Economic Survey 2021-22 - Key Features
Radiance News Service
9.2
PERCENT GROWTH EXPECTED IN REAL TERMS IN 2021-22
GDP
PROJECTED TO GROW 8.0-8.5 PERCENT IN 2022-23
PANDEMIC:
GOVERNMENT’s SUPPLY SIDE REFORMS PREPARING ECONOMY FOR SUSTAINED LONGTERM
EXPANSION
CAPEX
GROWS BY 13.5 PERCENT (YoY) DURING APRIL-NOVEMBER, 2021
FOREIGN
EXCHANGE RESERVES TOUCH US$ 633.6 BILLION ON 31st DECEMBER, 2021
MACROECONOMIC
STABILITY INDICATORS SUGGEST THE ECONOMY IS WELL PLACED TO TAKE ON THE CHALLENGES OF
2022-23
MASSIVE GROWTH IN REVENUE RECEIPTS
SOCIAL
SECTOR: EXPENDITURE ON SOCIAL SERVICES AS A PROPORTION OF GDP INCREASES TO 8.6
PERCENT IN 2021-22 (BE) AS COMPARED TO 6.2 PERCENT IN 2014-15
WITH THE REVIVAL OF THE ECONOMY, EMPLOYMENT INDICATORS BOUNCED BACK TO PRE-PANDEMIC LEVELS
DURING THE LAST QUARTER OF 2020-21
MERCHANDISE
EXPORTS AND IMPORTS REBOUND STRONGLY AND SURPASS PROVIDE LEVELS
BANK
CREDIT ACCELERATES TO 9.2 PERCENT AS ON 31st DECEMBER, 2021
Rs
89,066 CRORE RAISED VIA 75 IPOs; SIGNIFICANTLY HIGHER THAN IN ANY YEAR IN LAST
DECADE
CPI-C
INFLATION MODERATES TO 5.2 PERCENT IN 2021-22 (APRIL-DECEMBER)
FOOD
INFLATION AVERAGES AT A LOW OF 2.9 PERCENT IN 2021-22 (APRIL-DECEMBER)
EFFECTIVE
SUPPLY-SIDE MANAGEMENT KEEPS PRICES OF MOST ESSENTIAL COMMODITIES UNDER CONTROL
AGRICULTURE:
GVA REGISTERS BUOYANT GROWTH OF 3.9% IN 2021-22
RAILWAYS:
CAPITAL EXPENDITURE SEES SUBSTANTIAL INCREASE TO Rs. 155,181 CRORE IN 2020-21;
BUDGETED TO FURTHER INCREASE TO Rs. 215,058 CRORE IN 2021-22, A FIVE TIMES
INCREASE COMPARED TO 2014 LEVEL
PER
DAY ROAD CONSTRUCTION INCREASES TO 36.5 KMS IN 2020-21 – A RISE OF 30.4 PERCENT
COMPARED TO THE PREVIOUS YEAR
SDGs:
OVERALL SCORE ON NITI AAYOG DASHBOARD IMPROVES TO 66 IN 2020-21
The
Union Minister for Finance & Corporate Affairs, Smt. Nirmala Sitharaman
presented the Economic Survey 2021-22 in Parliament today. The highlights of
the Economic Survey are as follows:
State
of the Economy:
·
Indian economy estimated to grow by 9.2 percent in real terms in
2021-22 (as per first advanced estimates) subsequent to a contraction of 7.3
percent in 2020-21.
·
GDP projected to grow by 8- 8.5 percent in real terms in
2022-23.
·
The year ahead poised for a pickup in private sector investment
with the financial system in a good position to provide support for the economy’s
revival.
·
Projection comparable with World Bank and Asian Development
Bank’s latest forecasts of real GDP growth of 8.7 percent and 7.5 percent
respectively for 2022-23.
·
As per IMF’s latest World Economic Outlook projections, India’s
real GDP is projected to grow at 9 percent in 2021-22 and 2022-23 and at 7.1
percent in 2023-2024, which would make India the fastest-growing major economy
in the world for all 3years.
·
Agriculture and allied sectors are expected to grow by 3.9 percent;
industry by 11.8 percent and services sector by 8.2 percent in 2021-22.
