India economy to grow at fastest rate among large nations; says Ministry of Finance report; credits measures taken in Budget 2022

Indian economy is projected to grow at the fastest pace among the league of large nations, according to the Finance Ministry's Monthly Economic Review. The report credits the fast pace of growth to various measures taken by the government in Budget 2022-23.

"The current year may as well end with an economic reset manifest of a post-COVID-19 world...Manufacturing and Construction will be the 'growth drivers', triggered by the PLI schemes and public Capex in infrastructure," the review report said according to PTI.

In agriculture, which has been seeing a continuous increase in net sown area and crop diversification, food buffers will be strengthened, and farmers will benefit from generous procurement at remunerative minimum support prices, as well as income transfers through PM KISAN, it said.

While noting that the IMF in its January 2022 update lowered its global growth estimate, it said India is still the only major country whose growth projection has been revised upward in 2022-23.

"In a testimony to the resilience of its people and the farsightedness of its policymaking, the Indian economy that contracted by (-)6.6 per cent in 2020-21 is now projected in 2022-23 to grow the quickest among the league of large nations," it said.

According to the report, India's Budget for 2022-23 has strengthened the direction set by the previous year's Budget.

The CAPEX budget, increased by 35.4 per cent over this year's budget estimates and rising to 4.1 per cent of GDP after the addition of grants-in-aid to states for capital works, will power the seven engines of Gatishakti to reduce the infrastructure gap and facilitate private investment in the country, it said.

The report stated that despite the third wave of COVID-19, overall economic activity remained resilient, as indicated by the robust performance of several high-frequency indicators, including power consumption, PMI manufacturing, exports, and e-way bill generation.

"Once the uncertainty and anxiety caused by the Covid-19 virus recedes from people's minds, consumption will pick up and the demand revival will then facilitate the private sector stepping in with investments to augment production to meet the rising demand. Barring external shocks 'geopolitical and economic', this scenario should play out for the Indian economy in 2022-23," it said.

The Budget has forecast nominal GDP growth of 11.1 per cent in 2022-23 with a GDP deflator of 3.0-3.5 per cent. The estimated real growth rate of just about 8 per cent is close to the forecast in Economic Survey, 2021-22, as well as 7.8 per cent projected by the Monetary Policy Committee (MPC) of the RBI in its meeting of February 2022.

Since the repo rate and reverse repo rate were unchanged, the MPC's accommodative stance reinforced the Budget's investment orientation during these uncertain times.

(With Inputs from PTI)