CEA likens economic recovery to resilience of Indian cricket team: Key highlights

NEW DELHI: Chief economic adviser (CEA) Krishnamurthy Subramanian on Friday presented the Economic Survey 2020-2021 and dedicated it to all the Covid warriors who upheld the country during once-in-a lifetime crisis.
Earlier in the day, finance minister Nirmala Sitharaman had tabled the survey both in Lok Sabh and Rajya Sabha.
Here are the key highlights of the survey:
* The survey highlights potential of public investment, especially in times of a slowdown. It calls for fiscal policy to support growth. Hence, we need to re-think fiscal rules: CEA
* Even without lockdown, Covid-19 pandemic would have created a significant economic impact. But what the lockdown did ensure is help a coordinated response, enabling ‘saving lives and livelihoods’: CEA
* India’s V-shaped recovery is due to resurgence in high frequency indicators such as power demand, rail freight, e-way bills, GST collection, and steel consumption.
* Indian economy would take two years to reach and go past the pre-pandemic level.
* India to have a current account surplus of 2 per cent of GDP in FY21, a historic high after 17 years.
* India’s policy response to Covid-19 was guided by the realization that GDP growth will come back, but not lost human lives: CEA
* The policy response which India came up with, was a mature & farsighted one. India undertook short-term pain to get long term gain. The ‘V-shaped recovery’ makes India a sui generis case in mature policy making.
* Early intense lockdown saved lives, helped faster recovery, Subramanian said.
* Stringency of Covid-19 lockdown correlates with negative economic growth in same period but with positive growth in future time period, observes: CEA
* Government’s counter-cyclical fiscal policy will smoothen out the effects of economic cycles: CEA
* Economy projected to contract by 7.7 per cent in current financial year ending March 31 after economic activity was hit by pandemic.
* Robust economic recovery of 11 per cent for fiscal year 2021-22 on back of roll out of a massive vaccine drive.
* The survey predicted a V-shaped recovery for the next fiscal year.
* Nominal GDP growth for FY22 projected at 15.4 per cent
* Survey noted that agriculture sector has remained the silver lining amid the Covid-19 crisis.
* Agriculture is projected to clock 3.4 per cent growth, while industry and services are expected to contract by 9.6 per cent and 8.8 per cent, respectively this year.
* Nirmala Sitharaman is widely expected to focus on some fiscal expansion in the upcoming budget to boost slacking economic growth.
* India’s fiscal deficit is likely to be over 7 per cent in 2020-21 as the government eyes asset sales to partly fund higher spending next year.

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