New Delhi: The 2015-16 Economic Survey has projected India’s growth in the range of 7-7.5% in 2016-17 fiscal, but warned that growth may be seriously affected if the world economy slides into further turbulence.
On inflation, it painted a brighter picture saying it will come down to 4.5-5% and that the wage increase handed out by the 7th Central Pay Commission (CPC) will not destabilise prices.
Cheering investors and markets ahead of the Budget, the survey stated that the Centre will meet its fiscal deficit target of 3.9% in the current year, but cautioned that containing the Budget deficit in 2016-17 may be challenging due to additional outgo on 7th CPC and the slowing global economy.
The Economic Survey 2015-16, which set the tone for Finance Minister Arun Jaitley’s Budget on Monday, pressed for more reforms in absence of which the economy will not realise its full potential. “Approval for the game-changing GST bill has proved elusive so far; the disinvestment programme fell short of targets… and the next stage of subsidy rationalisation is a work-in-progress,” the survey, authored by Chief Economic Adviser Arvind Subramanian, stated.
Giving a glimpse of Jaitley’s third Budget, it said, India’s long run growth potential is still 8-10% and the government needs to push on three fronts – agriculture, a competitive business environment and education & healthcare – to realise that.
“While dynamic sectors such as services and manufacturing tend to grab public attention, India cannot afford to neglect its agriculture. After all, nearly 42% of Indian household derive the bulk of their income from farming,” the survey said.
Similarly, it said, introducing a new bankruptcy law, rehabilitating stalled projects and considering guidelines for public private partnerships will improve economy.
The survey also drew government’s attention to speedy labour reforms.
Without mincing words, the survey demanded policy attention on subsidies for the poor which at present tend to provide benefits to the well-off.
“We estimate these benefits for the small savings schemes and the tax/subsidy policies on cooking gas, railways, power, aviation turbine fuel, gold and kerosene, making assumptions about the definition of ‘well-off’ and the nature of neutral policies,” the survey said.
On streamlining subsidies, the survey suggested spreading JAM Trinity (Jan Dhan, Aadhaar, Mobile) to areas other than LPG subsidy to reduce leakage and provide more fiscal space to the government.
On external trade, it said India’s exports slowdown may continue for a while before picking up in the next fiscal.
It also highlighted the shortcomings of free trade agreements India has signed with various countries which has resulted in increasing imports rather than promoting exports.