India’s economy is likely to rebound with an 11% growth in the next financial year as it makes a ‘V-shaped’ recovery after witnessing a pandemic-led carnage, the Pre-Budget Economic Survey said on Friday. The Gross Domestic Product (GDP) is projected to contract by a record 7.7% in the current fiscal ending March 31, 2021.
The Survey has said that the robust FDI and FPI inflows have led India to register an all time high foreign currency reserve of $586.1 billion. It also said the country is expected to witness a current account surplus in FY21 after a gap of 17 years due to resilience shown by software service exports.
India’s merchandise trade deficit during the April-December, 2020-21 was $57.5 billion as compared to $125.9 billion in the corresponding period last year. Meanwhile, net services receipts amounting to $41.7 billion remained stable in April-September, 2020 as compared with $40.5 billion in corresponding period a year ago, notwithstanding a sharp contraction in travel receipts owing to international mobility restrictions imposed at the onset of the pandemic and falling remittances. Resilience of the services sector was primarily driven by software services, which accounted for 49 per cent of total services exports, the survey pointed out.
“The changing nature of India’s global trade manifested in terms of sliding exports of gems and jewellery, engineering goods, textile and allied products and improving exports of drugs and pharma, software and agriculture and allied products,” the survey points out. It said that pharma exports used the Covid-19 opportunity to enhance their share in total exports and indicate India’s potential to be the pharmacy of the world.
It said that the Covid-19 induced crisis resulted in an intense shock, with a sharp decline in global trade, lower commodity prices and tighter external financing conditions, and had varying implications for current account balances and currencies across the world. “Amidst this uncertain and shaky global economic environment, India’s external sector has emerged as a key cushion for resilience. The comfortable external balance position of India has been supported by surplus current account balances over three consecutive quarters, resumption of portfolio capital inflows, robust FDI inflows and sustained build-up of foreign exchange reserves,” it said.