Budget 2022 Countdown: Economic Survey 2021 Way Off GDP Numbers

by GoNews Desk 2 years ago Views 3795

Budget 2022 RBI Ministry of Finance Economic Repor
India’s Union Budget will be presented on February 1 and before that the Finance Ministry will present its Economic Survey to articulate the state of the economy. A quick relook at last year’s Eco Survey shows that the GDP numbers projected by the ministry were at least 1.8% higher than the current status of the economy.

With another 2 months left in the Financial Year, the picture can change further. The Reserve Bank of India’s January report on the ‘State of The Economy’ paints an optimistic picture of the year to come, while ignoring the cold facts in its own presentation. From Economic Survey’s projections of 11% growth in the GDP, RBI reports only 9.2% GDP growth this year, that too after adjusting the pandemic year’s shrinkage from 7.7% to 7.3% in GDP.

As a muted admission of headwinds, the RBI report released this week says: “Since the December 2021 issue of the State of the Economy article, there has been moderation in some sectors. On the external front, however, India’s robust export performance in December reflects resilient demand for Indian goods, while imports also surged on the back of improvement in domestic demand.” 

But in the same report, RBI shows that the merchandise trade deficit at a record worst in the country. In the quarter ended December 2021, the trade deficit was -62.4% which is worse than the -51.5% in the second quarter of FY 2018-19. During the last quarter India’s trade deficit was more than $20b for four months running, a first for the country. 

On consumer confidence side, the RBI panel itself reports that automobile sales in the country were 20% less in December 21 than February 2020 before the pandemic hit the country. 

As reported earlier by GoNews the two-wheeler sales – a weather bell of rural economy- were nearly 25% down from a year ago. 
The optimism of RBI is also perplexing as its own data confirms that no significant increase has taken place in electricity generation since January 2020 before the pandemic and two strict lock downs crippled manufacturing and industrial activities. 

But nonetheless, the RBI is upbeat in its conclusions: “Overall economic activity in India remains strong, with upbeat consumer and business confidence and upticks in several incoming high frequency indicators. On the vaccination front, India has made rapid strides. On the Omicron variant, the recent data from the UK and South Africa suggest that such infections are 66 to 80 per cent less severe, with a lower need for hospitalisation. This has brightened near-term prospects and financial markets reflect this optimism.”

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