Editorials/Opinions Analysis For UPSC 02 February 2022
Contents:
- Ramp Up Support
Ramp Up Support
Context:
The Economic survey 2021-22, was recently tabled in the Parliament by the Finance Minister.
Relevance:
GS III: Growth & Development, Planning, Fiscal Policy, Inclusive Growth
Dimensions of the Article:
- State of the Economy (GDP Growth)
- Issues unaddressed by the Economic Survey
- Highlights of the Economic Survey
- Way forward
State of the Economy (GDP Growth):
- The Economic Survey expects the Indian economy to grow by 8-8.5 per cent in the upcoming financial year, on the back of a 9.2 per cent expansion in 2021-22.
- The Survey’s projections appear conservative when compared to recent assessments of the IMF, which has pegged the economy to grow at 9 per cent, or the World Bank which expects it to grow at 8.7 per cent.
- In its recent World Economic Outlook, the IMF has pegged global GDP growth at 4.4 per cent in 2022, down from 5.9 per cent in 2021, with global trade volumes growth expected to fall in 2022.
Issues unaddressed by the Economic Survey:
- The Annual flagship document of the Ministry of Finance does not examine the uneven nature of the recovery in greater detail.
- Issues need to be stressed upon:
- The continuing distress in the labour market,
- the sharp rise in inequality,
- the lingering financial stress among the MSMEs (especially those operating in the informal parts of the economy)
- With reference to macro-economic stability, the Survey has assured that India is better placed than it was at the time of the global financial crisis, but what is less clear is the extent to which the recovery will heal the scars induced by the pandemic in the near term.
Highlights of the Economic Survey:
- The external environment is likely to be less benign, and financial conditions will tighten considerably.
- Pandemic Threat: Possibility of threat by another wave of infections and the associated impact on economic activity.
- It has stressed on supply-side oriented measures, rather than relying solely on “demand management” as a response to the pandemic.
- Elevated crude oil prices: The Survey has assumed oil to remain in the range of $70-75 per barrel, crude oil prices are currently around $90.
- Assured continued government support to the economy:
- The “government has the fiscal capacity to maintain the support, and ramp up capital expenditure when required,” it says.
- The sharp rise in central government revenues provides it with the necessary fiscal space.
- However, the government needs to remain mindful of its constraints in the context of rising government debt
Way forward:
- The Government needs to balance the twin objectives of supporting the economy and putting government finances on a credible path of consolidation.
-Source: The Indian Express
