Economic Survey paints brighter picture about India's economy

Finance Minister Nirmala Sitharaman on Friday tabled the Economic Survey of India for the financial year 2020-21. Though the all-important, much-awaited Budget session of India's Parliament begins with the address of the President, the Economic Survey that the Finance Minister presents hogs limelight on the first day. It's no different this time too.

Moreover, this year's Economic Survey came amid an unprecedented Covid-19 pandemic that took a heavy toll on the Indian economy with GDP shrinking by a whopping 23.9 per cent in the first quarter i.e. April-June 2020. The economy registered negative growth in the second quarter too, but thankfully the contraction was lower at 7.5 per cent. The Survey authored by Chief Economic Advisor Krishnamurthy V Subramanian projected that the economy would end the current fiscal with a contraction of 7.7 per cent. That looks ambitious given the fact that the shrinkage was steeper in the first quarter thanks to the total lockdown imposed by the Narendra Modi government to contain the spread of Chinese-born novel coronavirus that triggered the Covid-19 global pandemic.

On the economic growth trajectory for FY22 which kicks off in April this year, the Survey took cues from the recent projections made by the International Monetary Fund (IMF) and projected a GDP upswing at 11.5 per cent for the next financial year.It said the economic recovery would be V-shaped. For the financial year 2022-23, it forecast a growth rate of 6.8 per cent, saying it would take two years for the country's economy to reach pre-Covid levels. Given the low base thanks to the contraction in the current fiscal, higher GDP growth is likely to be a reality in the next financial year.

But that depends on how the Covid-19 pandemic pans out as new, more potent variants of the deadly virus are surfacing in one country after another.The GDP trajectory for the next financial year will also hinge on the success of the vaccination drive that is currently underway. However, it's too early to say how the economy behaves in FY23 given the current uncertainties and natural vagaries. But the Indian economy may take longer than two financial years to reach the pre-Covid mark.

The Economic Survey slammed the global rating agencies for bias against India and stated that sovereign credit ratings accorded by these agencies did not reflect the fundamentals of the Indian economy. It pointed out that the biased ratings were damaging the flow of foreign portfolio investments. It is to be seen how the agencies will take this official snub. Overall, the latest Economic Survey painted a brighter picture about the Indian economy. But will those projects come true is a trillion-dollar question given Covid and other uncertainties!