Contrary to expectations of a faster growth in FY22 helping to shave off the sharp GDP contractions this year, the Indian economy will take at least two more years to return to the growth levels achieved in the pre-pandemic period, the Economic Survey 2020-21 said.
The projection on return of pre-pandemic growth is based on IMF projections of 11.5 per cent real GDP growth in 2021-22 and a 6.8 per cent growth in 2022-23. With these growth projections, Indians would once again return to become the fastest growing economy in the world.The survey has projected that the country's real GDP in FY22 will grow by 11 per cent after an estimated contraction of 7.7 per cent during the current fiscal.
The survey said that Covid led to a once in a century global crisis in 2020. While the lockdown resulted in GDP contracting by 23.9 per cent in Q1 of FY21, the recovery has been V shaped thereafter, the survey noted.
The Economic Survey for 2020-21 has suggested that the government should come up with more fiscal measure for short term support to the economy and businesses.Highlighting the long term reform measures, the survey tabled by Finance Minister Nirmala Sitharaman in Parliament on Friday, also said that to eliminate the possibility of growth being impacted in the medium to long run, the Government has been extremely pro-active in launching several seminal reforms, but noted that their impact will manifest in the medium to long-term only.
It suggested that to ensure that the economy remains in good health to avail the full benefit of these significant reforms, the "economic bridge" between the medium and long-term has to be created."Only an active fiscal policy -- one that recognises that the risks from doing too little are much more than the risks from doing too much -- can ensure that this 'economic bridge' is well laid out," he said.Although, the government has taken several measures to support and provide relief to businesses, steps to push demand have been lagging, according to several economists. Supply-side push, however, have been appreciated.
Further, the issue has been raised at several forums by several industry representatives that, although the reforms measures are welcome. They would reflect changes only in the long run, while the businesses and the common man need some immediate cushioning.
