The forecast estimates that gross domestic product will have grown 6.75 percent in the current fiscal year ending in March. PTI file photo
The forecast estimates that gross domestic product will have grown 6.75 percent in the current fiscal year ending in March. PTI file photo
The Economic Survey pegged India's GDP growth at 7%-7.5% in 2018-19, higher than last year as it saw the impact of demonetisation and GST waning.
It also cautioned the government on "policy vigilance" saying persistently high oil prices and a possible sharp correction in stock market could be the biggest threat to economy.
It suggested the government to consolidate reforms undertaken earlier, stabilise GST implementation to remove uncertainty for exporters, facilitate easier compliance, and expand the tax base and vociferously recommended privatisation of Air-India.
"I think that in some ways.. the government doesn't have to do anything new or radical. Just finishing what it has started already would be a very ambitious and fantastic agenda to complete," Arvind Subramanian, the author of the Economic Survey told the press after it was presented in Parliament by Finance Minister Arun Jaitley.
Subramanian said it was due to the impact of demonetisation and GST that the Indian economy decelerated in the last one year when the rest of the world was growing. He, however, called the impact temporary.
"The evidence that policy actions from demonetisation and GST had an impact - exports decelerated and imports accelerated, interests rate went up sharply and that impacted demand and competitiveness. Exchange rate was impacted as oil prices went up," Subramanian said, adding however in terms of direction, the economy seemed to be picking up robustly.
It also suggested a "radical follow-up action" to achieve the goal of doubling farmers' income by 2022 as it saw climate change likely to increase the burden on already stressed agricultural economy.
The Survey also saw growth revival through exports and a rebound in private investments as the factors exerting a drag on growth over the past year had finally eased off. It suggested the GST Council to look into embedded taxes on India's exports hampering their output.
Going forward, it warned of rise in global crude prices and the way stock markets were elevated without much trigger."Average oil prices are forecast by the IMF to be about 12% higher in 2018-19, which will crimp real incomes and spending," the Survey said.
Every $10 rise in price of oil causes 0.2-0.3% drop in GDP, 0.4% rise in Current Account Deficit (CAD) and a rise inflation.
This according to Subramanian posed a risk on the story of India's revival.
On fiscal front, the Survey suggested a modest consolidation as it recognised that in a pre-election year, an overly ambitious target may not be realised.
The Survey also called for more representation of women in decision making process. It said their political participation was low compared to their population of 49%. The It also highlighted problems faced by small and medium enterprises in terms of getting loans from banks despite being large scale employers.
The high points of the Survey remained jobs, rural growth, education and women hinting that the focus of this year's Budget would also be the same. To underline the importance of gender issues in the economy, the entire Survey was painted in pink.