Report Summary - Economic Survey 2021-22 | Economic Survey & Government Reports - UPSC PDF Download

 Page 1


 
Tushar Chakrabarty 
tushar@prsindia.org  
January 31, 2022 
PRS Legislative Research ? Institute for Policy Research Studies  
3
rd
 Floor, Gandharva Mahavidyalaya ? 212, Deen Dayal Upadhyaya Marg ? New Delhi – 110002 
Tel: (011) 23234801, 43434035 ? www.prsindia.org  
Report Summary 
Economic Survey 2021-22 
? The Finance Minister, Ms Nirmala Sitharaman tabled 
the Economic Survey 2021-22 on January 31, 2022. 
Key highlights of the Survey include: 
State of the economy 
? Gross Domestic Product (GDP): The Survey estimates 
real GDP growth of 8-8.5% in 2022-23.  Growth in 
2022-23 is expected to be supported by widespread 
vaccine coverage, gains from supply-side reforms, 
robust export growth, and availability of fiscal space to 
increase capital spending.  In 2021-22, India’s real 
GDP is estimated to grow by 9.2% after contracting by 
7.3% in 2020-21. 
? Inflation: Consumer Price Index (CPI) based inflation 
was 6.2% in 2020-21.  The Survey observed that this 
was due to supply chain disruptions from COVID-19 
restrictions.  CPI inflation in 2021-22 (April-
December) was 5.2% which is lower than inflation of 
6.6% during the same period in 2020-21.  This decline 
was led by easing of food inflation.  Inflation in 2021-
22 (April-December) was driven by international crude 
oil, petroleum product prices, and higher taxes.  The 
Survey noted that inflation has reappeared as a global 
issue in both advanced and emerging economies. 
? Current account balance: During April-September 
2021, India’s current account slipped into a deficit of 
USD 3.1 billion as compared to a surplus of USD 34.3 
billion in the corresponding period of 2020.  This was 
because of an increase in merchandise trade deficit.  
This was lower than current account deficit of USD 
22.6 billion in April-September 2019.  In 2020-21, 
India reported a current account surplus in April-
September due to a steeper decline in merchandise 
imports relative to exports.  
? Fiscal deficit: Fiscal deficit for April-November 2021 
was 46.2% of the budget estimate as compared to 
135.1% in the same period in 2020.  The Survey noted 
that the fiscal deficit for the current year was more 
realistic as it brought in several off-budget items, such 
as food subsidy payments, within the budget allocation.  
In April-November 2021, revenue deficit was 38.8% of 
the budget estimate.  
? Debt: Central government debt has increased from 
49.1% of GDP in 2019-20 to 59.3% of GDP in 2020-
21.  This is due to increased borrowings on account of 
COVID-19.  Central government debt is expected to 
follow a declining trajectory with economic recovery.  
Total liabilities of the central government include debt 
taken against the Consolidated Fund of India (public 
debt) and liabilities in the public account.  At the end of 
March 2021, central government’s total outstanding 
liabilities were at Rs 117 lakh crore.  Public debt 
accounted for 89.9% of total liabilities.    
Agriculture and allied activities       
? The agriculture sector has witnessed buoyant growth in 
the last two years.  In 2020-21 the sector grew by 3.6% 
and is expected to grow by 3.9% in 2021-22.  Growth 
in allied sectors including livestock, dairying, and 
fisheries have driven the overall growth in the sector.  
The Survey noted that the share of the agriculture 
sector in total nominal gross value added (GVA) of the 
economy has a long-term trend of around 18%.  This 
changed to 20.2% in 2020-21 and 18.8% in 2021-22. 
? The gross capital formation (GCF) in agriculture and 
allied sectors relative to their real GVA has been 
fluctuating.  It touched a high of 18.2% in 2011-12 
before falling to 15.9% in 2019-20.  Public investment 
has remained stable (ranged in 2.4%-2.9%) whereas 
private investment has fluctuated.  The Survey 
suggested that there should be a focussed and targeted 
approach to ensure higher public and private 
investment in the sector. 
