Economic Surveys highlight problems and prospects of the Indian economy against which budgetary numbers are finalized. This years Economic Survey comes in the wake of a set of tumultuous international and national developments which included Brexit, political changes in US,and radical domestic policy actions: the GST and demonetization
2016-17 was a tumultuous year. Major Milestones in 2016-17 highlighted in the economic survey are:
1) GST : a bold new experiment in the governance of cooperative federalism
2) Overhauling of the bankruptcy laws.
3) Monetary Policy Committee: Modified the institutional arrangements on monetary policy with the Reserve Bank of India (RBI), to consolidate the gains from macroeconomic stability by ensuring that inflation control will be less susceptible to the whims of individuals and the governments
4) Aadhaar Bill: Solidified the legal basis for Aadhaar, to realize the long-term gains from the JAM trifecta (Jan Dhan-Aadhaar-Mobile)
5) Enacted a package of measures to assist the clothing sector which is export-oriented and labor intensive and thus could provide a boost to employment, especially female employment.
6) The National Payments Corporation of India (NPCI) successfully finalized the Unified Payments Interface (UPI) platform.
7) FDI Liberalization
Other Important Points made in Economic Survey :
- The Economic Survey says that conservatively India aims to grow at 8 per cent for the next decade and that requires growth in exports of goods and services of 15 per cent.
- Macroeconomic Indicators of the economy remain robust.
- FDI reforms result in India being one of the largest recipients of foreign investment with highest ever FDI of $55.6 billion in one year
- Demonetisation has short term costs, potential long term benefits:
- When compared to the baseline growth of 7%, the cash shortage will reduce 2016-17 growth to 6.5% to 6.75%. This is more in line with the 6.6% rate projected by multilateral agencies like the International Monetary Fund.
- Contractionary effects on the informal sector that accounts for 45% of GDP and 80% of employment would dissipate by the year-end when the currency in circulation should once again be back to normal. Overall GDP growth will thus be back to normal in 2017-18.
- Growth in 2017-18 is pegged at a robust clip of 6.75% to 7.5%.
- Service sector is estimated to grow at 8.9% in 2016/17
- Industrial growth rate expected to moderate to 5.2% in 2016/17 from 7.4% in 2015/16
- \The agriculture sector is estimated to grow at 4.1% in 2016/17 as opposed to 1.2% in 2015/16
- 151 million beneficiaries received ₹29,000 crore into their bank accounts to use LPG, the world’s largest direct benefit program
- Explicit subsidies on food, fertilizer, LPG, electricity and water hardly benefit the poor. Accordingly, it is felt that such subsidies must be rolled back and direct cash transfers provided to those below the poverty line.
- The survey spells out around 266.8 million Jan Dhan Yojana accounts have been created, out of these153.6 million are Aadhar seeded. More than 111 crore out of the 130 crore population have got Aadhar cards and approx 105 crore have mobile phones. If the number of unbanked people can be reduced significantly –then the time may be ripe to think of a universal basic income – a sum of money to every citizen to take care of the bare necessities of life in lieu of explicit subsidies that amount to as much as ₹ 3.8 lakh crore or 4.2% of GDP.
- The Survey says that a UBI that reduces poverty to 0.5% would cost between 4-5% of GDP, assuming that those in the top 25% income bracket do not participate.
- Calling Goods and Services Tax (GST) a bold new experiment, the pre-Budget Economic Survey today pitched for including land and other immovable property – the key source of black money creation – in the indirect tax regime to help propel GDP growth to 8-10 per cent.
- Focus on debt resolution.Create a Govt. backed centralized Public Asset Rehabilitation Agency-PARA-to sort most complex cases
- China’s credit rating was upgraded from A+ to AA- in December 2010 while India’s has remained unchanged at BBB-. From 2009 to 2015, China’s credit-to-GDP soared from about 142 percent to 205 percent and its growth decelerated. The contrast with India’s indicators is striking
- Apparel and leather sectors offer tremendous opportunities for creation of jobs, esp. for women
- Economic survey has devoted One whole section io fertilizer sector. The sector could be a beneficiary of the budget.
- India has 7 taxpayers for every 100 voters.
- Property Tax Potential Unexploited: Evidence from satellite data indicates that Bengaluru and Jaipur collect only between 5% to 20% of their potential property tax