agriculture has remained the silver lining while contact-based services, manufacturing, and construction have been hit the hardest by the pandemic. Govt consumption and net exports have cushioned the growth from diving further down, said the Survey.
“Policy focus does not imply that redistributive objectives are unimportant but that redistribution is only feasible in a developing economy if the size of the economic pie grows," the Survey states.
“India must continue to focus on economic growth to lift the poor out of poverty by expanding the overall pie," it adds.
Media had earlier reported on the Economic Survey 2020-21 forecasting the FY22 growth at close to 11 percent, citing sources.
The Economic Survey 2020-21 sees a resurgence and recovery in multiple sectors and economic indicators including power, steel, GST collections, rail freight and e-way bills, the sources had said.
The Economic Survey maintains that the measures taken to save lives and curb the virus have helped the economy, they had added.
The Survey projected India’s current account to register a surplus of 2 percent of GDP in FY21.
"Amidst this uncertain and shaky global economic environment, India’s external sector has emerged as a key cushion for resilience. The comfortable external balance position of India has been supported by surplus current account balances over three consecutive quarters, resumption of portfolio capital inflows, robust FDI inflows and sustained build-up of foreign exchange reserves," the survey said.
This is for the first time in seventeen years that India is posting a current account surplus. The last surplus was recorded in FY03 when the exports shrank because of a weak economy.
'India's sovereign credit rating does not reflect its fundamentals'
Defending India's lowest credit score ratings, the Survey stated that there is a bias against the emerging giants in sovereign credit rating. The Survey stated that India's sovereign credit rating does not reflect its fundamentals.
A sovereign credit rating reflects an independent assessment of a country's creditworthiness or sovereign entity. Sovereign credit ratings outline the amount of risk -- including any political risk -- associated with investing in the debt of a particular country for investors.
The Survey says that the fifth largest economy in the world had predominantly been rated AAA and for the first time, it has dropped to BBB-.
“Never in the history of sovereign credit ratings has the 5th largest economy been rated as the lowest rung of investment-grade (BBB -). India’s fiscal policy must not remain beholden to a noisy, biased measure of India’s fundamentals. India’s forex reserves can cover an additional 2.8 standard deviation negative event. It is imperative that sovereign credit rating methodology be made more transparent, less subjective,” it said.
The Survey noted that healthcare has finally taken the center stage. The key role of the government is to actively shape the structure of the healthcare market, it said.
The survey said that the health infrastructure must be agile in order to future pandemics. Secondly, telemedicine needs to be harnessed to the fullest to reach remote areas by investing in internet connectivity and health infrastructure. Third, the emphasis on the National Health Mission (NHM) must continue as it played a crucial role in mitigating inequity and gave access of the poorest to pre-natal and post-natal care and institutional deliveries have increased significantly.
It also suggested an increase in public spending on healthcare from 1 percent to 2.5-3 percent of GDP and a cut in the out-of-pocket expenditures from 65 percent to 30 percent of overall healthcare spend.
The Economic Survey can be seen as a report card of the country's economic health that provides detailed statistical data covering all aspects of the economy.
The Economic Survey highlights the economic trends in the country and facilitates a better appreciation of the mobilisation of resources and their allocation in the budget, according to the government.
This Survey analyses the trends in agricultural and industrial production, infrastructure, employment, money supply, prices, imports, exports, foreign exchange reserves and other relevant economic factors that have a bearing on the budget.
The Economic Survey is usually presented by the FM a day before the Union Budget, however, this year, due to the Budget Day being right after a Sunday, the Survey is being brought earlier.
The Union Budget will be presented by the FM on February 1 at 11 am.
(With inputs from agencies)