Economic survey: What it reveals

The report reaffirms other growth projections. But there are four major concerns in 2022-23

Over the years, the economic survey has grown into a slightly self-indulgent exercise, sometimes airing radical ideas that are unlikely to ever be adopted. It has also, perhaps as a result, become unwieldy, spanning two volumes. There’s good news on both fronts in the economic survey for 2021-22, which gives the radical ideas a miss, and restricts itself to one volume. Its core message on the state of the economy is what has been evident in the macro numbers and high-frequency indicators for some time — and something that has also been borne out in projections for the Indian economy from multilateral agencies such as the World Bank and the International Monetary Fund (IMF). This is simply that the Indian economy has put behind it the effects of the pandemic, and that it will grow by 8-8.5% in 2022-23. That number is conservative when compared to IMF’s projection of 9%, but coming on the back of this year’s 9.2% (as reaffirmed by the survey; IMF’s is 9% again), it means that India will continue to remain the fastest-growing major economy in the world.

There are four big concerns from the macroeconomic perspective in the coming financial year. The first is the government’s ability to keep spending, especially on capex, and the survey says there’s enough fiscal space to do so. And, while acknowledging that private investment growth has been lacklustre, it suggests that the stage is set for a revival in that too (just as it expects to see a stronger recovery in private consumption as well). The second is high inflation, which it doesn’t expect to be a problem (as long as there are no supply side disruptions). The third is the ongoing global taper, but the survey says (and rightly so) that the country’s external sector is strong enough to cope with this. And the fourth is the impact of higher oil prices; the survey says that its projections are based on an orderly “withdrawal of global liquidity”, a good monsoon, no “further debilitating pandemic-related economic disruption” and oil staying in the range of $70-75 a barrel. That’s an average, but it wouldn’t have escaped anyone’s attention that oil crossed $90 for the first time since 2014 last week.

It’s anecdotally known that the brunt of the impact of two years of the pandemic has been on small enterprises and the informal sector, and it might have been worth its while for the survey to explore this aspect, although, to be fair, the absence of data makes this task difficult. Still, one can hope the budget addresses the issues of this sector.