Economic Survey: GDP May Fall 7.7% This Year, But Projected to Grow 11% Next Year

Economic Survey
  • Economic survey predicts V-shaped fast recovery in FY 2022

Economic Survey: Finance Minister Nirmala Nirmala Sitharaman presented the Economic Survey of 2020-21 in Parliament on the first day of the budget session on Friday. According to the survey, GDP is expected to decline 7.7% this year due to Corona. However, a faster recovery is also expected after this, which is why there will be 11% growth in GDP in 2021-22. Nevertheless, it will take two years for the economy to reach the level before the epidemic.

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The GDP was reduced by 23.9% during April to June 2020 from the lockdown due to Corona. The situation improved after unlocking started, with the September quarter declining to just 7.5%. Similarly, the size of GDP has reduced by 15.7% in the first half of 2020-21. The survey estimated the decline to be just 0.1% in the second half. The major reason for this is the increase in government spending. By January 20, the government got just Rs 15,220 crore from the sale of shares of government companies, i.e. disinvestment. A target of 2.1 lakh crore rupees was set for this in the budget.

Agricultural Growth Rate to be 3.4%, Negative Growth in Industry and Services

This year, the biggest support for the economy is agriculture. Its growth rate is expected to be 3.4%. Its share in GDP will also increase. It was 17.8% last year, this year will be 19.9%. Apart from agriculture, two sectors of economy are industry and services. The industry is expected to decline 9.6% this year. The growth of the service sector will also be -8.8%.

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85% of Small Farmers in the Country Benefit From New Agricultural Laws

The new agricultural laws, which the farmers have been agitating against for two months, have been praised in this survey. Accordingly, the new laws will benefit small farmers. Farmers will have more rights when dealing with processors, whole sellers and large retailers. 85% of the total farmers in the country are small farmers.

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Given the uncertainty in farming, the risk still remains for farmers. The risk from the new laws will be for those who deal with the farmers in contract farming. Farmers will be able to fix the price of their crop. They will also get its payment in three days. New technology will also come from contract farming.

Need to Increase Government Spending on Healthcare

The survey said that government spending on healthcare should be increased from 2.5 to 3% of GDP. This goal was also set in the National Health Policy of 2017. Despite this it is still around 1%. Spending should increase in Internet connectivity and health infrastructure. Telemedicine also needs to be promoted.

Innovation is Necessary to Become the Third Major Economy

The survey also mentioned measures to speed up the economic growth rate. It said that India is currently the fifth largest economy in the world. If it has to reach the third place, then innovation has to be focused.

The global economy will also decline by 4.4% this year due to Corona. This will be the biggest decline in a century. The economy of developed countries has suffered more due to corona.

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