Statsguru: How is the Indian economy faring on various parameters

On February 1, Finance Minister Nirmala Sitharaman will present her second Covid Budget. Unlike last year, the Indian economy seems to be faring better as it battles another wave of Covid infections. The first advance estimates for 2021-22, released earlier this month, showed that the economy is expected to grow by 9.2 per cent in the current fiscal year. The International Monetary Fund’s projections last week pegged growth for 2022-23 at 9 per cent (chart 1). But the government still has an uphill task to bring the economy back on track. The fiscal deficit, for instance, remains high and is projected to be at 6.8 per cent of gross domestic product in 2021-22 (chart 2). Inflation also remains a concern. Rising prices could push the central bank to advance its rate hike cycle. In January, the headline figure was 5.6 per cent, which is fairly close to the upper limit of the Reserve Bank of India’s tolerance band. Rising fuel prices would keep inflation at elevated levels (chart 3). While exports are on track to hit new highs, it remains to be seen whether the growth can be sustained in the medium term.

Until December 2021, India had exported $300 billion worth of merchandise (chart 4). The challenge for the finance minister would be the government’s performance on various parameters. Tax receipts have provided much headroom to the government, but capital expenditure has not picked up as expected. Data from the Controller General of Accounts shows that capital spending as a percentage of Budget estimates was low for the first eight months of the year. Until November, only 49.4 per cent of the budgeted capex was undertaken by the government, compared to 58.5 per cent last year (chart 5).

Moreover, divestment has been a disappointment. The government met its divestment target only in two of the last seven years. This year against the budgeted target of Rs 1.75 trillion, so far the government has only achieved Rs 9,365 crore (chart 6).

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StatsGuru is a weekly feature. Every Monday, Business Standard guides you through the numbers you need to know to make sense of the headlines