Economic Survey Report 2021-22

The report was published today and it has some interesting results.

  1. The GDP is expected to grow at 9.2% in 2021-22. Let’s hope this is true.
  2. The CPI inflation was 5.2% in 2021-22. This does not represent the difficult everyone is experiencing due to significant increasing price of all raw materials, logistics cost due to fuel price surge and finally labour rates.
  3. The central govt. debt increased from 49.1% to 59.3% of GDP. This is mainly due to increased populist schemes. The govt. must cut down sectarian schemes like minority ministry as well as free money to farmers.
  4. The patent registration is extremely low compared to US and China. One reason is the extremely low investment in R&D, just 0.7% of GDP. The other reason is the artificial English barrier in technology education and practice. Extending this to Indian languages will open it to a wider section of society.

Every year, startups and MSMEs give a long list of expectations. There is very little that get added in the budget as mostly the lobbying is effectively done by large organisations and their bodies. Once again a list of expectations.

  1. Post Covid suport – Unlike many economies, the only support provided to MSME by the Govt. of India is provide more loans. This might have helped many of them to survive for the short term, but unless demand picks up they will struggle to pay back the loans. This has made worse in the recent year by significant increase in raw material prices. Fuel price increase has only made it worse. Hope there is some change.
  2. Promote Design in India and technology Developed in India – Support MSME and startup with incentivising subsidy for investments in R&D like many other countries. This should be given higher pedestal than supporting mere manufacturing with design and technology owned abroad, which is what most of MakeinIndia is.
  3. Electric Boats – Discrimination against water transport continues. Currently FAME 2 support only for electric vehicles and not for electric boats.
  4. Working capital a struggle – For firms that need working capital beyond the 2 Cr. limit under CGTMSE, there is no banking facility without collateral.
  5. Govt. shipyards like CSL (Cochin Shipyard) discriminates against Indian firms and manufacturing in India by pushing for foreign vendors both by preference for technology architecture as well as discrimination on currency exchange risk. 
  6. Central Govt PSU, Defense tenders kills MSME by keeping conditions like 80% on delivery and 20% after commissioning. The latest Cochin Shipyard tender for electric propulsion of 23 boats (for KMRL) kills MSME from participation (although MSME like Navalt have technology).
  7. When Central Govt. PSU, Defense tenders go for global tender, forcing financing (due to payment terms), MSME with high cost of finance cost (12-16%) are at disadvantage against foreign players who get finance at 2-3%.


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