The Modi government believes that the economy will grow by 8 to 8.5 per cent in the next fiscal — slower than the 9.2 per cent projection this year, but higher than most estimates from the pundits.

The upbeat forecast in the Economic Survey, which was tabled in parliament on Monday, suggests that the finance ministry is fairly confident that it will be able to once again reclaim bragging rights as one of the fastest growing economies in the world.

The forecast is built around several assumptions: that the pandemic will have no further debilitating impact on the economy, the monsoon will be normal, the withdrawal of global liquidity by central banks in advanced economies will be fairly orderly, and oil prices will hover in the range of $70-$75 per barrel.

The projections are in line with the forecast by the World Bank but lower than the 9 per cent projected by the IMF. They are slightly higher than that predicted by S&P and Moody’s.

The Economic Survey was released a day before finance minister Nirmala Sitharaman unveils Budget 2022 amid expectations about plans to ratchet up public spending, dole out some tax breaks, offer incentives to industry to revive investment, and try to jump-start job creation.

The Economic Survey — an annual report card of the economy — presented in Parliament by finance minister Nirmala Sitharaman, warned about risks from global inflation and pandemic-related disruptions.

Sitharaman is expected to announce plans to boost spending to revive investment and create jobs in her Budget to be presented on Tuesday.

“It is quite likely that some of these assumptions may not hold and there could be other risks emerging from rising geopolitical tensions (that have not been stated in the assumptions). Therefore, we should realistically expect sub 8% GDP growth in FY23,” Ranen Banerjee - Partner and Leader Economic Advisory Services, PwC India, said.

The growth will be supported by “widespread vaccine coverage, gains from supply-side reforms and easing of regulations, robust export growth, and availability of fiscal space to ramp up capital spending,” the survey said.

The rosy growth forecast could easily crumble if the anticipated higher interest rates in the advanced economies like the US precipitate an exodus of capital.

“India also needs to worry about imported inflation especially from elevated global energy prices,” said Sanjeev Sanyal, principal economic adviser at the finance ministry and the lead author of the Survey. The Survey anticipates a pick-up in private sector investment with the financial system in a fairly strong position and prepared to provide support.