FM Sitharaman Presents Blueprint Of PM Modi’s $5 Trillion Economy Dream In Economic Survey

Background

New Delhi: The government Thursday pegged the growth rate for the current fiscal at 7 per cent, marginally up from the five-year low of 6.8 per cent recorded in the previous fiscal. According to the Economic Survey for 2018-19, tabled by Finance Minister Nirmala Sitharaman in the Rajya Sabha, "real GDP growth for the year 2019-20 is projected at 7 per cent reflecting a recovery in the economy after a deceleration in the growth momentum throughout 2018-19."
The fiscal deficit, as per the survey deteriorated to 5.8 per cent of the GDP as compared to 3.4 per cent for 2018-19 estimated in the interim Budget.

The survey prepared by Chief Economic Adviser Krishnamurthy Subramanian is likely to flag headwinds that the economy might face in its pursuit to become the world's fifth largest economy. It is also likely to detail reforms road map needed to fulfil Modi's goal of more than doubling the size of the economy to USD 5 trillion by 2024.

The survey, which traditionally has chapters on macro economy as well as industry and different sectors and the outlook, will come a day ahead of Finance Minister Nirmala Sitharaman presents the first budget of the Modi 2.0 government. "Looking forward with excitement to table my first - and the new Government's first - Economic Survey in Parliament on Thursday. #EcoSurvey2019", he tweeted.

Also Read | What Is Economic Survey? Check How To Download PDF, When And Where To Watch

It comes at a time when the economy is facing headwinds in manufacturing and agriculture sectors that saw growth rate slowing down to 5-year low of 5.8 per cent in the January-March quarter.

The Economic Survey, the annual report of the Indian economy for the year gone by (2018-19), also comes at a time when some critics sais that the Modi government in its first term delivered a job less growth and it needed to re-invent to propel the economy and create jobs.

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There are also concerns that the government might this year again slip on the fiscal deficit front given sluggish GST collections and lower-than-expected growth in direct taxes.

After breaching the Rs 1 lakh crore mark in goods and services tax (GST) collections for two consecutive months, indirect tax mop-up in June fell marginally to Rs 99,936 crore.

However, the average monthly collection for the April-June quarter stood at Rs 1.04 lakh crore, up by 7 per cent from the corresponding period of last year.

There are also concerns with regard to lower than expected direct tax collection due to slow down in the economy.

The survey comes weeks after Subramanian's predecessor Arvind Subramanian in a research paper claimed India was overestimating its economic growth rate by up to 2.5 percentage points.

The incumbent CEA has not commented on the findings of the research papers even as government bodies like EAC to the Prime Minister have not agreed with the conclusion.

Also questions have been raised on the credibility of the methodology of collecting data used to project macro economic numbers and the survey will be critically seen if it address these challenges.

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Besides, it is likely to dwell upon issues like slow down in private investments, employment generation, banking and non-banking-finance-company crisis.

Since 2015, the survey document comes in two parts. One part consists of commentary on the state of the economy, which is released before the Union Budget. The other part carries key economic statistics and data, which is tabled in July or August.

This split in the presentation took effect after the Union Budget was moved from the last working day of February to the first day of the month in 2017.

The Economic Survey serves as a useful policy document since it also contains policy ideas, key statistics on economic parameters and in-depth research on macro and sectoral trends.

Often, the survey serves as a policy guideline for the Union Budget. However, its recommendations are not binding on the government.

(With inputs from PTI)

12:42 PM (IST)  •  04 Jul 2019

Survey also says that total transfers to States have risen between 2014-15 and 2018-19 RE by 1.2 percentage points of GDP. Total liabilities of the Central Government (as a ratio of GDP), has been consistently declining, particularly after the enactment of the Fiscal Responsibility and Budget Management Act, 2003

12:39 PM (IST)  •  04 Jul 2019

Central Government finances over the last several years have seen an improvement in the tax to GDP ratio, consolidation of revenue expenditure, gradual tilt towards capital spending and consistent decline in total liabilities of the Central Government.

12:38 PM (IST)  •  04 Jul 2019

The Survey adds that combined liabilities of Centre and States have declined to 67 per cent of GDP as on end-March 2018 from 68.5 per cent of GDP as on end-March 2016. The fiscal deficit of General Government is further expected to decline from 6.4 per cent of GDP in 2017-18 RE to 5.8 per cent of GDP in 2018-19 BE.

12:37 PM (IST)  •  04 Jul 2019

The revised fiscal glide path envisages achieving fiscal deficit of 3 per cent of GDP by FY 2020-21 and Central Government debt to 40 per cent of GDP by 2024-25. The Survey notes the Medium Term Fiscal Policy Statement presented along with the Union Budget 2018-19 aimed to reach the fiscal deficit target of 3.3 per cent of GDP in 2018-19 BE

12:36 PM (IST)  •  04 Jul 2019

The Economic Survey 2018-19 says the General Government (Centre plus States) has been on the path of fiscal consolidation and fiscal discipline. It says revenue augmentation and expenditure reprioritization and rationalization continue to be integral to fiscal reforms. “Broadening and deepening the direct tax base and stabilization of Goods and Services Tax are the other priorities. Improving the quality of expenditure remains the key priority. Meeting allocational requirements without diversion from the newly revised fiscal glide path remains the foremost challenge. Despite several headwinds, Indian economy is expected to grow at 6.8 per cent (as per provisional estimates released by Central Statistics Office) in 2018-19 while maintaining macro-economic stability. The growth with macro-stability stems mainly from ongoing structural reform, fiscal discipline, efficient delivery of services and financial inclusion”, says the Survey.