Economic Survey has set stage for pvt investment, growth: Indian industry

With the government's new Chief Economic Adviser Anantha Nageswaran articulating his hopes on private capex cycle to build on the back of what the Central and state governments have done, India Inc has some reason to cheer-- an Economic Survey which forecasts India's economy to grow by 9.2% during FY 2021-22 and by 8-8.5% in fiscal 2023 beginning 1 April. 

"Crowding-in of private sector in capex cycle will lead to job creation," he said. "We hope to see virtuous economic cycle that will help address loss of jobs and incomes suffered," Nageswaran said on Monday. 

For an industry which has weathered the triple whammy of the Covid 19 waves, lockdowns, severe setback to earnings across sectors, the Survey's prescription of focused and targeted approach towards capital investment in agriculture sector and underlining the record profits of companies in recent quarters along with mobilization of risk capital as signals of a more robust investment climate, have generated optimism for continued reforms and sustained high rates of growth. 

"As per the Economic Survey, India is expected to see further momentum in economic recovery, with GDP growth projected at 8.0 - 8.5 per cent for 2022-23," says Sanjiv Mehta, president, FICCI who finds this encouraging in the context of India's unique response strategy to Covid-19 pandemic backed by accelerated vaccination drive. While all this, boosted by supportive measures of the government and RBI, has spurred economy recovery to pre-pandemic levels, Mehta feels there is need to be mindful of some of the assumptions that underpin this projection against a backdrop of evolving geo-political developments and their impact on oil prices. 

"The likely accelerated pace of monetary policy normalisation by central banks and the still uncertain trajectory of the Covid-19 pandemic could throw up newer challenges for the economy in the year ahead," cautions Mehta. Importantly, points out Mehta, the Economic Survey has highlighted that growth in the next fiscal will be supported by private investments, exports and supply-side reforms. "The government has not shied away from taking bold measures that are good for the economy and its various constituents," says the FICCI president. 

The Confederation of Indian Industry (CII) has highlighted the Economic Survey's prognosis of strong GDP growth as setting the stage for catapulting India as the fastest-growing major economy of the world for two consecutive years. The industry body is looking back at the strong growth momentum experienced in 2021 and the buoyancy in tax revenues as a strong foundation to help ramp up capital spending and exert a multiplier impact on rest of the sectors to support growth in the next fiscal. 

"With the continuation of the impressive reforms' agenda coupled with aggressive push on trade, the Indian economy can reach the GDP target of US$5 trillion by 2026-27," says Chandrajit Banerjee, Director General, CII. With India's highly successful vaccination drive injecting confidence in the economy, Banerjee feels highlighting of vaccination as a macro- economic parameter by the Economic Survey has been most apt. 

According to the Indian Chamber of Commerce, the Economic Survey has captured the economy's recovery from the devastating impact of the pandemic through multiple economic indicators like tax collections, exports and imports. "It is in touch with the reality of a GDP which is projected to grow in real terms by 8.0-8.5% in 2022-23 and at 9.2 % in the current fiscal," says Rajeev Singh, Director General, ICC. As per the Survey, India's economic response to devastation caused by pandemic has been supply-side reforms rather than demand management. 

"ICC shares the concerns expressed in the Survey that unemployment levels and labour force participation rates though much better than lockdown levels are yet to reach pre pandemic levels," says Singh who believes the panacea for unemployment may lie within nurturing of India's Start Up ecosystem which is the third largest startup ecosystem in the world after the US and China.