Finance Minister Nirmala Sitharaman on Friday presented the Economic Survey in Parliament ahead of the Union Budget.
The survey expects the Indian economy to grow by 11 percent in FY22 following a 7.7 percent contraction in the current fiscal.
It points out that a V-shaped recovery is underway owing to a resurgence in high-frequency indicators such as power demand, rail freight, and e-way bills among others.
Sanjeev Sanyal, Principal Economic Adviser said, “The current account surplus you are talking about is partly reflective of the fact that during the first half of the financial year there was a big demand compression which is precisely what you should expect when you have lockdown of the kind we went through. In the economic survey we make the case that was exactly the right thing to do from the perspective of health outcomes but we also say that when the lockdown was unwound we did begin to ramp up demand this is important in the context of the debate that was happening at that time about when and how India will opt for large fiscal stimulus and many experts at that time were of the opinion that we should through this big one time fiscal boost and we did not go for it we in fact went for a more calibrated approach of smaller packages spread out over time.”
“In this context it should also be pointed out that once the foot had been taken out of the brake we did begin to press the accelerator. We are not simply going out and spending blindly, we are focusing and targeting it on spending on creating assets that is why it is capital expenditure and we are doing it at a time where the supply side can respond.”
On the next set of measures, Sanyal said, “The future being uncertain it means that you have to invest in supply-side measures. The point we are making is that the post COVID world is not simply a reinflation of the pre COVID world. This post COVID world will have its own logic in many ways. So it is very important that we invest into providing flexibility to the system as well whether it is labour laws, removing all kinds of restrictions on the BPO sector, or going forward there is a full chapter on an economic survey on simplifying regulation.”
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