·
On demand side, consumption estimated to grow by 7.0 percent,
Gross Fixed Capital Formation (GFCF) by 15 percent, exports by 16.5 percent and
imports by 29.4 percent in 2021-22.
·
Macroeconomic stability indicators suggest that the Indian
Economy is well placed to take on the challenges of 2022-23.
·
Combination of high foreign exchange reserves, sustained foreign
direct investment, and rising export earnings will provide an adequate buffer
against possible global liquidity tapering in 2022-23.
·
Economic impact of the “second wave” was much smaller than that
during the full lockdown phase in 2020-21, though health impact was more
severe.
·
Government of India’s unique response comprised of safety-nets
to cushion the impact on vulnerable sections of society and the business
sector, significant increase in capital expenditure to spur growth and supply-side reforms for a sustained long-term expansion.
·
Government’s flexible and multi-layered response is partly based
on an “Agile” framework that uses feedback-loops, and the use of eighty High-Frequency Indicators (HFIs) in an environment of extreme uncertainty.
Fiscal
Developments:
·
The revenue receipts from the Central Government (April to
November 2021) have gone up by 67.2 percent (YoY) as against expected
growth of 9.6 percent in the 2021-22 Budget Estimates (over 2020-21 Provisional
Actuals).
·
Gross Tax Revenue registers a growth of over 50 percent during
April to November 2021 in YoY terms. This performance is strong compared
to pre-pandemic levels of 2019-2020 also.
·
During April-November 2021, Capex has grown by 13.5 percent
(YoY) with focus on infrastructure-intensive sectors.
·
Sustained revenue collection and a targeted expenditure policy
have contained the fiscal deficit for April to November 2021 at 46.2 percent of
BE.
·
With the enhanced borrowings on account of COVID-19, the Central
Government debt has gone up from 49.1 percent of GDP in 2019-20 to 59.3 percent
of GDP in 2020-21, but is expected to follow a declining trajectory with the
recovery of the economy.
External
Sectors:
·
India’s merchandise exports and imports rebounded strongly and
surpassed pre-COVID levels during the current financial year.
·
There was a significant pickup in net services with both receipts
and payments crossing the pre-pandemic levels, despite weak tourism revenues.
·
Net capital flows were higher at US$ 65.6 billion in the first
half of 2021-22, on account of continued inflow of foreign investment, revival
in net external commercial borrowings, higher banking capital and additional
special drawing rights (SDR) allocation.
·
India’s external debt rose to US $ 593.1 billion at
end-September 2021, from US $ 556.8 billion a year earlier, reflecting
additional SDR allocation by IMF, coupled with higher commercial borrowings.
·
Foreign Exchange Reserves crossed US$ 600 billion in the first
half of 2021-22 and touched the US $ 633.6 billion as of December 31, 2021.
·
As of end-November 2021, India was the fourth-largest forex
reserves holder in the world after China, Japan and Switzerland.
Monetary
Management and Financial Intermediation:
·
The liquidity in the system remained in surplus.
o Repo rate was maintained
at 4 per cent in 2021-22.
o RBI undertook various
measures such as G-Sec Acquisition Programme and Special Long-Term Repo
Operations to provide further liquidity.
·
The economic shock of the pandemic has been weathered well by
the commercial banking system:
o YoY Bank credit growth
accelerated gradually in 2021-22 from 5.3 per cent in April 2021 to 9.2 per
cent as on 31st December 2021.
o The Gross Non-Performing
Advances ratio of Scheduled Commercial Banks (SCBs) declined from 11.2 per cent
at the end of 2017-18 to 6.9 per cent at the end of September 2021.
o Net Non-Performing
Advances ratio declined from 6 percent to 2.2 per cent during the same period.
o Capital to risk-weighted
asset ratio of SCBs continued to increase from 13 per cent in 2013-14 to 16.54
per cent at the end of September 2021.
o The Return on Assets and
Return on Equity for Public Sector Banks continued to be positive for the
period ending September 2021.
