India’s economic growth is likely to rebound with a 11% growth in the next financial year as it makes a ‘V-shaped’ recovery after suffering a pandemic-led carnage, according to the Pre-Budget Economic Survey. It needs to be kept in mind, however, that the GDP is projected to contract by a record 7.7% in the current fiscal ending March 31, 2021. This means that the 11% growth projection is on a much smaller base. India’s last annual contraction was in 1979-80, when the GDP shrank by 5.2%.
The Economic Survey 2020-21 said the agriculture sector was the only silver lining while services, manufacturing and construction were most hit by the lockdown. “After an estimated 7.7% pandemic-driven contraction in 2020-21, India’s real GDP is projected to record a growth of 11.0% in 2021-22 and nominal GDP by 15.4%. These conservative estimates reflect upside potential that can manifest due to the continued normalisation in economic activities as the rollout of Covid-19 vaccines gathers traction,” the Survey said.
The growth will be further supported by supply-side push from reforms and easing of regulations, push for infrastructural investments, boost to manufacturing sector through the Productivity Linked Incentive Schemes, recovery of pent-up demand for services, and increase in discretionary consumption subsequent to roll-out of the vaccine, it said.
The survey, tabled in Parliament by Finance Minister Nirmala Sitharaman, said there was likely to be a fiscal slippage during the year based on the available trends for April to November 2020. India is expected to witness a current account surplus during the current financial year after a gap of 17 years, the report said.