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The Economic Survey was tabled by the FM, Nirmala Sitharaman in the Parliament first and it was the newly appointed Chief Economic Advisor (CEA),  V Anantha Nageswaran, as is the tradition, who held the Press Conference.

The most watched figure in the Survey – the GDP forecast. The FY23 real GDP growth was pegged at 8 to 8.5% and for current fiscal, FY22, at 9.2%. The Survey expects that in FY22, agri growth will be at 3.9%, industrial growth at 11.8% and services sector at 8.2%.

The Survey has based these numbers on four assumptions –

1: No further debilitating pandemic related economic disruption

2: Monsoon will be normal

3: Withdrawal of global liquidity by major central banks will be orderly

4: Crude price will settle in range of $70 -80/barrel

As is seen in almost all Economic Survey’s the picture is rosy and brimming with optimism and growth ahead. This time around, the growth engine will be led by reforms on the supply side and easing of regulations. The Survey has laid a lot of importance on consumption growing to pre-pandemic levels led through Govt spending on infra and uptick in housing cycle helping revive the construction sector. Based on this commentary it would be safe to say that the Budget tomorrow will continue to focus on boosting the realty sector and increase consumer spending.

The snake in the grass is inflation, which is already poisoning everything around and the survey goes on to warn us about imported inflation – increase in price of imports, leading to a decline in the value of the currency. The more the currency depreciates on the foreign exchange market the higher the price of imports. As a result, prices within the country rise. Imported inflation causes inflation.

On tapering, the Survey has said that as tapering happens and affects liquidity, India can defend itself via FDI, high forex reserves and rising exports.

And it looks like there will be more seasons of Shark Tank, given the growing number of entrepreneurs setting startups and many becoming unicorns. India recognised 14,000 new startups in 2021, taking the cumulative number to 61,400 in the country. In 2021, India also saw 44 startups reach unicorn status in 2021, becoming the third highest country in number of unicorns after the U.S. and China. The total number of unicorns went up to 83, with a total valuation of $277.7 billion. Wow! These are fantastic numbers and we hope the Budget gives more impetus to such budding startups because they create employment and bring in a sense of well-being.

What we have also inferred from the Survey is that economic revival has mostly been financed through money raised through the capital markets rather than bank credit. In the first 8-months of the current fiscal, IPOs of 75 companies have raked in Rs.89,066 crore, an over 50% increase (YoY) in fund mobilization. The 8-months also saw nearly 221 lakh individual Demat accounts getting added. Last year stocks rose to record level as the base year was very low and in that context, this year we might see a more moderate growth. So this year, growth will have to pushed by Govt again and led by credit growth by banks too.

The Survey is always a very feel-good paper to read but we hope that what we read is what we are really seeing on the ground. The gap between the plans the implementation needs to come down; it sounds very good and right to say “capex led growth” but we need that going into action too.  Exports have bounced back and have been robust; this needs to be taken forward with more push via trade relationships and taking a more proactive role in global trade.

This an annual statement which is put together by the Finance Ministry of India, showcasing the economic development during the course of the year. The draft of the survey is prepared by Department of Economic Affairs and cleared by Chief economic Advisor and the secretary Economic Affairs. The final version is vetted by Finance secretary and Finance Minister. The Union Budget is a statement for the future while the Economic Survey is a statement of the past fiscal.

All in all, as we said earlier, the Survey is rooted but the suggestions sound more Utopian; in an ideal world, this is the vision which our country should have, following the path chalked by the Survey. But then we do not live in an ideal world….

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