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More reform measures to be put in place as India targets to become $5 trillion economy

Economy on the rebound

Expect more reform measures in the year 2022 as India targets to become a $5 trillion economy by 2025. With just a little over a month left for the Union Budget, sources said that the focus would be on boosting consumption, private investments, agriculture, micro small and medium enterprises besides reforms.

Most projections have shown a rapid turnaround in the economy. According to a recent report by British firm Cebr, India, which is the fastest growing economies among the G20 nations, is set to overtake the French economy in 2022 and Britain by 2023.

“The supply side constraints that had hit the economy have been addressed, we will now look at consumption and measures that would help in employment generation both in the urban and rural areas,” an insider told India Narrative.

While the strong base effect in the first two quarters of 2021-22 due to a contraction in the corresponding period of 2020-21 helped push growth, the advantage will erode in the subsequent quarters. The economic indicators of the third and the fourth quarters in the current fiscal and the next financial year will reflect the real growth story.

Also read: GatiShakti master plan– the pathway to a $5 trillion economy

“There will be a base effect in play in this year’s growth rate and we will achieve double digit growth rate this year but we are also on the path to achieve high single digit growth rate on a sustained basis,” Gopal Krishna Agarwal, BJP’s spokesperson on economic affairs said.

The buoyant tax collections, for one, have been encouraging. As of December 16, the total direct Tax collections for the current financial year stood at Rs 9.45 lakh crore compared to Rs 5.87 lakh crore over the corresponding period of the preceding financial year – an increase of 60.8 per cent.

Similarly, gross goods and services tax (GST) collection for November was at Rs 1.31 lakh crore.  Barring June, the monthly GST tax collection in the current financial year since April clocked over the psychological mark of over Rs 1 lakh crore.

“Tax collections have been strong and this shows that the economy is performing and both organized and unorganized sectors are recovering,” the analyst said.

However, it would be critical for the government—both Centre and states – to ensure that the Covid 19 pandemic is kept under control.