The coronavirus pandemic adversely impacted most economies across the globe in 2020. In 2021, the global economy started seeing an increase in widespread vaccinations and a drop in COVID-19 cases. Most governments rolled out economic immunity programs to shield the banking sector and revive financial growth.
The rebounding economic growth was expected to accelerate in 2022. However, with the Omicron variant spreading fast, it will take time to catch up with the expected growth rate. Let's look at what we can expect from the new financial year 2024.
The World Trade Organisation (W.T.O.) estimates that the global trade volume will increase by 4.7% in 2022. According to RBI reports, India exported 148.3 billion U.S dollars in software services in 2021. As part of the government's initiative to promote ease of doing business, more incentivisation schemes and reforms were implemented, such as notifying Remission of duties or taxes on Export (RoDTEP) rates and releasing pending tax refunds.
To ensure record growth in exports in 2022, the government is developing new foreign trade policies and negotiating free trade agreements with countries like the U.K., Australia, and others. Additionally, the Production Linked Incentive(PLI) schemes will offer growth in the electronics, mobile, and pharma sectors, further increasing the export rate.
In March 2021, the government's strategy of bank recognition and recapitalisation schemes led to a drop in banks' bad loans from 8.96 lakh crores to 8.34 lakh crores. By September 2021, the Non-Performing Asset (NPA) rate had fallen to a six-year low of 6.9%.
The government may take back policy support now that the economy is rebounding. In addition to Omicron, this could add to the banks' stress. According to experts, bad loans may reach 9.5% by September 2022.
The global economy's performance affects the Indian economy. The industrial and consumer goods sectors are witnessing rising raw-material costs and inflating commodity prices. Additionally, certain supply and logistics issues have been further fueling inflation. In addition, the RBI expects the CPI (Consumer Price Index) inflation rate to ease further to 5% by April-September 2022.
With the onset of winters, the economy is already witnessing a correction in vegetable prices. Furthermore, India is working towards reducing dependency on foreign markets for produce and increasing its domestic availability of raw materials. In addition, there are more prospects for reducing excise duty and V.A.T. on petrol and diesel.
With widespread and accelerated vaccinations, improvement in global and domestic demand, experts forecast that the financial market of India will grow at a rate of 9.2% in 2022. Also, more start-ups are likely to file for Initial Public Offerings, such as Ola.
The Omicron variant might temporarily hinder economic growth at the beginning of the Indian financial year. Nonetheless, more tax revenue growth will lead to considerable economic development by the end of this year.
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