Note4Students

From UPSC perspective, the following things are important :

Prelims level: India's export

Mains level: Paper 3- Taking stock of Indian economy

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

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.

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.

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.

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.

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.

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.

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/

Taking stock of the Indian economy

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