Growth concerns: On economic forecasts amid Omicron boom

The National Statistics Office’s first advance estimates for economic output The current fiscal year has an optimistic forecast that shows some positive trends as well as areas of concern that have the potential to derail the growth momentum. NSO has projected real GDP at ₹147.54 lakh-crore for the 12 months ending March 2022, a 9.2% expansion from the provisional estimate of ₹135.13 lakh-crore for the previous financial year, when the COVID-19 pandemic hit. There was complete outbreak. Production was contracted to 7.3%. At that pace, India’s economy will gain its prominence as the world’s fastest growing major economy. A key pillar of this growth sentiment is the upbeat outlook for net tax receipts on products, which NSO sees rising to a strength of 16.2 per cent after shrinking 18.4% in the preceding period. Gross value added, which aggregates production across various sectors of the economy, is projected to grow 8.6% year-on-year on the back of continued healthy performance by the agriculture sector and a pleasant double digit (12.5%) rebound in India. production. However, when compared with the pre-pandemic FY2020 GVA, the estimated production of ₹135.2 lakh-crore is barely ₹2.5 lakh-crore, or 1.9%, higher, clearly pointing to the fact that the economy There is a fair distance to travel in. It can regain the growth momentum that is vital to creating more jobs and helping reduce widespread income inequality.

Clearly, the NSO’s forecast, which relies on various data spread over the first six to eight months of the current fiscal, has not impacted the ongoing omicron-induced surge in COVID-19 cases. After all, it’s anyone’s guess how much of a blow the current wave could deal to already weak supply chains, consumption demand and contact-intensive services. In fact, private final consumption expenditure, which two years ago accounted for close to 60% of GDP, is still struggling to recover from the crushing compression it experienced in the full year before the pandemic, when it shrank 9.1%. Was. While NSO has projected consumer spending to grow at 6.9% this fiscal, the projected figure is still 2.9% shy of FY20 levels. Equally important, the ubiquitous services category spanning trade, hotels, transport, communication and broadcasting and one-fifth of GVA is projected to post a mere 11.9% expansion after shrinking 18.2% in the previous fiscal. As a result, this critical services sector will still lag behind its pre-pandemic output by 8.5 percent, regardless of the impact of the third wave. With the Union Budget barely a few weeks away, policymakers have a clear choice: to introduce consumption and investment supportive measures, even if it means loosening fiscal purse strings, or slowing growth in the absence of a fair wind. Seeing the risk of being vulnerable.