Union Budget 2022-23: Indian Economy snapshot & current status
~ GDP growth ~
- Growth is estimated at 9.2 percent for FY22.
- Gross value addition in agriculture and industry is estimated to grow by 3.9 percent and 11.8 percent, respectively.
- Gross investment and exports will be the bigger growth drivers.
- In FY23, growth may increase between 8.0 percent and 8.5 percent.
~ Fiscal deficit ~
- The fiscal deficit reached 46.2 percent of the full year target during April−Nov 2021, amidst a rise in tax collections. The deficit for FY22 is expected to be 6.9 percent.
- In FY23, government finances will witness consolidation in FY22, after an uptick in deficit and debt indicators in FY2021. The deficit is expected to be –6.4 percent.
~ Inflation ~
- In Dec 2021, the CPI inflation increased to a five month high of 5.6 percent with core inflation remaining high at 6.1 percent. Inflation may increase due to imported inflation, especially from elevated global energy prices and supply-chain disruptions.
~ Domestic Credit growth ~
- Domestic credit growth was 9.8 percent in Q3 FY22 against 8.5 percent in FY21. Credit growth to the industry sector improved but has yet to recover in the services sector.
- In FY23, demand for credit growth may increase gradually as economic activity returns to normalcy. Banks are well capitalised and the reduced NPAs level will improve lending activities.
~ Current Account Deficit ~
- Current account recorded a deficit of 0.2 percent of GDP in H1 FY22, led by a rising trade deficit.
- In FY23, the current account may remain in deficit as imports rise with the economic recovery. Stronger exports may keep the deficit in check.
~ FDI ~
- Net FDI inflows amounted to US$ 24.7 billion for April-November 2021, 29.5 percent lower than April-November 2020.
- In FY23, FDI is expected to remain volatile due to global uncertainties associated with the spread of the infection and the pace of monetary policy tightening in advanced countries.
~ Other economic parameters ~
- RBI kept repo rate unchanged at 4 percent since May 2020; continues with an accommodative monetary policy stance.
- Forex reserves touched US$ 633.6 billion, as of Dec 2021
- Net FDI inflows amounted to US$ 24.7 billion for April−November 2021, 29.5 percent lower than those for April−November 2020
- CPI averaged at 5.2 percent in April−December 2021, driven primarily by food inflation and high fuel prices
- Merchandise exports expanded by 49.7 percent to US$ 301.4 billion in April−December 2021, exceeding the pre-pandemic levels.
Highlights of Union Budget 2022-23: Analysis & Important points
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