Economic Survey pegs industrial growth at 11.8 per cent in FY22, and how schemes like PLI would aid recovery

“The pace of this recovery and further growth is likely to continue due to consistent efforts of the government to bring in various structural, fiscal and infrastructural reforms in addition to a slew of measures/schemes like the production linked incentive scheme (PLI) to support industries,” the survey noted.

Union Finance Minister Nirmala Sitharaman during a press conference at the National Media Centre, in New Delhi, Tuesday, Jan. 18, 2022. (PTI Photo)

India’s industrial sector, which was marred by disruptions due to the Covid-19 pandemic, is likely to record a growth of 11.8 per cent in 2021-22, the economic survey has said. Though the performance of the slowed down during the year, it offers some prescriptions: a gradual unlocking of the economy and plans such as the production linked incentive (PLI) scheme for various sectors, along with other policy initiatives such as emergency credit line guarantee to micro, small, and medium enterprises will help aid the pace of recovery.

“The pace of this recovery and further growth is likely to continue due to consistent efforts of the government to bring in various structural, fiscal and infrastructural reforms in addition to a slew of measures/schemes like the production linked incentive scheme (PLI) to support industries,” the survey noted.

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Quoting the Reserve Bank of India studies on corporate performance, the economic survey noted that the net profit to sales ratio of large corporates had reached an all-time high despite the challenges of the pandemic.

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“Buoyant FDI (foreign direct investment) inflows amid improvements in overall business sentiments, foretells a positive outlook for the industry,” the survey noted.

Finance Minister Nirmala Sitharaman on Monday tabled the Economic Survey 2021-22 in the Lok Sabha.

Among the various major components of industrial growth, manufacturing, which had an average share of 16.3 per cent in the nominal gross value addition over the last decade saw its share fall to 14.4 per cent. It is, however, expected to recover and reach 15.3 per cent by the end of this fiscal.

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Overall, in 2021-22, manufacturing is expected to grow by 12.5 per cent, mining and quarrying by 14.3 percent, construction by 10.7 percent and electricity, gas and water supply by 8.5 per cent.

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For the country to achieve a gross domestic product of $5 trillion by 2024-25, about $1.4 trillion will have to be spent just on infrastructure over these years. Though India invested $1.1 trillion between 2008 and 2017, the challenge is to “step up infrastructure investment substantially”, the survey noted.

“The next 10 years will see a very high level of CAPEX (capital expenditure) in the railway sector as capacity growth has to be accelerated such that by 2030 it is ahead of demand. The CAPEX outlay for 2021-22 is Rs 2,15,000 crores which is more than five times the 2014 level. As more projects are taken on hand and several sources of capital funding are developed, the CAPEX will increase further in coming years and the railway system will actually emerge as an engine of national growth,” the survey noted.