Ahead of the annual budget for 2021-22 FY to be placed in parliament by Union Finance Minister Nirmala Sitharaman on Monday, Economic Survey for 2020-21 that arrived on Friday has tried to infuse optimism by projecting that an excellent turnaround of the Indian economy is very much possible in the coming fiscal year and the grim impression (read contraction, recession or by whatever term used and understood) which has been caused by Covid-19 pandemic will be largely effaced. In technical language, the recovery has been termed as ‘V-shaped’ in the survey and a real GDP growth of 11 % is expected to make it happen. But the most striking observation in it, or rather an appeal is that the governments, both at the Centre and the States have been advised to spend more. The urge is not new to the current economic context and has actually been repeated by several economists since the arrival of a deluge of negative figures which rattled the nerves of the Finance and Commerce ministries. 2021-22 general budget thus will be followed with double attention to know, among many other things, to what extent this important advice is followed.

Explaining the reasons for the optimism, the survey has reasoned that it will possible due to the expected robust recovery in services sector and phenomenal growth in consumption and investment coupled with a resurgence in high frequency indicators such as power demand, rail freight, e-way bills, GST collection, steel consumption etc. and above all the massive Covid vaccination drive which has just commenced. It's interesting to note that the above projections coincide with the estimates made earlier by the IMF which said that real GDP growth of 11.5 % in 2021-22 is a high possibility for India followed by a 6.8 % in 2022-23 and if all goes well the country’s emergence as the fastest growing economy in the world over the next two years is almost certain. The chief takeaway of the survey, however, is the suggestion to the government at the Centre and the states as well to spend more particularly on heads that will bring oxygen into the demand side of the economy and not to worry much about the fiscal strain. This approach is actually the only solution left now and once real-time investments across sectors especially those related to infra kick off, demand for consumption, industrial or by individual consumers alike will rise, leading to a greater revenue collection, thereby making good of the fiscal loss, if any.

A host of suggestions such as rolling out of productivity-linked incentives to the manufacturing sector, easy access to liquidity, more investment on social welfare schemes have been made. It’s hard to recall when an economic survey last urged the government to be less thrifty as this one. But, it’s really the case now and for a V-shaped recovery, nothing less will do.

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Kenter Joya Riba

(Managing Editor)
      She is a graduate in Science with post graduation in Sociology from University of Pune. She has been in the media industry for nearly a decade. Before turning to print business, she has been associated with radio and television.
Email: kenterjoyaz@easternsentinel.in / editoreasternsentinel@gmail.com
Phone: 0360-2212313

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