This year's economic survey came in the midst of several crisis including economic and social crisis. The main focus of this year's economic survey was to trace the recovery path of the country in the past year. In doing so, the survey compared the pre-covid level output with the current levels. The survey discussed both demand side and supply side stressing on its various sectors. Vaccination was discussed separately in the survey as it was an important strategy of the Government and is considered a macroeconomic indicator, critical for opening up the economy and the nation was successful in covering majority of population through its wide vaccination drive. It also analysed the impact of COVID-19 macroeconomic stability as the country, at the time of survey, was again going through another wave of the pandemic and other issues like inflation, liquidity withdrawal etc.

The focus of this paper is on the demand side, supply side and the impact of COVID on macroeconomic stability discussed in the state of the economy of the economic survey               2021-22.

According to the economic survey 2021-22, the economy has shown a sustained recovery since the second half of 2020-21. The advance estimates also suggest a growth of 9.2 per cent in 2021-22 with respect to 2020-21 Provisional Estimate (PE). Economic output in 2021-22 Advanced Estimate (AE) is expected to surpass the pre-covid level output of 2019-20 and this is a 1.6 per cent growth from the 2019-20 numbers. The GDP is expected to grow by 8.0-8.5 percent in 2022-23 which is similar with the OECD's projection of 8.1 percent. It is more than FICCI's projection of 7.4 percent and less than the IMF's projection of 9 percent.

Figure 1: GDP at Constant Prices

Source: Calculated based on data from MOSPI

Sectoral trends

As per the survey, agriculture has been least affected by the pandemic. But still it has not recovered to its pre pandemic levels. The industrial sector on the other hand went through a big swing by first contracting by 7 per cent in 2020-21 and then expanding by 11.8 percent in this financial year. All the sectors within the Industrial sector has grown past the pre-pandemic level. Service sector, which has the highest share in GVA (54%), was the most impacted by the pandemic. Financial, real estate and professional services recovered from its negative pandemic level growth of -1.5 percent but did not bounce to its pre-pandemic level of 7.3 percent. To summarise the trend of growth we see a V-shaped recovery in almost all the sectors as mentioned before (see fig. 1).

Table1: Sector-wise growth rate