India's economy seems to be on the rebound after being badly fractured by the spread of the coronavirus pandemic. The Economic Survey 2020-21, tabled in Parliament on 29 January, has forecast real gross domestic product (GDP) to grow by 11% in FY22 on the back of a vaccination drive and a return in consumer demand.

However, the current fiscal year ending 31 March 2021 will see an estimated 7.7% pandemic-driven contraction, the deepest shrinkage in four decades. The economic survey’s growth figure for 2020-21 is in-line with the estimates of the Reserve Bank of India (7.5%) and the National Statistical Office (7.7% contraction). For the first half of FY22, the RBI had forecast a real GDP growth rate of 14.2%.

But the rollout of vaccines against Covid-19 is making the government bullish in its forecast of 11% next year, making it one of the world’s fastest growing economies after the outbreak of Covid-19. Nominal GDP is set to grow by 15.4%, the annual survey said.

The survey forecast a ‘V-shaped’ economic recovery but cautioned that it would take at least two years to revert to pre-pandemic gross domestic levels.

"Despite the hard-hitting economic shock created by the global pandemic, India is witnessing a V-shaped recovery with a stable macroeconomic situation aided by a stable currency, comfortable current account, burgeoning forex reserves, and encouraging signs in the manufacturing sector output," the survey said.

"With the economy's returning to normalcy brought closer by the initiation of a mega vaccination drive, hopes of a robust recovery in services sector, consumption, and investment have been rekindled," the survey stated.

The survey comes ahead of the budget to be presented by Finance Minister Nirmala Sitharaman on Monday.

Sitharaman will have to balance between the government’s swelling debt and a spending plan in the budget to push growth in the economy