Page 38 - economic_survey_2021-2022

12 Economic Survey 2021-22

Figure 20: Investor Sentiment in Figure 21: Non-Financial Sector
Manufacturing Profitability Ratios

Investment Projects Under-Implementation Operating Profit Ratio 6
Net Response Next Quarter (RHS) 80 21 Interest Cover (RHS)
22 19 5
70
20 60 17 4
Hundreds 18 50 Per cent Per cent 15 3 Per cent

13
40
16
30 11 2
14
20 9
12 10 7 1
10 0 5 0
Mar/19 Jun/19 Sep/19 Dec/19 Mar/20 Jun/20 Sep/20 Dec/20 Mar/21 Jun/21 Sep/21 Dec/21 Mar/19 Jun/19 Sep/19 Dec/19 Mar/20 Jun/20 Sep/20 Dec/20 Mar/21 Jun/21 Sep/21

Source: CMIE Capex Database, RBI Industrial Outlook Survey, Prowess Database

Exports and Imports
1.15 India’s exports of both goods and services have been exceptionally strong so far in
2021-22. Merchandise exports have been above US$ 30 billion for eight consecutive months
in 2021-22, despite a rise in trade costs arising from global supply constraints such as fewer
operational shipping vessels, exogenous events such as blockage of Suez Canal and COVID-19
outbreak in port city of China etc. (Figure 22). Concurrently, net services exports have also
risen sharply, driven by professional and management consulting services, audio visual and
related services, freight transport services, telecommunications, computer and information
services (Figure 23). From a demand perspective, India’s total exports are expected to grow by
16.5 per cent in 2021-22 surpassing pre-pandemic levels. Imports also recovered strongly with
revival of domestic demand and continuous rise in price of imported crude and metals. Imports
are expected to grow by 29.4 per cent in 2021-22 surpassing corresponding pre-pandemic
levels.

1.16 Resultantly, India’s net exports have turned negative in the first half of 2021-22, compared
to a surplus in the corresponding period of 2020-21 with current account recording a modest
deficit of 0.2 per cent of GDP in the first half (Figure 24). However, robust capital flows in the
form of continued inflow of foreign investment were sufficient to finance the modest current
account deficit. Elevated global commodity prices, revival in real economic activity driving
higher domestic demand and growing uncertainty surrounding capital inflows may widen
current account deficit further during the second half of the year. However, it is expected to be
within manageable limits.