? Crop diversification towards oilseeds, pulses, and 
horticulture needs to be given priority.  This requires 
addressing core issues of irrigation, investment, credit, 
and markets in their cultivation.  There is a need for 
coordinated action from state governments to facilitate 
the shift to high value and less water consuming crops.  
Use of alternative fertilisers such as Nano Urea and 
organic fertilisers should be promoted.  These 
fertilisers protect the soil, are more productive, and 
contribute to higher nutrient use efficiency.       
Industry and infrastructure 
? The industrial sector is estimated to grow by 11.8% in 
2021-22 against a contraction of 7% in 2020-21.  The 
Survey noted that buoyant FDI inflows and 
improvements in overall business sentiments signal a 
positive outlook for industry.  Over the last decade, 
manufacturing had an average share of 16.3% in 
nominal GVA.  This declined to 14.4% in 2020-21 but 
is expected to improve to 15.3% in 2021-22.  In 2021-
22, the manufacturing sector is expected to register a 
growth of 12.5% after contracting by 7.2% in 2020-21.              
? In 2020-21, Index of Industrial Production (IIP) 
contracted 8.4% reflecting the impact of the pandemic 
on the industrial sector.  IIP is a measure of industrial 
performance that assigns a weight of 78% to 
manufacturing, 14% to mining, and 8% to electricity.  
During April-November 2021-22, IIP grew at 17.4% as 
compared to a contraction of 15.3% in the 
corresponding period of 2020-21.  According to studies 
on corporate performance by Reserve Bank of India 
(RBI), net profit to sales ratio of large corporates 
reached a level of 10.6% in the second quarter (July-
September) of 2021-22 despite the pandemic. 
Page 2


 
Tushar Chakrabarty 
tushar@prsindia.org  
January 31, 2022 
PRS Legislative Research ? Institute for Policy Research Studies  
3
rd
 Floor, Gandharva Mahavidyalaya ? 212, Deen Dayal Upadhyaya Marg ? New Delhi – 110002 
Tel: (011) 23234801, 43434035 ? www.prsindia.org  
Report Summary 
Economic Survey 2021-22 
? The Finance Minister, Ms Nirmala Sitharaman tabled 
the Economic Survey 2021-22 on January 31, 2022. 
Key highlights of the Survey include: 
State of the economy 
? Gross Domestic Product (GDP): The Survey estimates 
real GDP growth of 8-8.5% in 2022-23.  Growth in 
2022-23 is expected to be supported by widespread 
vaccine coverage, gains from supply-side reforms, 
robust export growth, and availability of fiscal space to 
increase capital spending.  In 2021-22, India’s real 
GDP is estimated to grow by 9.2% after contracting by 
7.3% in 2020-21. 
? Inflation: Consumer Price Index (CPI) based inflation 
was 6.2% in 2020-21.  The Survey observed that this 
was due to supply chain disruptions from COVID-19 
restrictions.  CPI inflation in 2021-22 (April-
December) was 5.2% which is lower than inflation of 
6.6% during the same period in 2020-21.  This decline 
was led by easing of food inflation.  Inflation in 2021-
22 (April-December) was driven by international crude 
oil, petroleum product prices, and higher taxes.  The 
Survey noted that inflation has reappeared as a global 
issue in both advanced and emerging economies. 
? Current account balance: During April-September 
2021, India’s current account slipped into a deficit of 
USD 3.1 billion as compared to a surplus of USD 34.3 
billion in the corresponding period of 2020.  This was 
because of an increase in merchandise trade deficit.  
This was lower than current account deficit of USD 
22.6 billion in April-September 2019.  In 2020-21, 
India reported a current account surplus in April-
September due to a steeper decline in merchandise 
imports relative to exports.  
? Fiscal deficit: Fiscal deficit for April-November 2021 
was 46.2% of the budget estimate as compared to 
135.1% in the same period in 2020.  The Survey noted 
that the fiscal deficit for the current year was more 
realistic as it brought in several off-budget items, such 
as food subsidy payments, within the budget allocation.  
In April-November 2021, revenue deficit was 38.8% of 
the budget estimate.  
