“The structural reforms and the policy push under the Aatmanirbhar Bharat Mission along with the slew of measures announced in the Union Budget 2021-22 towards achieving broad-based inclusive growth will strengthen the fundamentals of the economy and bring it back on to a strong and sustainable growth path in the year ahead,” the ministry’s Monthly Economic Report said.
Growth and inflation outlook in 2021-22, “portends more than full recovery”, it added.
Indian economy is estimated to contract 7.7 per cent in the current financial year, mainly due to the coronavirus pandemic. The latest Economic Survey projected growth rate to rebound to 11 per cent during 2012-22 while the Budget estimated real GDP to be between 10-10.5 per cent.
“FY 2021-22 will be the year to rebuild with the IMF projecting growth of output at 11.5 per cent, Economic Survey at 11 per cent and the RBI’s Monetary Policy Committee at 10.5 per cent.
“With the IMF keeping India’s growth projections elevated at 6.8 per cent in FY 2022-23, India is back as the fastest growing major economy in the world,” it said.
The Survey pitched for growth through counter cyclical fiscal policy emphasising that growth alone is the answer to sustaining the public debt burden of the country, the report said.
The Survey was presented in Parliament on January 29 and the Budget on February 1.
The Budget implemented the counter cyclical fiscal policy by raising the target of fiscal deficit to 6.8 per cent of GDP, more than double the FRBM (Fiscal Responsibility and Budget Management) target, the report said.
With the expanded borrowing programme mostly meant for funding the enhanced capital outlay, the Budget has set in place the multiplier impact on growth to support the prescribed fiscal deficit target of 4.5 per cent of GDP in 2026 under the fiscal glide path.
The report noted that various measures taken by the government since March 2020 against the pandemic ensured minimum loss of life.
“Early lockdown, health-infra ramp up, gradual unlocking, blanket testing, social distancing, calibrated fiscal stimulus to minimise supply side disruptions and revive demand and structural reforms pursued diligently by government since March, 2020 have now come to fruition to limit the fatality rate to globally one of the lowest at 1.2 per cent,” it said.
According to the report, with each day ending with positive COVID-19 cases falling to new lows and economic activity levels attaining new peaks, India has worked its way around the pandemic through the will of the brave people and astute policy interventions by the government.
“The fact that complacency is far from settling in is demonstrated by India administering close to four million doses of COVID-19 vaccine within a span of two weeks since 16th January, 2021 to become the fifth largest inoculated country in the world.