India economy to grow at quickest pace among large nations: Finmin report

The Indian economy is poised to grow at the quickest pace among the league of large nations on the back of various initiatives taken by the government in Budget 2022-23, said the Finance Ministry’s Monthly Economic Review.

”The current year may as well end with an economic reset manifest of a post-COVID-19 world…Manufacturing and Construction will be the ‘growth drivers’, triggered by the PLI schemes and public capex in infrastructure,” the review report 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 KISAN scheme, it added.

Observing that the IMF in its January 2022 update has lowered its global growth estimate for 2022, it said India is yet the only large and major country listed by the IMF whose growth projection has been revised upwards in 2022-23. ”In a testimony to the resilience of its people and the farsightedness of its policymaking, the Indian economy that contracted by (-)6.6 per cent in 2020-21 is now projected in 2022-23 to grow the quickest among the league of large nations,” it said.

The report said the Budget 2022-23 has strengthened the direction set for India’s economy by the previous year’s budget. The capex budget, higher by 35.4 per cent over current year’s budget estimates and rising to 4.1 per cent of GDP after inclusion of grants-in-aid to states for capital works, will power the seven engines of Gatishakti to reduce the infrastructure gap and facilitate private investment in the country, it said.

On the impact of third wave of COVID-19, it said, overall economic activity remained resilient and this is reflected in robust performance of several high frequency indicators like power consumption, PMI manufacturing, exports and e-way bill generation. ”Once the uncertainty and anxiety caused by the Covid-19 virus recedes from people’s minds, consumption will pick up and the demand revival will then facilitate the private sector stepping in with investments to augment production to meet the rising demand. Barring external shocks – geo-political and economic – this scenario should play out for the Indian economy in 2022-23,” it said.

The Budget has targeted a nominal GDP growth of 11.1 per cent in 2022-23 with a GDP deflator of 3.0-3.5 per cent. The implied real growth component of just about 8 per cent is close to the forecast in Economic Survey, 2021-22 as well as 7.8 per cent projected by the Monetary Policy Committee (MPC) of the RBI in its meeting of February 2022. The unchanged repo and reverse repo rate along with the MPCs accommodative stance prioritise growth during these uncertain times and reinforce the investment orientation of the budget.