India to grow fastest among large nations in FY23: Finance ministry

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With the third wave subsiding and vaccination numbers fast approaching the final target, India will clock the quickest pace among large nations in FY23 with growth being steady across sectors, the finance ministry’s department of economic affairs has said in its monthly economic report.

"In a testimony to the resilience of its people and the farsightedness of its policymaking, the Indian economy that contracted by 6.6 percent in 2020-21 is now projected in 2022-23 to grow the quickest among the league of large nations," the report said.

Going forward, FY23 is set to see “inclusive and large enough” growth as well, providing for growing levels of direct income and in-kind support to vulnerable groups of the society, it added.

The report also took on the recent spate of controversies regarding India's growth forecasts being lowered by international ratings agencies and multilateral bodies. "The International Monetary Fund (IMF) in its January 2022 update has lowered its global growth estimate for 2022. Yet India is the only large and major country listed by the IMF whose growth projection has been revised upwards in 2022 (Read 2022-23),” the report said.

"The current year may as well end with an economic reset manifest of a post-COVID world," the report added. It stressed that high-frequency indicators show India’s economy is well on its way to growing at above nine percent as projected in the country’s advance estimates for the current year.

Post-COVID soon

"With a near full vaccination coverage of the adult population with the first dose (above three-quarters with the second), and adaptability of both people and government to “living with the pandemic”, the impact of the third wave on economic activity has been much weaker than the previous two waves," the report said. India’s cumulative COVID vaccination coverage has crossed 173.42 crore.

The report painted a cautious but hopeful picture of the economy in the coming year. "Private investment, helped by complementary support of public investment in infrastructure, will continue to gain traction from the ethos of Atmanirbhar Bharat. Private consumption will grow cautiously as precautionary demand for money will rise at every hint of a new infection," it said.

On rising inflation, the report said inflation for the current year is set to close within its tolerance band of 4±2 per cent. The Reserve Bank of India's Monetary Policy Committee has retained its inflation forecast for 2021-22 at 5.3 percent.

Broad-based rise

Like the finance minister in her budget speech, the report relied on current growth in exports to continue, to further prop up the economy. Exports have maintained major growth over the past half year, rising to a cumulative $335 billion in FY22, a record high. The Centre is now confident of securing the target of $400 billion worth of exports in FY22.

"Key to medium-term gains in export growth lie in improving the competitiveness and complexity of India’s products. Imports will also grow but re-aligned to the country’s requirements of what is not available within," the report said.

It pointed out manufacturing and construction as growth drivers, triggered by the Production Linked Incentive schemes and public capita expenditure in infrastructure. "Distance enabled or remote services will be on the rise to the extent they substitute for contact-based services made dysfunctional with repeated waves of the pandemic," it said.

"Agriculture, which continues to see a constant increase in net sown area and crop diversification, will strengthen food buffers while benefiting farmers through generous volumes of procurement at remunerative minimum support prices and income transfers through PM Kisa," the report added.

It also promised that an additional layer of security for the rural workforce in the form of the Mahatma Gandhi National Rural Employment Guarantee Scheme will always be in a ready state of deployment.