·
Exceptional year for the capital markets:
o Rs. 89,066 crore was
raised via 75 Initial Public Offering (IPO) issues in April-November 2021,
which is much higher than in any year in the last decade.
o Sensex and Nifty scaled
up to touch peak at 61,766 and 18,477 on October 18, 2021.
o Among major emerging
market economies, Indian markets outperformed peers in April-December 2021.
Prices
and Inflation:
·
The average headline CPI-Combined inflation moderated to 5.2 per
cent in 2021-22 (April-December) from 6.6 per cent in the corresponding period
of 2020-21.
o The decline in retail
inflation was led by the easing of food inflation.
o Food inflation averaged
at a low of 2.9 per cent in 2021-22 (April to December) as against 9.1 per cent
in the corresponding period last year.
o Effective supply-side
management kept prices of most essential commodities under control during the
year.
o Proactive measures were
taken to contain the price rise in pulses and edible oils.
o Reduction in central
excise and subsequent cuts in Value Added Tax by most States helped ease petrol
and diesel prices.
·
Wholesale inflation based on Wholesale Price Index (WPI) rose to
12.5 per cent during 2021-22 (April to December).
o This has been
attributed to:
§ Low base in the previous
year,
§ Pick-up in economic
activity,
§ Sharp increase in
international prices of crude oil and other imported inputs, and
§ High freight costs.
·
Divergence between CPI-C and WPI Inflation:
o The divergence peaked to
9.6 percentage points in May 2020.
o However, this year there
was a reversal in divergence with retail inflation falling below wholesale
inflation by 8.0 percentage points in December 2021.
o This divergence can be
explained by factors such as:
§ Variations due to base
effect,
§ Difference in scope and
coverage of the two indices,
§ Price collections,
§ Items covered,
§ Difference in commodity
weights, and
§ WPI being more sensitive
to cost-push inflation led by imported inputs.
o With the gradual waning
of base effect in WPI, the divergence in CPI-C and WPI is also expected to
narrow down.
Sustainable
Development and Climate Change:
·
India’s overall score on the NITI Aayog SDG India Index and
Dashboard improved to 66 in 2020-21 from 60 in 2019-20 and 57 in 2018-19.
·
Number of Front Runners (scoring 65-99) increased to 22 States
and UTs in 2020-21 from 10 in 2019-20.
·
In North East India, 64 districts were Front Runners and 39
districts were Performers in the NITI Aayog North-Eastern Region District SDG
Index 2021-22.
·
India has the tenth largest forest area in the world.
·
In 2020, India ranked third globally in increasing its forest
area during 2010 to 2020.
·
In 2020, the forests covered 24% of India’s total geographical,
accounting for 2% of the world’s total forest area.
·
In August 2021, the Plastic Waste Management Amendment Rules,
2021, was notified which is aimed at phasing out single-use plastic by 2022.
·
Draft regulation on Extended Producer Responsibility for plastic
packaging was notified.
·
The Compliance status of Grossly Polluting Industries (GPIs)
located in the Ganga main stem and its tributaries improved from 39% in 2017 to
81% in 2020.
·
The consequent reduction in effluent discharge has been from
349.13 millions of litres per day (MLD) in 2017 to 280.20 MLD in 2020.
·
The Prime Minister, as a part of the national statement
delivered at the 26th Conference of Parties (COP 26) in Glasgow
in November 2021, announced ambitious targets to be achieved by 2030 to enable
further reduction in emissions.
·
The need to start the one-word movement ‘LIFE’ (Lifestyle for
Environment) urging mindful and deliberate utilization instead of mindless and
destructive consumption was underlined.
Agriculture
and Food Management:
·
The Agriculture sector experienced buoyant growth in past two
years, accounting for a sizeable 18.8% (2021-22) in Gross Value Added (GVA) of
the country registering a growth of 3.6% in 2020-21 and 3.9% in 2021-22.
·
Minimum Support Price (MSP) policy is being used to promote crop
diversification.
·
Net receipts from crop production have increased by 22.6% in the
latest Situation Assessment Survey (SAS) compared to the SAS Report of 2014.
·
Allied sectors including animal husbandry, dairying, and
fisheries are steadily emerging to be high growth sectors and major drivers of
overall growth in the agriculture sector.
