The Economic Survey 2022, to be tabled later today by the government in Parliament, is likely to keep FY22 GDP forecast between 9 percent and 9.5 percent, sources told CNBC-TV18. It is also likely to project FY23 GDP around 9 percent, they added.
The Survey is also expected to strongly hint at inflation risks to the economy, and the need for consumption-based growth, issues which had become major headaches for policymakers, even before the Covid-19 pandemic began.
The survey outlines the government’s vision for diverse areas such as agriculture, industry, infrastructure, services, social development, employment, and even climate change. The survey also reviews developments in India’s fiscal, monetary management, inflation, financial intermediation, banking, and external sectors over the previous financial year.
The government has spent much of the past 2 years trying to rein in inflation and supercharging consumption in the country. Household consumption demand in India is lagging fiscal 2020 levels by 3 percent, according to the latest National Statistical Office estimates on India’s gross domestic product (GDP) for this fiscal.
"Private consumption was slowing even before the pandemic. On a per-capita basis, consumption growth slipped to 4.4 percent in fiscal 2020 from 6.8 percent in fiscal 2017. It contracted sharply by 10.1 percent in fiscal 2021," Crisil recently said in a report.
Meanwhile, retail inflation shot up to 5.59 percent in December 2021 from 4.91 percent in November 2021. The Reserve Bank of India (RBI) has forecasted inflation would peak in the running fourth quarter (January -March) of 2021-22 and soften thereafter.
Integrating domestic industry with the global supply chain is expected to be a major thrust area likely to be focussed on in the Survey. Moneycontrol earlier reported that the Survey may bat for the introduction of more production-linked incentive (PLI) schemes to encourage industry to invest in expanding domestic manufacturing capacities.
Protecting domestic industry & importance of Free Trade Agreements to push exports. Moneycontrol has reported that the government is actively seeking to finalize proposed trade deals with a raft of nations, aiming to forge strategic trade partnerships with all of them in 2022. The Commerce Department is currently negotiating up to eight free trade agreements that have increasingly been billed as the most important way to boost exports in the mid-to-long term future.
The Survey will also focus on the need for job creation in the economy. Apart from India's perennial battle to provide employment to millions of youth entering the job market every year, a new challenge of rehabilitating those who lost their jobs in the past 2-years, has also emerged. Despite the economic trajectory going towards growth now, India Inc has repeatedly told the government that bringing people who lost jobs back into formal sector remains big challenge.
Reducing the urban-rural divide and better infrastructure is expected to be another thrust area. According to the 2011 Census, India has more than 6 lakh villages while there are around 7,000 towns and urban centres. Out of a total population of 121 crores, the rural population accounts for 69 percent while the urban population stood at 31 percent.
Demographers believe these figures have changed rapidly in the past 10 years due to an accelerating rate of migration towards cities.
Historically, the Economic Survey has always led the debate on the government's agenda in the social sector. Sources said this year, the Survey would lay stress on the need for social security benefits and explore the channels available through which they can be given. Access to basic necessities like drinking water, toilets, better education and health facilities, the lack of which was repeatedly made evident by the pandemic across large chunks of the country, will also be in focus.
Nearly two years into the pandemic, the Survey is also expected to focus on the importance of India's homegrown pharma sector and the greater need for Research Development across the value chain.