Economic Survey 2021: India’s Nominal GDP To Grow 15.4% In 2021-22

Chief Economic Adviser KV Subramanian has said that the government must use its fiscal policy to support growth till pre-Covid levels are reached.

Counter-cyclical fiscal policy must become an important point of emphasis in India, especially at times like these, Subramanian said in his press conference on the Economic Survey 2021. Subramanian said that fiscal rules that do not enable a counter-cyclical policy need a rethink.

Subramanian argued that higher growth will lead to more sustainable debt levels, and not the other way around. In the worst-case scenario, he said, even if India has real GDP growth of 3.8% each year between FY23-FY29, debt will still come down. "Debt will come down because nominal rate of growth would be higher than nominal rate of interest," he said.

• Food inflation driven primarily by supply-side factors.
• Several components of food inflation are transitory with wide variations.
• Changes in consumption patterns not reflected in current index.

"For all these reasons, a greater focus on core inflation is warranted. Further, given the significant increases in e-commerce transactions, new sources of price data capturing e-commerce transactions must get incorporated in the construction of price indices."

• According to National Health Accounts, 2017, 66% of spending on healthcare is done by the states.
• An increase in public spending to 2.5-3% can substantially reduce OOP from the current level of 60% to 30%.
• Therefore, the richer states should especially target increasing the healthcare spending as a percent of GDP to 2.5-3%.

• The new farm laws will empower farmers in their engagement with processors, wholesalers, aggregators, large retailers and provide level-playing field.
• It will transfer risk of market unpredictability from farmer to the sponsor and enable access to modern technology.
• Farmers will have full power in the contract to fix a sale price of their choice for the produce and receive payments within a maximum of 3 days.
• Due to the new law, 10,000 farmer producer organisations will be formed through the country which will bring together small farmers.
• After signing the contract, farmers will not have to seek out traders.
• The new farm laws are designed and intended primarily to benefit small and marginal farmers who constitute 85% of total farmers.
• The new laws will herald a new era of market freedom which can go a long way in improvement of farmer welfare.