Introduction
In 2022-23, India’s GDP is expected to rise by 8.0-8.5%, owing to broad vaccine coverage, gains from supply-side reforms and regulatory ease, healthy export growth, and the availability of fiscal space to ramp up capital spending. The trajectory set for India's economy by the previous year's budget has been reinforced in Budget 2022-23. After accounting for grants-in-aid to states for capital works, the capex budget increased by 35.4% over the current year's budget predictions, amounting to 4.1% of GDP will fuel Gatishakti's seven engines, bridging the infrastructure gap and making life easier. There is a lot of private investments taking place and consumption levels are rising as a result of increased employment. Capex generated by the government will also encourage private investment. The Production Linked Incentive (PLI) schemes in 14 sectors will further encourage private investment in order to boost export growth and allow for feasible import substitution in the country. The growth forecast for 2022-23 is based on the premise that there will be no further devastating pandemic-related economic disruption, that the monsoon will be expected, and that major central banks will withdraw global money in a relatively orderly manner.
In April 2022, the following key frequency indicators highlighted improved performances:
- As per the ‘Fourth Advance Estimate’ of principal crops, food grain production in India is estimated at 308.65 million tonnes in FY21, an increase of 11.14 million tonnes compared with FY20.
- Private consumption stood at 57.5% of the nominal GDP for FY 22, indicating that it is becoming a macro growth driver.
- Rice, wheat, gramme, and maize production are expected to be at record highs. According to the second advance projections of foodgrain production for FY22, overall foodgrains production is expected to reach a record high of 316.1 million tonnes, 2.85% higher than the objective set, thanks to higher output of kharif crops and record acreage under rabi crops.
- In March 2022, CPI inflation reached a 17-month high of 6.95% from 6.07% in February, mostly as a result of inflation in all key groups except "clothing and footwear."
- The Retail Food Inflation (CFPI), which contributed to rising headline inflation, increased to 4.94% in March 2022 from 3.87% the previous month, owing it to prices of cereals and vegetables.
- In November 2021, monthly sales of fertilisers stood at 66.2 Lakh LMT, closely equivalent to the previous year levels.
- In March 2022, the Manufacturing Purchasing Managers’ Index (PMI) in India stood at 54.0 recovering from its 4 months low.
- PMI Services was at 53.6 in March 2022 marginally improving from the previous month.
- Power consumption saw a 19% growth in March 2022 compared to February, indicating growth and improvement in economic activities.
- In February 2022, the overall IIP (Index of Industrial Production) registered a 1.7% increase. The mining sector showed a growth of 4.5%, and the manufacturing sector showed a growth of 0.8% and the electricity sector showed a growth of 4.5% YoY.
- In March 2022, the eight sectors output index stood at 157.3 based on provisional data increased by 4.3% YoY compared to February 2021, indicating the resumption of economic activities.
- Traffic handled at major ports stood at 720.05 million tonnes between April to March 2022.
- In March 2022, freight movement increased by 0.3% compared to previous year indicating that the increase in air freight and traffic activity has been maintained.
- Railway freight traffic growth increased by 15% YoY in FY22, driven primarly by incremental loading of coal and cement.
- In early January 2022, the daily average of e-way bills generated stood at 2.04 million, compared to 2.3 million in December.
- The gross GST collection in April 2022 rose to Rs. 1.68 lakh crore (US$ 21.91 billion) and this collection has been the highest since implementation of the GST.
- In March 2022, UPI transactions were valued at Rs. 9.60 lakh crore (US$ 127.24 billion), roughly twice as much as the same month in 2020 in terms of volume and value.
- In March 2022, the Indian basket of crude oil reached US$ 112.87 a barrel, compared with the average crude oil price of US$ 94.07 a barrel in December 2021.
- Merchandise exports stood at US$ 40.38 billion in March 2022 (at 14.53% YoY growth), driven by a strong performance from critical sectors such as engineering, electronics, petroleum, gems and jewellery, and chemicals.
- In the second half of February through March 2022 (up to March 13), daily liquidity absorptions under the liquidity adjustment facility (LAF) averaged Rs. 8.4 lakh crore (US$ 111.27 billion), up from RS. 7.4 lakh crore (US$ 98.02 billion) in the second fortnight of January to mid-February 2022.
- As of April 22, 2022, reserve money stood at Rs. 4,002,311 crore (US$ 523.6 billion).
- As of April 22, 2022, currency in circulation (CiC) registered Rs. 3,209,394 crore (US$ 419.86 billion).
- In April 2022, Foreign Portfolio Investment (FPI) outflows stood at US$ 2.96 billion.
- Rupee strength reached Rs. 76.48/US$ 1, as of May 2, 2022.
- From April to December 2021, India received a total of US$ 60.3 billion in foreign direct investment.
- As of March 25, 2022, foreign exchange reserves in India stood at US$ 617.648 billion.
- Non-food bank credit increased by 8% YoY in February 2022, compared to 6.6% the previous year.
Despite the third wave of COVID-19, overall economic activity remained stable, indicating that India has learned to cope with virus-related restrictions. Several high frequency indicators, such as electricity consumption, PMI manufacturing, exports, and e-way bill creation, reflect this. The economy's confidence has been bolstered even more by the rapid pace of immunisation. In addition, the Union Budget commitment to asset creation (public infrastructure development) in 2022-23 will re-energize the virtuous cycle of investment and crowd in private investment with huge multiplier effects, boosting inclusive and sustainable growth. Consumption will rise up once the uncertainty and worry caused by the Covid-19 virus has passed, and the demand rebound will allow the private sector to step in with investments to boost production to satisfy the rising demand. This scenario should play out for the Indian economy in 2022-23, barring geopolitical and economic surprises.
Between April 2021 and October 2021, the central government finances registered improved performances. In the review period, the corporation tax recorded 91.6% YoY growth. Between April 2021 and October 2021, custom revenue collection registered 122.3% YoY growth, and the IGST collection to the Centre increased by 40% YoY, primarily due to the recovery of economic activities. As of February 2, direct tax receipts, net of refunds, were Rs. 10.45 trillion (US$ 140 billion), compared to a revised full-year target of Rs. 12.5 trillion (US$ 160 billion). Corporation tax receipts came in at Rs. 5.48 trillion (US$ 73 billion), falling short of the revised projection of Rs. 6.35 trillion (US$ 84 billion) by nearly 14%. Personal income tax receipts totaled Rs. 4.76 trillion (US$ 63 billion), falling short of the aim of Rs. 6.15 trillion (US$ 82 billion).
Note: Conversion rate used for February 2022 is Rs. 1 = US$ 0.013
