Economic Survey predicts 8-8.5% GDP growth in FY23

Growth to be supported by vaccine coverage, supply-side reforms, easing of regulations, and robust export growth, says Survey tabled by FM Nirmala Sitharaman

Nirmala Sitharaman
Finance Minister Nirmala Sitharaman

Economic Survey 2022 has projected GDP (gross domestic product) growth at 8.0-8.5% for financial year 2022-23, against the National Statistical Office’s (NSO) first advance estimates of 9.2% for 2021-22. 

Union Finance Minister Nirmala Sitharaman on Monday, January 31, tabled the Economic Survey in the Lok Sabha, soon after the President’s Address to both Houses of Parliament. On Tuesday, February 1, she will present the Union Budget for the financial year 2022-23.

The Economic Survey pointed to inflation as a concern, but said the macroeconomic stability indicators signal the economy is ‘well-placed’ to take on the challenges of the next fiscal year. The key reason for this is the government’s response strategy that didn’t “pre-commit to a rigid response” but “opted to use safety-nets for vulnerable sections” based on information, it added.

“Growth in 2022-23 will be supported by widespread vaccine coverage, gains from supply-side reforms and easing of regulations, robust export growth, and availability of fiscal space to ramp up capital spending,” said the Survey, which was released in digital format. “The year ahead is also well poised for a pick-up in private sector investment with the financial system in a good position to provide support to the revival of the economy.”


Factors presenting risks to the economy include the Omicron variant of COVID, and the cycle of liquidity withdrawal being initiated by major central banks, said the Survey. However, India has transformed from being among the ‘Fragile Five’ nations to the 4th largest forex reserve, giving policy room for manoeuvring, it noted.

Growth indicators

Last year’s Survey had forecast GDP growth of 11% following a 7.3% contraction in 2020-21. This year’s higher growth could be due to low base effect, pointed out experts. The growth projection for the next year is based on the assumption that “there will be no further debilitating pandemic related economic disruption, monsoon will be normal, withdrawal of global liquidity by major central banks will be broadly orderly and oil prices will be in the range of $70-75/bbl,” the Survey said.

Against the Survey’s prediction of 8.0-8.5%, the World Bank and the Asian Development Bank have predicted India’s GDP growth in 2022-23 at 8.7% and 7.5%, respectively. The IMF, on the other hand, has predicted 9% growth in both 2021-22 and 2022-23. For 2023-24, it has forecast 7.1% GDP growth.

Imported inflation — caused by non-domestic factors — is a cause for concern, said the Survey. The nation’s Consumer Price Index (CPI) inflation was 5.6% in December 2021 while the Wholesale Price Inflation (WPI) was in double-digits. “Although this is partly due to base effects that will even out, India does need to be wary of imported inflation, especially from elevated global energy prices,” said the survey.

Sector-wise growth

The Survey further said India’s economic response to the devastation caused by the pandemic has been supply-side reforms rather than demand management, and this has helped the economy. Its growth projection for the industrial sector stands at 11.8%; for the services and agriculture sectors, it is 8.2% and 3.9%, respectively.

The number of newly recognised start-ups has increased to over 14,000 in 2021-22 from just 733 in 2016-17, noted the Survey, adding that 555 districts had at least one new start-up. Over the recent years, Delhi has replaced Bengaluru as the start-up capital of India.

The Survey recommended improving the productivity of small, marginal farmers through small holding farm technologies. It further said crop diversification towards oilseeds, pulses and horticulture should be prioritised.

Resource mobilisation trends

The Economic Survey, authored by the Chief Economic Advisor (CEA), shows the current economic trends and provides a better appreciation of the mobilisation of resources and their allocation in the Union Budget that follows. Importantly, the pre-Budget report presents the projection of the Gross Domestic Product (GDP) for the next financial year.

V Anantha Nageswaran has just taken over as CEA, succeeding KV Subramanian, who finished his three-year term in December 2021. Nageswaran is an academic and former executive with Credit Suisse Group AG and Julius Baer Group.

Former CEA Arvind Subramanian, during his stint in the post, started the trend of making the Economy Survey a two-volume report, which essentially analyses the trends in agricultural and industrial production, infrastructure, employment, money supply, prices, imports, exports, foreign exchange reserves and other relevant economic factors that have an effect on the Union Budget.