Review ( brief ) of Indian economy in 2021-22 and snapshot of 2022-23

Posted on 2022-06-29

For Illustration Purpose Only.


Gross Domestic Product ( GDP) at constant prices increased by 8.7 percent in 2021-22, as compared to a fall by 6.6 percent in 2020-21. It  demonstrates  that India’s strong economic parameters have become resilient to global vulnerability ,  triggered by COVID 19 pandemic. India is among few countries in the world which bounced back in the economy during the COVID 19 . Even the Indian economy posted higher growth than China, which was 8.1 percent in 2021 

It is believed that the current volatility of global political situation due to Russia invasion of Ukraine, is unlikely to impact Indian economy in 2022-23. This is because India is largely insulated by its age long cordial political relationship with Russia and Russia is not a major trading partner of India, excepting supplying defence goods

In 2022-23,  India may post  GDP growth over 10 percent ,  according to a private estimation  


Despite COVID 19, Indian agriculture witnessed growth in 2021-22. Agriculture, including forestry and fishery, displayed a growth  by 3 percent in 2021-22, according to GDP estimate by Government of India. 

The truth of the fact is that agriculture continued to sustain a growth during the entire period of COVID pandemic, whereas all other major sectors of economy witnessed downturns during the pandemic.  Agriculture grew by 3.3 percent in 2020-21    


To the surprise of many, manufacturing made a sharp bounce back in 2021-22, despite the lock down .  It increased by 9.9 percent in 2021-22 after a fall by 0.6 percent in 2020-21.

The core sectors , comprising  of coal, electricity, natural gas, refinery products, fertilizers, steel and cement registered growth in 2021-22 , against fall in 2020-21.

It is expected that industrial production ( measured by Index of Industrial Production) will grow by 4.8 percent in 2022-23, according to CMIE report. The industries like basic metals, motor vehicles, machinery and food products are expected to push industrial growth in 2022-23.

Production of motor vehicles is projected to grow by 7 percent, cement by 5 percent and steel industry to make an healthy growth due to large increase in capacity in 2022-23.


Similar to manufacturing, construction industry is likely to make a boom in near future. Construction increased by over 11 percent in 2021-22 , against a drop by 7.5 percent, according to Govt.

Consumer demand   

Even though the major sectors of Indian economy bounced back in 2021-22, the consumer demand continued sluggish. According to Index of Consumer Sentiments ( ICS) , it grew by 0.8 percent in May 2022.

Nevertheless, there is a big difference between urban and rural ICS. The urban ICS jumped by 7.8 percent in May 2022, as compared to a fall in rural ICS by 2.3 percent during the same month.


Inflation by CPI ( Consumer Price Index) went high in May 2022, compared to 6.3 percent in May 2021.This was mainly due to the indirect impact of oil price hike.

Several measures were taken by Govt. to control the inflation. They were cut in excise duty on petrol by Rs 8 /litre and diesel by Rs 6/litre and  ban on the export of wheat .

Foreign Trade   

Notwithstanding years long lock down due to COVID 19, India’s exports surged by 44.5 percent in 2021-22 – an unusual growth in export , amidst sluggish global demand.  The spur in export growth was due to rise in world commodity prices. During 2021-22, export was worth US $ 422.1 Billion , as compared to US $ 291.8 Billion in 2020-21.

Imports also increased sharply . It increased by 55.3 percent in 2021-22. It was mainly due to rise in oil prices. During 2021-23, import was worth US $ 612.6 Billion as compared to US $ 394.5 Billion in 2020-21.

The robust growth in exports is expected to continue in 2022-23, with a forecast of over 10 percent growth, according to CMIE report. The major contribution to export growth will be by exports of machinery and electronic goods, readymade garments and pharmaceutical products.   

Capital market

Indian capital market continued to be bearish, despite bounce back in the economy. One reason, which could dent the stock market, was the backtrack of  FPIs, who continued to be the net seller.

It is believed that hike in interest rates by Federal Bank of USA as well as RBI to check the inflation caused the outflow of FPI stock, unleashing negative impact on stock market.

According to Goldman Sache, FPI flow in India will remain weak in 2022-23.   

Author: Subrata Majumder

Former Adviser, Japan External Trade Organization ( JETRO), New Delhi