With the third wave of Covid-19 subsiding, the government says that the Indian economy that contracted by -6.6 per cent in 2020-21, is now projected to grow the quickest among the league of large nations in 2022-23. The finance ministry's monthly economic report cited the IMF projections which had revised downwards its global growth estimate for 2022. India was the only large and major country listed by the IMF whose growth projection has been revised upwards in 2022.
The first report of the 2022 said that the impact of the third wave on economic activity has been much weaker than the previous two waves. “High frequency indicators show that India’s economy is well on its way to growing at above 9 per cent as projected in the country’s advance estimates for the current year.”
The economic report added that as monetary policy committee retained its inflation forecast for 2021-22 at 5.3 per cent, the inflation for the current year is set to close within its tolerance band of upto 4-6 per cent. “The current year may as well end with an economic reset manifest of a post-Covid-19 world,” the report added.
The agriculture has been a great saviour during the pandemic. It still continues to see a constant increase in net sown area and crop diversification will strengthen food buffers while benefiting farmers through generous volumes of procurement at remunerative minimum support prices and income transfers through PM Kisan.
“An additional security of MGNREGS for the rural work-force will always be in a ready state of deployment as was the case in the last two years. Manufacturing and construction will be the 'growth drivers', triggered by the PLI schemes and public capex in infrastructure,” the report prepared by the department of economic affairs said.
It said that the private consumption will grow cautiously as precautionary demand for money will rise at every hint of a new infection. Private investment, helped by the complementary support of public investment in infrastructure, will continue to gain traction from the ethos of Atmanirbhar Bharat.
The report praised the Budget 2022-23 for strengthening the direction set for India’s economy by the previous year’s budget.
“The capex budget, higher by 35.4 per cent over current year’s budget estimates, and rising to 4.1 per cent of GDP after inclusion of grants-in-aid to states for capital works, will power the seven engines of Gatishakti to reduce the infrastructure gap and facilitate private investment in the country. Rising consumption levels consequent to employment generation by government’s capex will also induce private investment,” it said.
