New Delhi: The Economic Survey 2020-21 was tabled in Parliament by Finance Minister Nirmala Sitharaman on Friday, two days ahead of the presentation of the Union Budget on February 1.
The Economic Survey has forecast India’s real GDP to record a growth of 11 per cent in 2021-22 and nominal GDP by 15.4 per cent-the highest since independence, believing that rebound will be led by the low base and continued normalization in economic activities as the rollout of COVID-19 vaccines gathers traction.
“This path would entail a growth in real GDP by 2.4 percent over the absolute level of 2019-20-implying that the economy would take two years to reach and go past the pre-pandemic level. These projections are in line with IMF estimate of real GDP growth of 11.5 per cent in 2021-22 for India and 6.8 per cent in 2022-23. India is expected to emerge as the fastest growing economy in the next two years as per IMF,” the Survey said.
The Economic Survey states that the combined (Centre and States) social sector expenditure as per cent of GDP has increased in 2020-21 compared to last year. The expenditure on social services (education, health and other social sectors) by Centre and States combined as a proportion of GDP increased from 7.5% in 2019-20 (RE) to 8.8% in 2020-21 (BE).
The Government took a slew of measures to deal with the situation arising out of the COVID-19 pandemic. The government announced the first relief package of Rs.1.70 lakh crores under Pradhan Mantri Garib Kalyan Yojana (PMGKY) in March 2020 and a comprehensive stimulus cum relief package of Rs. 20 lakh crore under Atma Nirbhar Bharat Abhiyan in May 2020. Development and welfare schemes being implemented by the Government over the years together with these relief measures enabled the country to endure the impact of the COVID-19 pandemic and led to a V-shaped economic recovery.
The Survey observes that year 2018-19 was witnessed as a good year for employment generation. About 1.64 crore additional employment was created during this period consisting of about 1.22 crore in rural area and 0.42 crore in urban area. Female LFPR increased to 18.6 per cent in 2018-19 from 17.6 per cent in 2017-18.
The Survey describes that the Government has given incentive to boost employment under the scheme Atmanirbhar Bharat Rojgar Yojana. Existing Central labour laws have been rationalized and simplified into four Labour Codes viz. (i) the Code on Wages, 2019, (ii) the Industrial Relations Code, 2020, (iii) the Occupational Safety, Health and Working Conditions Code, 2020 and (iv) the Code on Social Security, 2020 to bring these laws in tune with the changing labour market trends.
The net payroll data of Employees’ Provident Fund Organisation (EPFO) as on 20th December, 2020 shows a net increase of new subscribers in EPFO of 78.58 lakhs in 2019-20 as compared to 61.1 lakhs in 2018-19.The quarterly PLFS, which covers the urban areas, shows improvements in the employment situation in Q4-2020 when compared to Q4-2019.
Dwelling on the sectoral trends, the Survey says that the year also saw manufacturing sector’s resilience, rural demand cushioning overall economic activity and structural consumption shifts in booming digital transactions. It adds that Agriculture is set to cushion the shock of the COVID-19 pandemic on the Indian economy in 2020-21 with a growth of 3.4 per cent in both Q1 and Q2. A series of progressive reforms undertaken by the government have contributed to nourishing a vibrant agricultural sector, which remains a silver lining to India’s growth story of FY 2020-21.
The Economic Survey highlights potential of public investment, especially in a slowdown and calls for fiscal policy to support growth, with specific need for rethink in fiscal rules. Emerging giants are not getting the credit ratings their economic fundamentals demand, observes the Economic Survey stating fifth largest economy has typically been rated AAA with exceptions of China (A-) and India (BBB+)
Chief Economic Adviser KV Subramanian during the press conference after tabling of the Economic survey said that India’s Sovereign Credit Ratings do not reflect its fundamentals, adding that a variety of indicators bear testimony to this.
Willingness to repay has been gold standard for India and ability to repay is also very very high for India. So India should have highest credit rating, observes Subramanian. The Sovereign Credit Rating Methodology needs correction, current ratings do not reflect fundamentals, they also affect foreign investment flow in a mechanical manner, the CEA said.