The Finance Ministry’s monthly report released recently states that the Indian economy is estimated to contract 7.7 percent in the current financial year, mainly due to the coronavirus pandemic. The latest Economic Survey projected growth rate to rebound to 11 percent during 2012-22 while the Budget estimated real GDP to be between 10-10.5 percent. The Survey was presented in Parliament on January 29 and the Budget on February 1. The report paints a rosy picture of the economy and believes that the growth and inflation outlook for 2021-22 portends more than full recovery and that the country has become the COVID-19 vaccine hub of the world.
“The structural reforms and the policy push under the Aatmanirbhar Bharat Mission along with the slew of measures announced in the Union Budget 2021-22 towards achieving broad-based inclusive growth will strengthen the fundamentals of the economy and bring it back on to a strong and sustainable growth path in the year ahead,” the ministry’s report said. It states that FY 2021-22 will be the year to rebuild with the IMF projecting growth of output at 11.5 percent, Economic Survey at 11 percent, and the RBI’s Monetary Policy Committee at 10.5 percent. With the IMF keeping India’s growth projections elevated at 6.8 percent in FY 2022-23, India is back as the fastest-growing major economy in the world. “The Budget implemented the countercyclical fiscal policy by raising the target of fiscal deficit to 6.8 percent of GDP, more than double the FRBM (Fiscal Responsibility and Budget Management) target,” the report said.
The report noted that early lockdown, health-infra ramp up, gradual unlocking, blanket testing, social distancing, calibrated fiscal stimulus to minimize supply-side disruptions and revive demand and structural reforms pursued diligently by the government since March 2020 have now come to fruition to limit the fatality rate to globally one of the lowest at 1.2 percent. According to the report, with each day ending with positive COVID-19 cases falling to new lows and economic activity levels attaining new peaks, India has worked its way around the pandemic through the will of the brave people and astute policy interventions by the government.