? Debt: Central government debt has increased from 
49.1% of GDP in 2019-20 to 59.3% of GDP in 2020-
21.  This is due to increased borrowings on account of 
COVID-19.  Central government debt is expected to 
follow a declining trajectory with economic recovery.  
Total liabilities of the central government include debt 
taken against the Consolidated Fund of India (public 
debt) and liabilities in the public account.  At the end of 
March 2021, central government’s total outstanding 
liabilities were at Rs 117 lakh crore.  Public debt 
accounted for 89.9% of total liabilities.    
Agriculture and allied activities       
? The agriculture sector has witnessed buoyant growth in 
the last two years.  In 2020-21 the sector grew by 3.6% 
and is expected to grow by 3.9% in 2021-22.  Growth 
in allied sectors including livestock, dairying, and 
fisheries have driven the overall growth in the sector.  
The Survey noted that the share of the agriculture 
sector in total nominal gross value added (GVA) of the 
economy has a long-term trend of around 18%.  This 
changed to 20.2% in 2020-21 and 18.8% in 2021-22. 
? The gross capital formation (GCF) in agriculture and 
allied sectors relative to their real GVA has been 
fluctuating.  It touched a high of 18.2% in 2011-12 
before falling to 15.9% in 2019-20.  Public investment 
has remained stable (ranged in 2.4%-2.9%) whereas 
private investment has fluctuated.  The Survey 
suggested that there should be a focussed and targeted 
approach to ensure higher public and private 
investment in the sector. 
? Crop diversification towards oilseeds, pulses, and 
horticulture needs to be given priority.  This requires 
addressing core issues of irrigation, investment, credit, 
and markets in their cultivation.  There is a need for 
coordinated action from state governments to facilitate 
the shift to high value and less water consuming crops.  
Use of alternative fertilisers such as Nano Urea and 
organic fertilisers should be promoted.  These 
fertilisers protect the soil, are more productive, and 
contribute to higher nutrient use efficiency.       
Industry and infrastructure 
? The industrial sector is estimated to grow by 11.8% in 
2021-22 against a contraction of 7% in 2020-21.  The 
Survey noted that buoyant FDI inflows and 
improvements in overall business sentiments signal a 
positive outlook for industry.  Over the last decade, 
manufacturing had an average share of 16.3% in 
nominal GVA.  This declined to 14.4% in 2020-21 but 
is expected to improve to 15.3% in 2021-22.  In 2021-
22, the manufacturing sector is expected to register a 
growth of 12.5% after contracting by 7.2% in 2020-21.              
? In 2020-21, Index of Industrial Production (IIP) 
contracted 8.4% reflecting the impact of the pandemic 
on the industrial sector.  IIP is a measure of industrial 
performance that assigns a weight of 78% to 
manufacturing, 14% to mining, and 8% to electricity.  
During April-November 2021-22, IIP grew at 17.4% as 
compared to a contraction of 15.3% in the 
corresponding period of 2020-21.  According to studies 
on corporate performance by Reserve Bank of India 
(RBI), net profit to sales ratio of large corporates 
reached a level of 10.6% in the second quarter (July-
September) of 2021-22 despite the pandemic. 
Economic Survey 2021-22  PRS Legislative Research 
 
  
January 31, 2022  - 2 - 
 
? Gross fixed capital formation (GFCF) indicates the 
state of investments in the economy.  During 2019-20, 
share of the industrial sector in total GFCF (at current 
prices) was 30.1%.  This was slightly lower as 
compared to 31% in 2018-19.  In 2018-19, aggregate 
and industrial GFCF (at constant prices) increased by 
9.9% and 12.4% respectively.  Growth rate of 
aggregate GFCF decreased to 5.4% in 2019-20 while 
that of industrial GFCF decreased to 3.7%. 
? India registered its highest ever annual FDI inflow of 
USD 82 billion in 2020-21.  Between 2014-21, India 
received FDI inflow worth USD 440 billion.   
