Ukraine, rate hike, Covid resurgence key threats

New Delhi, January 31

Despite India maintaining a far better growth rate than most of its peers, the Economic Survey has cautioned against six challenges facing the global economy. The Indian economy has so far been resilient in tackling the first three challenges — Covid-related disruption, Russian-Ukraine conflict’s adverse impact and interest rate hikes by advanced economies.

Global factor

Impact of price rise due to pandemic and Ukraine conflict worsened by advanced economies injecting massive fiscal stimuli… This caused higher inflation in emerging economies, says Economic Survey.

The fourth challenge is the prospects of global stagflation, a situation in which growth is stagnant whereas inflation is high.

This will lead to countries to protect their domestic markets, slowing down cross-border trade. The fifth challenge has just emerged after China experienced a considerable slowdown in growth and is poised to grow slowly as compared to the pre-pandemic era of high growth rates. The sixth challenge to growth is due to the pandemic-induced loss of education and income-earning opportunities.

Domestic demand drives aviation sector recovery

While in FY21 there was a considerable decline in air traffic (a dip of 54 per cent) as well as passenger traffic (66 per cent), FY22 saw a recovery, mainly led by the domestic sector, the survey said. In the current fiscal, both passenger and cargo movement have reached close to the pre-Covid levels.

150.1 lakh flyers in Dec 2022, which is 106.4% of pre-Covid level (average for 11 months from April 2019-Feb 2020)

2.5 lakh MT cargo tonnage recorded in Nov 2022, which is 89% of the pre-Covid levels

FM may announce tax sops

• Finance Minister Nirmala Sitharaman, who tabled the Economic Survey in the Lok Sabha on Tuesday, will present her fifth Budget speech on Wednesday
• She is expected to announce tax sops for salaried taxpayers, middle class and senior citizens while balancing growth and fiscal deficit
• It’ll be the first normal Budget since the Covid shock and amid global geopolitical tensions

9,000 Janaushadhi Kendras providing Affordable drugs

The Economic Survey has hailed steps to control the rates of major drug formulations as well as making available 1,759 medicines and 280 surgical devices at affordable rates at the Prime Minister Janaushadhi Kendras. It said till December 31, 2022, the prices of 890 formulations of 358 drugs were ceiled under the National List of Essential Medicines.

358 drugs and 890 formulations’ rates ceiled under National List of Essential Medicines

The survey put the blame largely on advanced economies. The impact of soaring rates of critical commodities due to the pandemic and the European conflict was worsened by advanced economies injecting massive fiscal stimuli and letting loose ultra-accommodative monetary policies. This caused higher inflation in emerging market economies, which otherwise were in the lower inflation zone as their governments, including the Indian Government, undertook a calibrated fiscal stimulus to address output contraction in 2020.

The hardening of bond yields resulted in an outflow of equity capital from most economies into the traditionally safe-haven market of the US. The capital flight subsequently led to the strengthening of the US dollar and the consequent depreciation of other currencies led to a widening CAD and increased inflationary pressures in net importing economies.

New organised sector jobs going to youth

Expert services (consisting of manpower agencies, private security agencies and small contractors, etc) form the largest share of EPFO payroll addition (41.1% in FY23, April-November), followed by trading-commercial establishments (6.9%), the survey said. With nearly 62.7% of net payroll addition coming from less than 29 years of age, new jobs in organised sector are mainly going to youths, it said.

MGNREGS job demand limps back to normal

The work demand under the MGNREGS hovered around the pre-pandemic level between July and November 2022. The survey attributed this to “normalisation of the rural economy” and “swift recovery from Covid-induced slowdown”.

laced with excuses of poor showing: Congress

The Congress said the survey is laced with “excuses of non-performance” as it blames Covid, Russia-Ukraine war and global slowdown for price rise and India’s falling GDP, but offers no solutions.