The pandemic hit economy is close to coming back on track as the data suggests. According to data released by the National Statistical Office, Indian Gross Domestic Product (GDP) grew at 8.4 per cent in the quarter ended in September 2021. In absolute terms, the GDP at constant prices at Rs 35.73 lakh crore was 0.33 per cent higher than the pre-pandemic levels of Quarter two (Q2) of 2019-20, indicating the economy has recovered the ground lost due to Covid-19.
Despite the deadly second wave, agriculture, mining and public administration witnessed good growth however, it was marginal in manufacturing. The construction industry has stagnated while trade, hotels, transport, and communication witnessed decreased.
Bloomberg’s latest forecast suggests that the Indian economy in this fiscal would grow up to 9.4 per cent. While there are no new strict restrictions in place to check the omicron variant, policymakers have retained an accommodative stance to support the recovery. The service sector will probably be the main beneficiary as a result of lower government-imposed restrictions.
While higher vaccine coverage and fuel duty cuts are likely to boost confidence and spur demand, economists flagged concerns over a durable recovery once the base effect starts waning in the third quarter onward, rising higher prices, and uncertainty due to the new Covid variant Omicron hurting the global recovery.
The Indian economy is lagging behind on the fronts of employment and income. These challenges are reflected in the GDP figures through the levels or amounts of private consumption expenditure that have not reached the pre-pandemic levels and also, with rising inflation the situation is aggravating further.
With this growth rate as we approach the next year the preparation for the budget has begun. The Budget 2022-23 is likely to be presented on February 1 during the first half of the Parliament’s Budget session which usually begins in the last week of January every year. The budget for the next year will have to address critical issues of demand generation, job creation, and putting the economy on a sustained 8 per cent plus growth path.
Finance Minister, Nirmala Sitharaman has started the pre-budget consultation meetings with the private sector and industries from December 15, 2021. The first meeting was held with the agriculture experts, economists and agro-processing industries.
On December 16, 2021, FM had a similar kind of discussion with several chambers, the private sector companies, and banks. They suggested the continuation of reforms while ensuring tax and policy stability in the forthcoming Budget to prop up the economy hit hard by the COVID-19 pandemic.
Moreover, these pre-budget consultations should also be undertaken with health sector experts and workers regarding the treatment of the new variant, Omicron. So that budgetary provisions can be made beforehand including for State governments and for local bodies. The uncertainty which has been a core aspect of this pandemic fears people which leads to direct implications on their income and consumption proportion. The detailed early planning and preparation for execution would help in reducing the hovering fear. This should be a crucial aspect of Budget 2022-23, a lesson from the pandemic hit economy.