J Sagar Associates on economic survey

1 Feb 2022 , 08:57 AM

“The economic survey credits the supply side reforms and the “agile” approach to governance with constant feedback loop for a good year. It sets the tone of cautious optimism with projected GDP growth of 8 to 8.5% in 2022-23 supported by widespread vaccine coverage, gains from supply side reforms, ease of regulations, robust export growth and availability of fiscal space to ramp up CAPEX. This is in line with WB, IMF and ADB projections. India is expected to be the fastest growing large economy during 2021-24 with real term growth of 9.2% in 2021-22. The successful AirIndia divestment boosts the confidence in disinvestments planned. With over Rs.89K crores raised through 75 IPOs between April-Nov 2021 and an estimated 15% growth in investments during 2021-22 providing the much needed impetus. Infrastructure Development with NIP’s projected Rs.111 lakh crores investment till 2025 and NMP of Rs. 6 lakh crores remains the key growth driver. Some fundamentals that give confidence are the unprecedented FOREX reserves of US$634 bn providing 13 months of import cover; CPI at 5.6%; fiscal deficit at 46.2% of budgeted levels and significantly reduced Gross NPAs. Some underlying assumptions for this growth projection are too ambitious like that no further pandemic related economic-disruption, normal monsoons, orderly global liquidity, oil prices between US$70-75/bbl Et al. The Economic Survey does not and perhaps cannot factor in the election focused populism and it’s distortions including in the gross fixed capital formation. We need to tread cautiously as we build back.” Amit Kapur, Joint Managing Partner, J Sagar Associates (JSA)