Key highlights from Economic Survey 2021-22

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Key highlights from Economic Survey 2021-22
  • Context:
    • The Economic Survey 2021-22 was tabled in Parliament on Monday by Finance Minister Nirmala Sitharaman soon after the President's address to both Houses of Parliament. The survey presented a day before the Union Budget, underlines the state of the economy and outlines suggestions for policy actions.

State of the Economy Projections
  • Indian economy is estimated to grow by 9.2 percent in real terms in 2021-22.
  • GDP is projected to grow by 8- 8.5 percent in real terms in 2022-23. 
  • The financial system is in a good position to provide support for the economy’s revival, thus, a pickup in private sector investment is estimated.
  • As per IMF’s latest World Economic Outlook projections, India’s real GDP is projected to grow at 9 percent in 2021-22 and 2022-23 and at 7.1 percent in 2023-2024, which would make India the fastest-growing major economy in the world for all 3 years.
  • Macroeconomic stability indicators suggest that the Indian Economy is well placed to take on the challenges of 2022-23.
  • The combination of high foreign exchange reserves, sustained foreign direct investment, and rising export earnings will provide an adequate buffer against possible global liquidity tapering in 2022-23.
  • Government of India’s unique response comprised of safety nets to cushion the impact on vulnerable sections of society and the business sector, a significant increase in capital expenditure to spur growth, and supply-side reforms for a sustained long-term expansion.

Fiscal Developments


  • The revenue receipts from the Central Government (April to November 2021) have gone up by 67.2 percent.
  • Gross Tax Revenue registers a growth of over 50 percent from April to November 2021 in YoY terms.  This performance is strong compared to the pre-pandemic levels of 2019-2020 also.
  • During April-November 2021, Capex has grown by 13.5 percent (YoY) with a focus on infrastructure-intensive sectors.
  • With the enhanced borrowings on account of COVID-19, the Central Government debt has gone up from 49.1 percent of GDP in 2019-20 to 59.3 percent of GDP in 2020-21.
  • Sustained revenue collection and a targeted expenditure policy have contained the fiscal deficit for April to November 2021 at 46.2 percent of BE.
External Sectors
  • India’s external debt rose to US $ 593.1 billion at the end-September 2021, from the US $ 556.8 billion a year earlier, reflecting additional SDR allocation by IMF, coupled with higher commercial borrowings.
  • India’s merchandise exports and imports rebounded strongly and surpassed pre-COVID levels during the current financial year.
  • There was a significant pickup in net services with both receipts and payments crossing the pre-pandemic levels, despite weak tourism revenues.
  • Despite all the disruptions caused by the global pandemic, India’s balance of payments remained in surplus throughout the last two years.
  • This allowed the Reserve Bank of India to keep accumulating foreign exchange reserves (they stood at US$ 634 billion on 31st December 2021).
  • This is equivalent to 13.2 months of merchandise imports and is higher than the country’s external debt. The combination of high foreign exchange reserves, sustained foreign direct investment, and rising export earnings will provide an adequate buffer against possible global liquidity tapering in 2022-23.

Monetary Management and Financial Intermediation
  • The liquidity in the system remained in surplus.
  • Repo rate was maintained at 4 percent in 2021-22.
  • Bank credit growth accelerated gradually in 2021-22 from 5.3 percent in April 2021 to 9.2 percent as of 31st December 2021.
  • The Gross Non-Performing Advances ratio of Scheduled Commercial Banks (SCBs) declined from 11.2 percent at the end of 2017-18 to 6.9 percent at the end of September 2021.
  • Sensex and Nifty scaled up to a touch peak at 61,766 and 18,477 on October 18, 2021.
  • Among major emerging market economies, Indian markets outperformed peers in April-December 2021.
Prices and Inflation
  • The average headline CPI-Combined inflation moderated to 5.2 percent in 2021-22 (April-December) from 6.6 percent in the corresponding period of 2020-21.
  • The decline in retail inflation was led by the easing of food inflation.
  • Food inflation averaged at a low of 2.9 percent in 2021-22 (April to December) as against 9.1 percent in the corresponding period last year.
  • Proactive measures were taken to contain the price rise in pulses and edible oils.
  • Reduction in central excise and subsequent cuts in Value Added Tax by most States helped ease petrol and diesel prices.
  • Wholesale inflation based on the Wholesale Price Index (WPI) rose to 12.5 percent during 2021-22 (April to December).
  • Low base in the previous year,
    •  This has been attributed to:
      • The divergence between CPI-C and WPI Inflation:
      • The divergence peaked at 9.6 percentage points in May 2020.
      • Pick-up in economic activity.
      • The sharp increase in international prices of crude oil and other imported inputs, and
      • High freight costs.
Sustainable Development and Climate Change
  • India’s overall score on the NITI Aayog SDG India Index improved to 66 in 2020-21 from 60 in 2019-20 and 57 in 2018-19.
  • India has the tenth largest forest area in the world.
  • In 2020, India ranked third globally in increasing its forest area from 2010 to 2020.
  • In 2020, the forests covered 24% of India’s total geographical, accounting for 2% of the world’s total forest area.
  • In August 2021, the Plastic Waste Management Amendment Rules, 2021, was notified which is aimed at phasing out single-use plastic by 2022.
  • Draft regulation on Extended Producer Responsibility for plastic packaging was notified.
  • The Compliance status of Grossly Polluting Industries (GPIs) located in the Ganga main stem and its tributaries improved from 39% in 2017 to 81% in 2020.
  • The Prime Minister, as a part of the national statement delivered at the 26th Conference of Parties (COP 26) in Glasgow in November 2021, announced ambitious targets to be achieved by 2030 to enable further reduction in emissions.
Agriculture and Food Management
  • The Agriculture sector experienced buoyant growth in the past two years, accounting for a sizeable 18.8% (2021-22) in Gross Value Added (GVA) of the country registering a growth of 3.6% in 2020-21 and 3.9% in 2021-22.
  • Allied sectors including animal husbandry, dairying and fisheries are steadily emerging to be high growth sectors and major drivers of overall growth in the agriculture sector.
  • The Livestock sector has grown at a CAGR of 8.15% over the last five years ending 2019-20. It has been a stable source of income across groups of agricultural households accounting for about 15% of their average monthly income.

