Economy
Economic Survey 2023: How India Is Bouncing Back After Three Years Of Pandemic
Prime Minister Narendra Modi and Finance Minister Nirmala Sitharaman.
Where is India’s economy headed after two years of the Covid-19 pandemic and a year of inflation and monetary tightening, driven by the Russia-Ukraine war?
As per the Economic Survey 2023, India’s economy is being challenged by the hike in interest rates, widening current account deficit, and a slowdown in exports due to muted demand in the West.
Yet, India’s economy is looking set to bounce back after three years of the pandemic.
The growth is expected to hover around 6.9 per cent, beating most large economies, as estimated by various global agencies, from S&P to Goldman Sachs.
The survey documents the slowdown in exports in the second-half of FY23. However, the economic buoyancy came from the increase in the previous financial year and the first-half of FY23.
The success of the Covid vaccination drive has also been credited for positively impacting the sentiment in the market, and boosting demand.
The success of the vaccination campaign was necessary, given the slowdown during the two years of Covid that impacted tourism, restaurants, hotels, shopping malls, and so forth.
Private consumption was also on a rise in FY23, highest since the first-half of FY15. The thrust also came up from all the pent-up demand during Covid, which was unleashed in FY23.
One of the obvious consequences of the pandemic was the muted demand for dwellings. Credit growth for housing went down, resulting in a slowdown in the construction sector.
However, in FY23, the demand for housing picked up, resulting in a domino effect on other sectors, increased rents (back to pre-pandemic levels), and a consequential reduction in inventory.
Another testament to the bouncing back Indian economy is the credit expansion amongst the MSMEs (micro, small and medium enterprises).
The banks have been in a hyperdrive mode, looking for quick resolutions against NPAs (non-performing assets), aiding MSMEs with Emergency Credit Guarantee Line (ECGL) scheme, and being aggressive with credit towards MSMEs as they register a comeback after the pandemic.
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