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While India’s total exports are estimated to grow by a robust 16.5 per cent in 2021-22, the Economic Survey 2021-22 cautioned that the downside risks on the back of global factors and fresh resurgence of covid-19 may pose a challenge in the next fiscal. It also estimates the current account deficit (CAD) to widen in the second half of the current fiscal compared with a current account surplus of 0.9 per cent in the previous fiscal.
The Survey noted that the resilience of India’s external sector during the current year augured well for the growth revival in the economy, with gross domestic product growth estimated at 9.2 per cent in FY22. India’s merchandise exports and imports rebounded strongly and surpassed pre-covid levels during the current financial year on the back of recovery of global demand coupled with a revival in domestic activity.
However, “global liquidity tightening and continued volatility of global commodity prices, high freight costs, coupled with the fresh resurgence of COVID-19 with new variants may pose a challenge for India during 2022-23," said the Survey tabled in the Parliament on Monday.
Out of an ambitious export target of $400 billion set for 2021-22, India has already attained more than 75 per cent of it by exporting goods worth $301.4 billion, which is actually higher than the export target of $300 billion set for the April-December period of 2021-22, the Survey pointed out.
Imports are expected to grow by 29.4 per cent in 2021-22 surpassing corresponding pre-pandemic levels.
“Elevated global commodity prices, revival in real economic activity driving higher domestic demand and growing uncertainty surrounding capital inflows may widen current account deficit further during the second half of the year. However, it is expected to be within manageable limits, it added.
CAD is the gap between the country's overall foreign receipts and payments. The current account deficit is usually financed by a capital account surplus.
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