Industry and Infrastructure
  • Introduction of Production Linked Incentive (PLI) scheme, the major boost provided to infrastructure-both physical as well as digital, along with measures to reduce transaction costs and improve ease of doing business, would support the pace of recovery.
  • Index of Industrial Production (IIP) grew at 17.4 percent (YoY) during April-November 2021 as compared to (-)15.3 percent in April-November 2020.
  • GVA of services crossed pre-pandemic level in July-September quarter of 2021-22; however, GVA of contact intensive sectors like trade, transport, etc. still remain below pre-pandemic level.
  • Overall service Sector GVA is expected to grow by 8.2 percent in 2021-22.
  • During the first half of 2021-22, the service sector received over US$ 16.7 billion FDI – accounting for almost 54 percent of total FDI inflows into India.
  • IT-BPM services revenue reached US$ 194 billion in 2020-21, adding 1.38 lakh employees during the same period.
  • India has become 3rd largest start-up ecosystem in the world after US and China. The number of newly recognized start-ups increased to over 14000 in 2021-22 from 733 in 2016-17.
  • 44 Indian start-ups have achieved unicorn status in 2021 taking the overall tally of unicorns to 83, most of which are in the services sector.

Social Infrastructure and Employment


  • With the revival of the economy, employment indicators bounced back to pre-pandemic levels during the last quarter of 2020-21.
  • As per the quarterly Periodic Labour Force Survey (PFLS) data up to March 2021, employment in the urban sector affected by the pandemic has recovered almost to the pre-pandemic level.
  • According to Employees Provident Fund Organisation (EPFO) data, formalization of jobs continued during the second COVID wave; the adverse impact of COVID on the formalization of jobs was much lower than during the first COVID wave.
  • Expenditure on social services (health, education and others) by the Centre and States as a proportion of GDP increased from 6.2 % in 2014-15 to 8.6% in 2021-22 (BE)
  • As per the National Family Health Survey-5:
    • Total Fertility Rate (TFR) came down to 2 in 2019-21 from 2.2 in 2015-16
    • Infant Mortality Rate (IMR), under-five mortality rate, and institutional births have improved in 2019-21 over the year 2015-16
    • Under Jal Jeevan Mission (JJM), 83 districts have become ‘Har Ghar Jal’ districts.
    • Increased allotment of funds to Mahatma Gandhi National Rural Employment Guarantee Scheme (MNREGS) to provide a buffer for unorganized labor in rural areas during the pandemic.
Foreign Exchange
  • A combination of high foreign exchange reserves, sustained foreign direct investment, and rising export earnings will provide an adequate buffer against possible global liquidity tapering in 2022-23.
  • The economic impact of the “second wave” was much smaller than that during the full lockdown phase in 2020-21, though the health impact was more severe.
  • Government of India’s unique response comprised of safety nets to cushion the impact on vulnerable sections of society and the business sector, significant increase in capital expenditure to spur growth and supply-side reforms for a sustained long-term expansion.

  • More significantly, the banking system is well-capitalized and the overhang of Non-Performing Assets seems to have structurally declined even allowing for some lagged impact of the pandemic.  
  • Vaccination is not merely a health response but is critical for opening up the economy, particularly contact-intensive services. Therefore, it should be treated for now as a macroeconomic indicator.
  • Over the course of a year, India delivered 157 crore doses that covered 91 crore, people, with at least one dose and 66 crores with both doses. 
  • Inflation has reappeared as a global issue in both advanced and emerging economies.

Approach of Government
  • Overall, macro-economic stability indicators suggest that the Indian economy is well placed to take on the challenges of 2022-23.
  • One of the reasons that the Indian economy is in a good position is its unique response strategy. Rather than pre-commit to a rigid response, the Government of India opted to use safety-nets for vulnerable sections on one hand while responding iteratively based on Bayesian-updating of information.
  • This “barbell strategy” was discussed in last year’s Economic Survey. A key enabler of this flexible, iterative “Agile” approach is the use of eighty High-Frequency Indicators (HFIs) in an environment of extreme uncertainty. 
  • Another distinguishing feature of India’s response has been an emphasis on supply-side reforms rather than a total reliance on demand management.
  • These supply-side reforms include:
    1. deregulation of numerous sectors
    2. simplification of processes,
    3. removal of legacy issues like ‘retrospective tax’,
    4. privatisation,
    5. production-linked incentives and so on.
  • Even the sharp increase in capital spending by the Government can be seen both as a demand and supply enhancing response as it creates infrastructure capacity for future growth.
  • This year’s Survey particularly highlights the importance of process reforms in a number of sectors while Chapter 11 provides a brief demonstration of the use of satellite images and geospatial data, both recently deregulated sectors, for gauging economic development. 

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