Economic Survey Report 2022

Key Challenges

1. Inflation
 Inflation has risen as a result of supply chain interruptions and weak economic
development, according to the survey. Capital flows into the country are likely to be
affected by the withdrawal of stimulus in developed countries in the coming fiscal
year (2022-23).
 During the year, worldwide inflation was fueled by an increase in the prices of
energy, food, non-food commodities, and inputs, as well as supply restrictions,
disruptions in global supply chains, and rising freight costs around the globe (2021-
22).
2. Volatility in Capital
 According to the economic survey, major economies had began the process of
withdrawing liquidity that had been provided during the epidemic in the form
of stimulus checks and loosening monetary policy in order to encourage an
economic rebound to boost the recovery. Higher inflation has resulted in a
reduction in the amount of stimulus provided in response to the epidemic.
3. Employment:
 Unemployment and labour force participation rates are higher than pre-
pandemic levels, indicating that a shortage of jobs is still a major worry for the
Indian economy.
Major Suggestions

1. The survey recommends focusing on building a supply-side strategy to address the post-
Covid world's long-term unpredictability, which stems mostly from changes in consumer
behaviour, technical advancements, geopolitics, climate change, and their potentially
unpredictable interactions.
2. According to the economic survey, major economies had began the process of withdrawing
liquidity that had been provided during the epidemic in the form of stimulus checks and
loosening monetary policy in order to encourage an economic rebound to boost the
recovery. Higher inflation has resulted in a reduction in the amount of stimulus provided in
response to the epidemic.
3. It recommends the application of the Agile approach to policymaking, which includes 80
high-frequency indications in an atmosphere of "extreme uncertainty."

Govt notifies phase 2 of capital goods scheme 

 The second phase of the Scheme on Enhancement of Competitiveness in the
Indian Capital Goods Sector has been notified by the government.
 The scheme's goal is to give support for common technology development and
services infrastructure in the Indian capital goods sector.
 The government has committed a total of Rs 1207 crore in financial resources
(with budgetary assistance of Rs 975 crore and industry contribution of Rs 232
crore).
  A robust and globally competitive capital goods industry, which contributes at
least 25 percent to the manufacturing sector, is what the government wishes to
see developed.

Ethanol blending programme

In one year, the percentage of ethanol in gasoline has climbed from 5 percent to 8.1 percent.
However, there are a number of difficulties that must be solved in order to achieve the 20
percent mix objective by 2025. (earlier the target was 2030)

Issues in ethanol blending

 There is a scarcity of high-quality feedstock.

 Ethanol is only available on a sporadic basis across the country (feedstock supply is
primarily concentrated in sugar producing states)
 The incompatibility of automotive technology with blending technologies)
Way forward
As a means of bolstering the programme, the government has reinstated the administered
pricing system for ethanol procurement, which has enabled the manufacture of ethanol from a
wide range of feedstock (heavy molasses, sugarcane juice, sugar, sugar syrup, damaged food
grains, maize and surplus rice stocks with FCI)

Govt swaps ₹ 1.2 lakh Cr G-sec, oil bond

 Govt has done a conversion transaction for government securities (G-Sec) and oil bonds
with RBI for value of ₹ 1,19,701 Cr
 It involved buying back securities maturing in the next three financial years (FY23, FY24
and FY25) with the ones maturing in later years and this will ease the redemption
pressure
 For the FY23, the govt has managed to postpone the redemption of G-Secs aggregating ₹
63648 Cr, hence the outgo will be less to the extent in FY23
 Oil bonds maturing between 2023 and 2025 were converted into the G-sec maturing in
2030