Economic Indicators and Various Reports On It- GDP, FD, EODB, WIR etc

Taking stock of the Indian economy

Note4Students

From UPSC perspective, the following things are important :

Prelims level : India's export

Mains level : Paper 3- Taking stock of Indian economy

Context

This article takes the stock of the Indian economy using the EFGHIJ framework.

Export

  • The $400-billion target of goods exports in FY22 appears achievable:
  • This is a structural break from ~$300-330 billion per year over the last decade.
  • Note that in calendar year 2021, India exported almost $400 billion worth of goods.
  • This export growth comes at a time when global shipping and freight markets have been in a tizzy over the last few months as Covid-related supply chain disruptions across commodities and final products reverberated across the globe.

Fiscal growth

  • India has significant fiscal headroom in FY23 with a 6.4% fiscal deficit pencilled in.
  • The revenue buoyancy, assumed at less than 1, is conservative as is the overall assumption on nominal growth at 11%.
  • In as volatile a world as this, the conservatism in forecasting should come to India’s advantage.
  • India saw healthy direct and indirect tax receipts in FY22: the GST collections have consistently remained above the `1 trillion-a-month mark for many months now.
  • Two aspects need a close watch:
  • (a) as the prices of various commodities rise, there can be calls for softening the blow on the final consumer via tax cuts or direct support, and
  • (b) the disinvestment programme of the government which could face a market where investor appetite is uncertain.

Growth challenges and opportunities for India

  • India’s GDP growth in FY23 is projected to be 7.6-8.5%, making it one of the fastest-growing economies.
  • With the newly changed circumstances, it is possible that this tight range and the absolute number may require revision.
  • It is, however, too early to say in which direction and by what amounts.
  • Opportunities for India: Global dislocations of supply chain or the creation of new supply sources could create divergent challenges and opportunities for India.
  • The post Covid rebound in high frequency indicators (air and rail passengers, toll collections, UPI payments, etc.) suggests that the internal consumption economy is currently back on track.
  • It is important to note that India continues to be the fastest-growing nation of its size in the world.

Health

  • India has now completed almost 1.8 billion doses.
  • The Omicron wave, thankfully both due to the inherent nature of the virus and the large vaccination drive, did not cause significant economic upheaval.
  •  It may be time to think of Covid as endemic and plan accordingly.

Inflation

  • The inflation in 2021 was based on a sudden bout of fiscal-support-driven spending meeting with tight supply chain bottlenecks.
  • It was expected that as spending normalises and supply chains open, prices will stabilise.
  • However, the sharp uptick in the prices of crude, coal, commodities, and chips has created a more sustained scare for inflation.
  • Many measures may be taken across the world to curb the impact for the common man: from opening of oil reserves, to cutting of taxes, to direct support, etc—all of which could impact the fiscal.

Capital

  • Denoted by K by economists, expect to see a lot of ebb-and-flow here as investors react to evolving, volatile trends.
  • Higher public investment in the last two years has supported economic recovery: India has planned for a record `10 lakh crore plus public capex.
  • Net FDI has been strong at $25.3 billion up to December in FY2022.
  • While FPIs have withdrawn $9.5 billion in FY22, DIIs and retail investors have supported the markets.

Conclusion

With two waves of COVID-19 largely behind us, many macroeconomic factors have changed dramatically, especially in the last fortnight.


Source:

https://www.financialexpress.com/opinion/efghijk-taking-stock-of-the-indian-economy/2457255/

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