The National Statistical Organisation (NSO) has estimated India’s GDP growth to be 147.5 lakh crore in 2021-22 financial year. The figure shows how immensely the Indian economy has been affected by Covid-19 pandemic. As the projected figure is just 1.26 per cent more than India's pre-pandemic growth rate, it indicates that the economy has registered only 0.63 per cent growth annually during the last two troubled years. In 2019-20, the last pre-pandemic financial year, India’s GDP was 145.6 lakh crore. If Covid-19 had not prevented the Indian economy from marching ahead with its average growth rate of 7.1 per cent, the country’s GDP would have been poised to reach 167.1 lakh crore. These figures indicate that India’s output loss due to Covid-19 pandemic is Rs. 22 lakh crore and in-order to cover up the loss the economy has to register 9.5 per cent growth for the next five years.
As we will soon enter the first of the crucial five financial years, a proper roadmap should be drawn to achieve this difficult target. Hopefully, the forthcoming budget will spell out the policies that India intends to adopt to achieve an average growth rate of nine per cent and above for the next five years. In this endeavour, the most important step will be to continue with capital expenditure (capex) and infrastructure development. Expenditure in these two sectors will definitely generate substantial revenue, which will help the Indian economy grow at a faster rate despite the devastations caused by the lethal virus. Moreover, unemployment is a major problem in the country. The country’s unemployment rate at present has risen to 9.3 per cent. So, the government needs to take steps on war footing to generate jobs and increased expenditure in these two sectors will provide an answer to this problem.
Unlike the earlier two waves, the effect of the Omicron variant is not as severe on the economy up till now. But as the international scenario is not very favourable with escalation of tensions between Russia and US-led alliance over Ukraine and the growing unrest in west Asia, the world economy may face a slump. Policy makers will have to keep these two factors in mind while framing policies. Among these two disturbing trends, trouble in west Asia will hurt the Indian economy most as it will increase the price of crude oil in the international market, which in turn will upset the country’s import budget. Crude price is threatening to touch $100 per barrel soon. India will have to be proactive to ward off any threat to the country’s economy due to rise in oil prices. So Union Finance Minister Nirmala Sitharaman is faced with problems of various natures. From ensuring an enhanced growth rate to controlling the impact of rising oil prices, Nirmala has to steer the Indian economy through many hurdles. How the next budget is managed is going to be critical to the country’s economic resurgence.