Services sector 
? Services sector contributed to over 50% of India’s 
GDP.  It contracted by 8.4% in 2020-21 and is 
estimated to grow by 8.2% in 2021-22.  The Survey 
noted that the services sector has been the worst 
affected from the COVID-19 pandemic.  Its share in 
India’s GVA declined from 55% in 2019-20 to 53% in 
2021-22.   
? Most of India’s start-ups are in the information 
technology/knowledge-based sector.  Intellectual 
property and patents are key to this knowledge-based 
economy.  The number of patents filed in India has 
increased from 39,400 in 2010-11 to 58,502 in 2020-
21.  During the same period, patents granted have 
increased from 7,509 to 28,391.  The Survey noted that 
the number of patents granted in India is a fraction 
compared to China, USA, Japan, and Korea.  One of 
the reasons for relatively low patents in India is low 
expenditure on research and development which was 
0.7% of GDP in 2020.  Procedural delays and complex 
processes also contribute to low patents in India.  The 
average pendency for final decision in acquiring 
patents in India was 42 months in 2020.  In 
comparison, this was 20.8 months in USA and 20 
months in China. 
Employment 
? Before the outbreak of COVID-19, the urban labour 
force had shown signs of improvement in terms of 
labour force participation rate.  The nationwide 
lockdown imposed in late March 2020 adversely 
impacted the urban labour market.  In the first quarter 
(April-June) of 2020-21 unemployment rate for urban 
sector (measured by current weekly status) increased to 
20.8%.  With economic revival, unemployment rate 
declined to 9.3% in fourth quarter (January-March) of 
2020-21. 
? The Survey observed that the latest payroll data from 
Employees’ Provident Fund Organisation (EPFO) 
suggests acceleration in formalisation of the job 
market.  This has been driven by new formal jobs and 
formalisation of existing jobs.  There were 13.95 lakh 
net additions to EPF subscribers in November 2021. 
? Data on demand for work under Mahatma Gandhi 
National Rural Employment Guarantee Scheme 
(MGNREGS) indicates: (i) MGNREGS employment 
peaked during the nation-wide lockdown in 2020, (ii) 
demand for MGNREGS has stabilised after the second 
COVID-19 wave, and (iii) aggregate MGNREGS 
employment is higher than pre-pandemic level.  During 
the second COVID-19 wave, demand for MGNREGS 
reached the maximum level of 4.59 crore persons in 
June 2021.       
Education 
? The Survey cited data from the Annual Status of 
Education Report (ASER) which found that during the 
pandemic, children aged 6-14 years who are not 
currently enrolled in schools increased from 2.5% in 
2018 to 4.6% in 2021.  The enrolment decline was 
relatively large among the age group of 7-10 years. 
? According to ASER, during the pandemic, children in 
rural areas moved out of private to government 
schools.  The possible reasons for these shifts are (i) 
shut down of low-cost private schools, (ii) financial 
distress of parents, (iii) free facilities in government 
schools, and (iv) families migrating back to villages. 
Sustainable development and climate change 
? There is a greater thrust on climate action following 
India’s announcement to achieve net zero emissions by 
2070.  Climate finance will remain critical to 
successful climate action by developing countries 
including India. 
? India’s overall score on the NITI Aayog SDG India 
Index and Dashboard improved from 60 in 2019-20 to 
66 in 2020-21.  India ranked third globally in 
increasing its forest area during 2010 to 2020.  Forests 
covered 24% of India’s geographical area.  During 
2011-2021, India’s forest cover has increased by more 
than 3% primarily due to increase in very dense forests 
(by 20% during the same period).  The Survey 
observed that going forward, there is a need to further 
improve forest and tree cover.  Social forestry could 
also play a significant role in this regard. 
? The extent of ground water extraction varies across the 
country.  During 2004-2020, ground water assessment 
units categorised as safe (less than 70% extraction) 
have declined from 73% in 2009 to 64% in 2020.  
Semi-critical units (extraction between 70% and 90%) 
have increased from 9% in 2009 to 15% in 2020.  
States/UTs need to improve management of its ground 
water resources through improving its recharge and 
stemming over exploitation.   
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