Indian economy will overtake big countries: Finance Ministry's ambitious projections

India’s overall economic activity remains resilient despite facing headwinds from a Covid-19 third wave driven by the Omicron variant, the Finance Ministry said in its bulletin.

“High frequency indicators show that India’s economy is well on its way to growing at above 9 per cent as projected in the country’s advance estimates for the current year. With MPC retaining its inflation forecast for 2021-22 at 5.3 per cent, the inflation for the current year is set to close within its tolerance band of 4±2 per cent,” the Finance Ministry said.

The Ministry’s bulletin said, “With a near full vaccination coverage of the adult population with the first dose (above three-quarters with the second), and adaptability of both people and Government to “living with the pandemic”, the impact of third wave on economic activity has been much weaker than the previous two waves.”

Here are the key highlights:  

·         Manufacturing and Construction are expected to be the “growth drivers”, triggered by the PLI schemes and public capex in infrastructure.

·         Distance enabled or remote services expected to be on the rise, picking up from the impact to contact based services during the pandemic waves

·         Global inflation and energy prices are likely to be influential in determining India’s rate of inflation. Inflation nudging 6 per cent after 6 months but CPI has declined over the last two months. Average CPI inflation for April-January at 5.3 per cent.

·         A closing of the infrastructure gap and increase in private investment is also expected as public capital expenditure rises to 4.1% of the GDP.

·         Rising consumption levels consequent to employment generation by government’s capex will induce private investment.

·         The Production Linked Incentive (PLI) schemes in the 14 sectors will further incentivise private investment to achieve higher export growth and enable viable import substitution in the country.

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