Economic Survey 2022 Live Updates: Growth Projection In Survey Conservative, Says CEA

Despite spike in inflation worldwide, India’s CPI is still within mandated tolerance band, Principal Economic Adviser Sanjeev Sanyal said.

"While taper creates issues on financial flows, it does presumably temper inflationary pressure," he said.

The MGNREGA demand is off-peak, but is still above pre-pandemic, according to the principal economic adviser.

"State-level MGNREGA data shows some counterintuitive trends, some migrant-sourced states that are doing better, and some migrant-recipient states not doing as well," he said.

There is a dearth of real-time unemployment data. "Have used proxies like Employees' Provident Fund Organisation data, MGNREGA numbers to study recent employment trends," he said.

According to the principal economic adviser, India's exports would have been even stronger had there not been a container shortage.

"Current account deficit is not expanding quickly and services exports are doing well," he said.

Tapering of global liquidity has been factored in, India well-placed with its reserves. The country has buffer to handle any capital flow arising due to tapering, he added.

The global demand for oil might moderate as we go into FY23, the chief economic adviser said.

"Oil demand may moderate thanks to global monetary policy and liquidity tightening, slowdown expected in developed world," he said.

Chief Economic Adviser Anantha Nageswaran expects private capex cycle to build on the back of what central and state governments have done.

"Crowding-in of private sector in capex cycle will lead to job creation," he said.

"We hope to see virtuous economic cycle that will help address loss of jobs and incomes suffered during the pandemic," he added.

The growth projection made in the Economic Survey is on the conservative side, Chief Economic Adviser Anantha Nageswaran said.

The credit growth is picking up from very low base and corporates have deleveraged, he said.

India needs to be concerned about imported inflation, particularly in energy prices, Principal Economic Adviser said.

"Global supply chain disruptions will remain in play for much of the next financial year and will slowly ease towards the end of the next fiscal," Sanjeev Sanyal said.

India’s financial sector has weathered the pandemic rather well, said Principal Economic Adviser Sanjeev Sanyal. "Gross NPAs and net NPAs have continued to decline."

"Decline in NPAs has continued after Insolvency and Bankruptcy Code moratorium was removed," he said. The banks have continued to increase capital adequacy ratios and are well-capitalised.

India's tax and non-tax revenue collections have increased sharply, Sanjeev Sanyal said.

"Tax collections jump is not just year-on-year on low-base, but from pre-pandemic levels too," he said.

The country fiscal deficit is below the pre-pandemic level in nominal Rupee terms, Sanyal added. "Unlike trends of past years, fiscal deficit of April-November period within check, at 46% of overall period in FY22."

Important to see if India’s macroeconomic indicators can provide buffer through recovery process, as risks arise, said principal economic adviser.

Geopolitical risks are bubbling up in various parts of the world, said Sanyal. "We are likely to see withdrawal of global liquidity by major central banks."

The agriculture sector was least-affected by lockdowns and is now about 8% above the pre-pandemic level, Principal Economic Adviser Sanjeev Sanyal said.

Industrial sector saw contraction and is now 4% above pre-pandemic level. Finance, real estate and professional services too have returned to pre-pandemic levels, he added.

Services sector was most affected by lockdown, just short of pre-pandemic level. Contact-intensive sub-sectors were too severely affected and continue to be below pre-pandemic level.

Gross fixed capital formation has recovered past FY20 level, led by government spending on capital expenditure, Sanyal said. Exports have been a major driver of growth, significantly above pre-Covid level.

Through the pandemic, the government focused on short-term support to economy, especially vulnerable sections, while keeping an eye on medium-term fiscal stability, Chief Economic Adviser Anantha Nageswaran said

With the opportunity that a crisis provides to undertake structural and supply-side reforms, government has undertaken several measures, he added. "Have seen government give considerable attention to process reforms."

The relationship between employment and movement of migrant labour is not clear, the Economic Survey said.

Demand for employment at an aggregate level via MGNREGA still seems to be above the pre-pandemic levels of 2019.

However, for many migrant source states like West Bengal, Madhya Pradesh, Odisha, Bihar, MGNREGA employment in most months of 2021 has been lower than the corresponding levels in 2020. In contrast, the demand for MGNREGA employment has been higher for migrant recipient states like Punjab, Maharashtra, Karnataka and Tamil Nadu for most months in 2021 over 2020.

The next 10 years will see a very high level of capital expenditure in the railways as capacity growth has to be accelerated such, that by 2030, it is ahead of demand, the Economic Survey said.

