Budget 2022 | FY23 nominal GDP growth seen at 11.1%

The government on February 1 projected that India’s nominal gross domestic product (GDP) will grow by 11.1 percent in 2022-23.

The Central Statistics Office’s (CSO’s) first advance estimates released last month projected that India’s nominal GDP will grow 17.6 percent in 2021-22.

The budget does not put out real or inflation-adjusted GDP growth projections.

Adjusted for inflation, India’s real GDP, according to the government estimates, will grow 9.2 percent in 2021-22.

Unlike other recessions caused by systemic flaws such as the debt bubble of 2008, this has been brought upon by a medical emergency. Will India pass through multiple peaks and troughs spanning several quarters before reaching a steady growth state?

The International Monetary Fund (IMF) has projected that India’s real gross domestic product (GDP) growth will grow 9 percent in 2022 and 2023 followed by 7.1 percent growth in 2024.

This would be a perfect example of a textbook V-shaped recovery. This is the best-case scenario that everyone is hoping for. This happens when the economy rockets back as quickly as it had fallen, aided by a government stimulus that pushes up demand. Income and output rise, demand grows and higher spending by households prompt companies to add capacity lines and hire more.

To assess how far the economy has recovered from the piling rubble of Covid-19’s devastation, it will be more prudent to compare the current year’s metrics with that of 2019-20, the immediate pre-Covid year.

The latest set of data shows the broader economy appears to have covered considerable ground this year, with real GDP level managing to keep its nose ahead of 2019-20.

In many ways, the comparison with 2020-21 can be fallacious and misleading, because it was a wash-out year, given the debilitating consequences of the global pandemic.