The finance ministry on Tuesday stated higher-frequency indicators — like energy consumption, inter-and-intra-state mobility, manufacturing capacity utilisation, small business expectations and customer self-confidence — in January point at a “sustained and strengthening economic recovery”.
In its most recent month-to-month financial report, the division of financial affairs stated the Budget announcements, which have focussed on elevated spending in places with higher-multiplier impact, along with structural reforms and the policy push below the Aatmanirbhar Bharat initiative will bring the economy back on to a “strong and sustainable growth path” in FY22.
The International Monetary Fund has forecast a 11.5% true GDP expansion for India in FY22 and 6.8% in FY23. With this, India is set to return as the world’s quickest-expanding big economy, beating China.
Highlighting encouraging trend across some gauges, the report stated GST mop-ups in January have hit a record. Manufacturing and services PMI stay in expansionary zone even though augmented credit development, surging FDI and FPI flows and private placement of corporate bonds are supplying essential economic cushion to the true recovery.
The report also highlighted a “convergence across three windows (economic survey, Budget and monetary policy review) of policy intervention” that “lays to rest any ambiguity on the growth agenda of the government”.
The Economic Survey pitched for development via counter cyclical fiscal policy emphasising that development alone is the answer to sustaining the public debt burden of the nation. The Budget for 2021-22 implemented the counter cyclical fiscal policy by raising the target of fiscal deficit to 6.8% of GDP, more than double the FRBM target.
“With the expanded borrowing programme mostly meant for funding the enhanced capital outlay, the Budget has set in place the multiplier impact on growth to support the prescribed fiscal glide path tapering to 4.5% of GDP in 2026,” it stated.
Similarly, the monetary policy committee statement issued final week has kept the currently low policy repo prices unchanged and maintained its accommodative stance on development, extending deeper into 2021-22.