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India's mature response to pandemic saved lives, says CEA

Srishti P
·5-min read
Union Finance Minister Nirmala Sitharaman and Chief Economic Advisor Krishnamurthy Subramanian. Photos: Getty Images
Union Finance Minister Nirmala Sitharaman and Chief Economic Advisor Krishnamurthy Subramanian. Photos: Getty Images

Finance Minister Nirmala Sitharaman on Friday presented the Economic Survey that details the state of the economy ahead of the Budget. The Economic Survey 2020-21 has been authored by a team led by Chief Economic Adviser Krishnamurthy Venkata Subramanian.

The economy, which was battered by the coronavirus lockdown, is expected to see a strong recovery in the 2021-22 fiscal year.

The gross domestic product (GDP) contracted by a record 23.9 per cent in April-June and by 7.5 per cent in the second quarter.

For the full fiscal, the survey projected a contraction of 7.7 per cent and V-shaped recovery in the next.

GDP growth is seen expanding by 11 per cent in the 2021-22 fiscal (April 2021 to March 2022).

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  • India’s GDP is estimated to contract by 7.7% in FY2020-21, composed of a sharp 15.7% decline in first half and a modest 0.1% fall in the second half.

  • In the year 2021-22, a sharp recovery of real GDP growth of 10-12% is expected based on a low base effect and inherent strengths of the economy.

  • It is expected that the economy grows at its trend growth rate of 6.5% in 2022-23 and 7% in 2023-24 aided by structural reforms.

  • This path would entail a growth in real GDP by 2.4% over the absolute level of 2019-20 - implying that the economy would take two years to reach and go past the pre-pandemic level

India’s nominal GDP to grow by 15.4% in 2021-22.

India GDP Growth Pegged At 10-12% For FY22

  • India’s GDP is estimated to contract by 7.7% in FY2020-21, composed of a sharp 15.7% decline in first half and a modest 0.1% fall in the second half.

  • In the year 2021-22, a sharp recovery of real GDP growth of 10-12% is expected based on a low base effect and inherent strengths of the economy.

  • It is expected that the economy grows at its trend growth rate of 6.5% in 2022-23 and 7% in 2023-24 aided by structural reforms.

  • This path would entail a growth in real GDP by 2.4% over the absolute level of 2019-20 - implying that the economy would take two years to reach and go past the pre-pandemic level

India’s nominal GDP to grow by 15.4% in 2021-22.

Economic Survey 2021: India's Timely Lockdown Strategy Saved Lives

India has transformed the short-term trade-off between lives and livelihoods into a win-win in the medium to long-term that saves both lives and livelihoods, the annual economic survey authored by Chief Economic Advisor Krishnamurthy Subramanian said, in its first chapter.

“By estimating the natural number of cases and deaths expected across countries based on their population, population density, demographics, tests conducted, and the health infrastructure, we compare these estimates with actual numbers to show that India restricted the Covid-19 spread by 37 lakh cases and saved more than 1 lakh lives.”

The survey found a correlation between the stringency of the lockdown and it the number of Covid-19 cases and resultant deaths. It also found a correlation between the lockdown’s stringency and the country’s “V-shaped” recovery.

“India thus benefited from successfully pushing the peak of the pandemic curve to September, 2020 through the lockdown."

Finance Minister Nirmala Sitharaman Tables Economic Survey 2021 In Lok Sabha

Finance Minister Nirmala Sitharaman has tabled the Economic Survey 2020-21 document in Lok Sabha.

Here are the key highlights so far:

  • India sees FY22 GDP growth at 11%

  • Combined fiscal deficit to exceed target in FY21

  • Growth recovery to be driven by government consumption

Source: Bloomberg

India Said To Forecast 11% Growth Buoyed By Vaccine Roll Out

India is predicting Asia’s third-largest economy will expand 11% in the year starting April betting that the vaccine roll out will contain the pandemic, while low interest rates and measures to lure investment will spur business activity, people with knowledge of the matter said.

The forecast for next year is in line with the International Monetary Fund’s estimate for 11.5% expansion, which will once again make India the fastest-growing major economy in the world ahead of China’s 8.1% pace.

The annual document acts as a platform to pitch larger economic ideas and concepts which the government may or may not act upon. On Jan. 31 2020 -- before coronavirus became a sizable threat to the Indian economy -- Subramanian outlined a difficult year for India’s growth, the need to create fiscal headroom, pitched large-scale job creation and proposed a new divestment mode. All these issues have only intensified over the last year as the Covid-19 virus rummaged through the economy, especially the country’s poorer half.

Since the last economic survey was tabled, India’s GDP contracted by nearly a quarter in the April to June period owing to a nation-wide lockdown. GDP improved but remained in the negative in the second quarter, officially taking India into recession. Unemployment rate rose to 9.1% in December, according to data released by the Centre for Monitoring Indian Economy, highest in the last six months despite an increase in overall economic activity.

Inputs: BloombergQuint, PTI, ANI

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