India on way to becoming fastest growing economy in world: FinMin report

New Delhi: Armed with necessary macro and micro growth drivers, India is on its way to becoming the fastest growing major economy in the world, a finance ministry report said.

Rapid vaccination and teeming festivities will push India's ongoing recovery resulting in narrowing of demand-supply mismatches and greater employment opportunities, as per the monthly Economic Review prepared by the ministry.

"Aatmanirbhar Bharat Mission encapsulating major structural reforms continues to play a critical role in shaping India's economic recovery, both through the signalling of business opportunities and expansion of spending channels.

"Armed with necessary macro and micro growth drivers, the stage is set for India's investment cycle to kickstart and catalyse its recovery towards becoming the fastest growing economy in the world," the review said.

The Economic Survey 2020-21, released in January this year, had projected GDP growth of 11 per cent during the current financial year ending March 2022.

The Survey had said growth will be supported by supply-side push from reforms and easing of regulations, push for infrastructural investments, boost to manufacturing sector through Production-Linked Incentive (PLI) schemes, recovery of pent-up demand, rise in discretionary consumption subsequent to rollout of vaccines and pick-up in credit given adequate liquidity and low interest rates.

India's economic recovery gathered steam in the festive season, recording a decade high Diwali sales of Rs 1.3 lakh crore, as per Confederation of All India Traders.

Improving COVID-19 situation amid high business and consumer spirits delivered sustained economic recovery in October 2021 as well. The global economic recovery however continues to be impacted by prolonged supply constraints and input cost inflation, it said.

Yet IMF in its October 2021 update foresees improved global growth prospects at 5.8 per cent in 2021 and 4.9 per cent in 2022 triggering a coterminous global trade growth, by volume, at 9.7 per cent and 6.7 per cent, respectively.

World Trade Organization's October forecast also confirms favourable trade prospects underpinned by resurgence in global economic activity and vaccine dissemination.

This augurs well for India's export performance in the near future lending credence to IMF projecting India becoming the fastest growing economy, among major countries, in the current and the following year.

Agricultural sector continues its strong presence in economic recovery with higher acreage of Rabi sowing, improved reservoir levels, and adequate availability of fertilisers and seeds ensured by the government, it said.

Sustained rise in agri-exports, growing year-on-year by 22 per cent in April-August 2021, bespeaks government's commitment to increasing farmers' income, it said, adding, rural demand remains upbeat with month-on-month improvement in tractor and two and three-wheeler sales in September 2021.

The report said, softening retail inflation and adequate liquidity in the market are also reflected in largely stable G-Sec and corporate bond yields since July 2021.

"A more deliberate effort to reduce cost of borrowing is seen in complete pass-through of policy repo cuts as weighted average lending rate (WALR) on fresh rupee loans decline by 130 basis points between February 2020 and September 2021," it said.

Understandably, it said, RBI's Monetary Policy Committee in its 33rd meeting during October 6-8 resolved to continue with the extant configuration on the policy rates and its accommodative stance, while deciding to prioritise growth.