The capex outlay for railways for 2021-22 is Rs 2.15 lakh crore which is more than five times the 2014 level. "As more projects are taken on hand and several sources of capital funding are developed, the capex will increase further in coming years and the railway system will actually emerge as an engine of national growth," it said.

A focused and targeted approach is needed towards capital investment in agriculture sector, the Economic Survey stated, adding that gross capital formation in agriculture and allied sectors relative to gross value added in the sector has been showing a fluctuating trend.

"Wide fluctuations in private investment in agriculture, while public investment has remained stable between 2-3%. There is a direct correlation between capital investments in agriculture and its growth rate."

Private corporate investments need to be crowded in by offering an appropriate policy framework, it said.

The Insolvency and Bankruptcy Code rescued as many 421 corporate debtors as on September 2021 through resolution plans and referred 1,419 corporate debtors for liquidation, the Economic Survey said.

The corporate debtors rescued had assets valued at Rs 1.48 lakh crore, while those referred for liquidation had assets valued at Rs 0.52 lakh crore. In value terms, around 74% of distressed assets were rescued.

Moreover, nearly 65% of the total admitted cases have been closed, either by resolution, withdrawal or liquidation.

"Out of the 1,640 ongoing CIRPs, nearly 75% of the cases has been ongoing for over 270 days. Till September 2021, 18,629 applications for initiation insolvency proceedings having underlying default of Rs 5.89 lakh crores were resolved before their admission," the annual report of the economy stated.

India recognised 14,000 new startups in 2021, taking the cumulative number to 61,400 in the country, the Economic Survey said, adding that as many as 555 districts had at least one new startup in 2021.

Between April 2019 to December 2021, over 5,000 recognised startups were added in Delhi, compared with 4,514 in Bangalore, but at over 11,000 companies, Maharashtra has the most number of recognised startups.

In 2021, India also saw 44 startups reach unicorn status in 2021, becoming the third highest country in number of unicorns after the U.S. and China. The total number of unicorns went up to 83, with a total valuation of $277.7 billion.

The Indian economy has exhibited greater resilience to the current episode of tapering, the Economic Survey said. "Since the taper episode of 2013, India’s salient external sector sustainability indicators improved."

It added that the conventional metric of import cover in terms of number of months of imports is now more than double since the episode of taper tantrum. "Vulnerability indicators such as reserves to total external debt, reserves to short-term debt (residual maturity), reserve cover of imports, etc., have shown marked improvement."

The central government's debt is expected to follow a declining trajectory from here on, said the Economic Survey, that was tabled today.

It added that the central government debt has gone up from 49.1% of GDP in 2019-20 to 59.3% of GDP in 2020-21, and now with the recovery of the economy, it is expected to decline.

"The general government finances are also expected to witness a consolidation during 2021-22"

The government has the fiscal capacity to maintain the support, and ramp up capital expenditure when required, the Economic Survey said.

"The strong revival in revenues also provides the government with fiscal space to provide additional support as well, if necessary."

While private investment recovery is still at a nascent stage, there are many signals which indicate that India is poised for stronger investment, the Economic Survey said.

Companies hitting record profits in recent quarters and mobilization of risk capital bode well for acceleration in private investment, while the number of private investment projects under implementation in manufacturing sector has also been rising over the years.

"A sturdy and cleaned-up banking sector stands ready to support private investment adequately," it said.

India's food procurement maintained its rising trend in 2021-22, the Economic Survey stated.

Food grain production for the Kharif season is estimated to post a record level of 150.5 million tonnes. This, along with higher minimum support prices, augur well for national food security and farmers’ incomes, it said.

Growth will be supported by “widespread vaccine coverage, gains from supply-side reforms and easing of regulations, robust export growth, and availability of fiscal space to ramp up capital spending," the Economic Survey said.

"The projection is based on the assumption that there will be no further debilitating pandemic related economic disruption, monsoon will be normal, withdrawal of global liquidity by major central banks will be orderly," the document added.

The Economic Survey forecasts FY23 real GDP growth at 8-8.5%. The same is seen at 9.2% for FY22.

According to the survey, the government has fiscal space to ramp up capex going ahead.

Finance Minister Nirmala Sitharaman has tabled the Economic Survey 2021-22 in Parliament on Monday.

The annual survey analyses India's economic growth, fiscal stance, state of banking, among others.

Newly-appointed Chief Economic Adviser V Anantha Nageswaran will address a press conference at 3:45 p.m. in New Delhi after the presentation of the survey.

Earlier during the day, the joint session of Parliament was addressed by President Ram Nath Kovind and Vice President Venkaiah Naidu.