Survey author explains why govt is bullish on the economy

The last two years have been very difficult for the world economy due to the Covid pandemic. After a significant decline during the national lockdown, followed by a sharp revival, the economy experienced a much shallower slowdown during the “second wave” of April-June 2021. Since then it has witnessing a sustained recovery even if Omicron may have impacted some sub-sectors in January 2022. Most high-frequency indicators like GST collections, freight traffic, e-way bill generation, and fuel consumption broadly follow the above trends. This year’s Economic Survey argues that a combination of responsive policy-making and supply-side reforms place India in a good position to generate strong growth in 2022-

23.

According to advance estimates, GDP has climbed past pre-Covid levels with growth registering 9.2% in 2021-22 after a contraction of 7.3% in 2020-21. Agriculture was the least affected sector but output in most segments of industry and services are also above the pre-pandemic level of 2019-20. However, the recovery is still not complete for contact-intensive sectors such as travel and tourism. Thus, the sub-sector Trade, hotels, transport, and communications” in national accounts remains 8.5% below prepandemic levels of activity.

Restrictions on contact-intensive sendees are unavoidable as long as serious health concerns persist. The good news is that, over the course of a year, India delivered 157 crore doses that covered 91 crore people with at least one dose and 66 crore with both doses. The vaccination process for boosters and for the 15-18 year age group is also gathering pace. With vaccination having covered the bulk of the population, and economic momentum in its favour, this year’s Economic Survey forecasts that the Indian economy is in a position to witness GDP growth of 8.0-8.5% in 2022-23. This would make India the fastest growing major economy in the world. The IMF’s latest forecast, released on January 25, is even higher at 9%.

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