·
The Livestock sector has grown at a CAGR of 8.15% over the last
five years ending 2019-20. It has been a stable source of income across groups
of agricultural households accounting for about 15% of their average monthly
income.
·
Government facilitates food processing through various measures
of infrastructure development, subsidized transportation and support for
formalization of micro food enterprises.
·
India runs one of the largest food management programmes in the
world.
·
Government has further extended the coverage of food security
network through schemes like PM Gareeb Kalyan Yojana (PMGKY).
Industry
and Infrastructure:
·
Index of Industrial Production (IIP) grew at 17.4 percent (YoY)
during April-November 2021 as compared to (-)15.3 percent in April-November
2020.
· Capital
expenditure for the Indian railways has increased to Rs. 155,181 crores in
2020-21 from an average annual of Rs. 45,980 crores during 2009-14 and it has
been budgeted to further increase to Rs. 215,058 crores in 2021-22 – a five
times increase in comparison to the 2014 level.
· Extent
of road construction per day increased substantially in 2020-21 to 36.5 Kms per
day from 28 Kms per day in 2019-20 – a rise of 30.4 percent.
· Net
profit to sales ratio of large corporates reached an all-time high of 10.6
percent in in July-September quarter of 2021-22 despite the pandemic (RBI
Study).
·
Introduction of Production Linked Incentive (PLI) scheme, major
boost provided to infrastructure-both physical as well as digital, along with
measures to reduce transaction costs and improve ease of doing business, would
support the pace of recovery.
Services:
·
GVA of services crossed pre-pandemic level in July-September
quarter of 2021-22; however, GVA of contact intensive sectors like trade,
transport, etc. still remain below pre-pandemic level.
· Overall
service Sector GVA is expected to grow by 8.2 percent in 2021-22.
· During
April-December 2021, rail freight crossed its pre-pandemic level while air
freight and port traffic almost reached their pre-pandemic levels, domestic air
and rail passenger traffic are increasing gradually – shows impact of second
wave was much more muted as compared to during first wave.
· During
the first half of 2021-22, service sector received over US$ 16.7 billion FDI –
accounting for almost 54 percent of total FDI inflows into India.
· IT-BPM
services revenue reached US$ 194 billion in 2020-21, adding 1.38 lakh employees
during the same period.
· Major
government reforms include, removing telecom regulations in IT-BPO sector and
opening up of space sector to private players.
· Services
exports surpassed pre-pandemic level in January-March quarter of 2020-21 and
grew by 21.6 percent in the first half of 2021-22 - strengthened by global
demand for software and IT services exports.
· India
has become 3rd largest start-up ecosystem in the world after US
and China. Number of new recognized start-ups increased to over 14000 in
2021-22 from 733 in 2016-17.
· 44
Indian start-ups have achieved unicorn status in 2021 taking overall tally of
unicorns to 83, most of which are in services sector.
Social
Infrastructure and Employment:
·
157.94 crore doses of COVID-19 vaccines administered as on 16th January
2022; 91.39 crore first dose and 66.05 crore second dose.
· With
revival of economy, employment indicators bounced back to pre-pandemic levels
during last quarter of 2020-21.
· As
per the quarterly Periodic Labour Force Survey (PFLS) data up to March 2021,
employment in urban sector affected by pandemic has recovered almost to the
pre-pandemic level.
· According
to Employees Provident Fund Organisation (EPFO) data, formalization of jobs
continued during second COVID wave; adverse impact of COVID on formalization of
jobs much lower than during the first COVID wave.
· Expenditure
on social services (health, education and others) by Centre and States as a
proportion of GDP increased from 6.2 % in 2014-15 to 8.6% in 2021-22 (BE)
· As
per the National Family Health Survey-5:
·
o Total Fertility Rate
(TFR) came down to 2 in 2019-21 from 2.2 in 2015-16
o Infant Mortality Rate
(IMR), under-five mortality rate, and institutional births have improved in
2019-21 over the year 2015-16
· Under
Jal Jeevan Mission (JJM), 83 districts have become ‘Har Ghar Jal’ districts.
· Increased allotment of funds to Mahatma Gandhi National Rural Employment Guarantee Scheme (MNREGS) to provide a buffer for unorganized labour in rural areas during the pandemic.