The Economic Survey on Monday projected India’s economy to grow in the range of 8%-8.5% in the financial year 2022-23 as against a 9.2% expansion likely in the current year, provided there were no further pandemic-related disruptions, the monsoon was normal, oil prices were much lower at $70-$75 per barrel and global supply chain disruptions eased over the course of the year.
Global crude oil is currently trading at $90 per barrel.
Nevertheless, the Survey for 2021-22 said the economy was well placed to meet future challenges on the back of widespread vaccine coverage, supply-side reforms and easing of regulations. It also sounded optimistic on the performance of the two main levers of the economy — consumption and investment — sidestepping concerns that the incomes of the poor were severely impacted by Covid-19 and private sector investment was not forthcoming in right measure to restructure the post-pandemic recovery.
Experts were quick to suggest that the growth projections were on the optimistic end of the spectrum. “It is quite likely that some of these assumptions may not hold and there could be other risks emerging from rising geopolitical tensions. Therefore, we should realistically expect sub 8% GDP growth in FY23,” said Ranen Banerjee, Partner and Leader, Economic Advisory Services, PwC India.
“While private investment recovery is still at a nascent stage, there are many signals that India is poised for stronger investment. The number of private projects under implementation in manufacturing sector has been rising,” said the Survey tabled by Finance Minister Nirmala Sitharaman in Parliament.
The Survey said agriculture and allied sectors were expected to grow by 3.9% in 2021-22 compared to last year’s 3.6%.
It, however, said India needed to be wary of imported inflation, especially from elevated global energy prices.
It was also sanguine about the prospects of the services sector, estimated to grow by 8.2%.
“It should be noted that there is a wide dispersion of performance by different sub-sectors. Both the finance/real estate and public administration segments are now well above pre-Covid levels. However, segments like travel, trade and hotels are yet to fully recover. There has been a boom in software and IT-enabled services’ exports even as earnings from tourism have declined sharply,” it said.
The Survey added that total consumption is estimated to have grown by 7% in 2021-22 with government consumption remaining the biggest contributor as in the previous year. Government consumption is estimated to grow by a strong 7.6% surpassing pre-pandemic levels. Private consumption is also estimated to have improved significantly.
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