The new year was ushered in riding on the third wave of Covid 19 pandemic in India largely due to the spread of the Omicron variant across the country. The daily case load shot up in the first 3 weeks of the month and restrictions were implemented in locations where the surge was prevailing. Business and commercial activities were disrupted in certain sectors. There were less hospitalisations reported and the recovery rate remained high. Consequently, some of the restrictions are being eased now as there has been some reduction in the case numbers. The general view is that there is comparatively less impact on the economic front. We see the forecasts by global financial institutions to be stable. The Government completed the key disinvestment of the national airline. It is also gearing up for the most anticipated activity of the year – presenting the Union Finance Budget.

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IMF Impact – The International Monetary Fund (IMF) recently released its World Economic Outlook January 2022 report titled ‘Rising Caseloads, A Disrupted Recovery, and Higher Inflation’. The report mentioned that global growth is expected to moderate from 5.9 in 2021 to 4.4 percent in 2022—half a percentage point lower for 2022 than in the October World Economic Outlook (WEO). Global growth is expected to slow to 3.8 percent in 2023. Although this is 0.2 percentage point higher than in the previous forecast, the upgrade largely reflects a mechanical pickup after current drags on growth dissipate in the second half of 2022. The forecast is conditional on adverse health outcomes declining to low levels in most countries by end-2022, assuming vaccination rates improve worldwide and therapies become more effective. The report lowered India’s growth forecasts mentioned in its October 2021 WEO, as reported by Asia Law Portal. The current GDP growth projections are 9% for the year 2022 and 7.1% for the year 2023, which mirrors the above reduction of 5% in the global forecast.

World Bank – The World Bank recently released its Global Economic Prospects, January 2022 report. In India, the economic damage caused by the second wave has already been unwound with output effectively back to levels reached prior to the pandemic (2019Q4) as COVID-19 cases and restrictions subsided. India’s economy is expected to expand by 8.3 percent in fiscal year 2021/22 (ending March 2022), unchanged from last June’s forecast as the recovery is yet to become broad-based. The economy should benefit from the resumption of contact-intensive services, and ongoing but narrowing monetary and fiscal policy support. In FY2022/23 and FY2023/24 growth has been upgraded, to 8.7 and 6.8 percent respectively, to reflect an improving investment outlook with private investment, particularly manufacturing, benefiting from the Production-Linked Incentive (PLI) Scheme, and increases in infrastructure investment. The growth outlook will also be supported by ongoing structural reforms, a better than-expected financial sector recovery, and measures to resolve financial sector challenges despite ongoing risks

Foreign Direct Investment – In its January 2022 bulletin, Reserve Bank of India covered the Changing Dynamics of Foreign Direct Investment (FDI) in India and mentioned the following highlights:

  • The recent trends in FDI flows at the global level and across regions/countries suggest that India has generally attracted higher FDI flows and continued to remain among the top attractive destinations for international investors.
  • An empirical analysis of factors influencing inward FDI, considering major countries in terms of their FDI stock position in India shows that inward FDI is significantly influenced by trade openness, economic growth prospects, market size, labour cost and capital account openness of the host countries.

The Global Investment Trend Monitor published by United Nations Conference on Trade and Development (UNCTAD) provides a different position. In the latest report, it is mentioned that FDI flows to India were 26% lower, mainly because large M&A deals recorded in 2020 were not repeated.

Air India Disinvestment The Government of India completed a milestone disinvestment with the sale of shares of the national carrier, Air India to one of India’s most respected business houses, the Tata group. The Government received a consideration of Rs 2,700 crore from the Strategic Partner (M/s Talace Pvt Ltd, a wholly owned subsidiary of M/s Tata Sons Pvt Ltd), retaining debt of Rs 15,300 crore in Air India and its subsidiary AIXL and transferring shares of Air India (100% shares of Air India and AIXL and 50% shares of AISATS) to the Strategic Partner. This follows Government’s approval of the highest price bid of M/s Talace Pvt Ltd for strategic disinvestment of Air India, the Letter of Intent was issued to the winning bidder on 11 October 2021. The Share Purchase Agreement (SPA) was signed on 25 October, 2021. Thereafter, Strategic Partner (M/s Talace Pvt Ltd), Air India and the Government worked towards satisfying a set of conditions precedent defined in the SPA including approvals from anti-trust bodies, regulators, lenders, third parties, etc. These conditions have since been met to mutual satisfaction.

Union BudgetThe Union Budget 2022-23 is to be presented by the Union Finance & Corporate Affairs Minister Smt. Nirmala Sitharaman on February 01, 2022 in paperless form. To maintain the secrecy of Budget, there is a “lock-in” of the officials involved in making the Budget. Budget Press, situated inside North Block, houses all officials in the period leading up to the presentation of the Union Budget. These officers and staff will come in contact with their near and dear ones only after the Budget is presented in the Parliament.

Posted by Sourish Mohan Mitra

Sourish Mohan Mitra, India-qualified lawyer from Symbiosis Law School, Pune and currently working as an in-house counsel in Delhi, India; views expressed are personal; he can be reached at; Twitter: @sourish247

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