The Economic Survey, tabled in Parliament on Friday three days ahead of budget, called for fiscal prudence and stable inflation, while acknowledging the risks to growth. The Economic survey 2016 has termed external environment as challenging but projected a 7-7.5 per cent GDP growth rate in the next fiscal which could accelerate to eight per cent in a couple of years. Prime Minister Narendra Modi berating tax breaks for rich has found a supporter in the Economic Survey, which today estimated that over Rs 1 lakh crore worth subsidies go to the well-off and advocated that they should be cut for better fiscal welfare management.
Important Highlights of the Economic Survey 2016
- Foreign exchange reserves have risen to US $ 349.6 (Jan-2016)
- 7th Pay Commission not to hit prices
- 2015/16 fiscal deficit seen at 3.9 percent of GDP seems achievable
- 2016/17 expected to be challenging from fiscal point of view
- Pay Commission implementation not to destabilise prices
- Credibility and optimality argue for adhering to 3.5% of GDP fiscal deficit target
- Low inflation has taken hold, confidence in price stability has improved;
- CPI inflation seen around 4.5 to 5% in 2016/17
- Services sector growth in 2015-16 seen at 9.2%
- The robust growth in gross tax revenue in the first three quarter of the year was aided by the 34.8% growth in indirect taxes, with union excise duties growing by about 68%.
- Crude oil prices to be about $35 a barrel next fiscal, as against $45 this year
- Among six commodities, the maximum subsidy to the rich is for LPG at Rs 40,151 crore followed by electricity Rs 37,170 crore, Kerosene Rs 5,501 crore, Gold Rs 4,093 crore, Railways Rs 3,671 crore and ATF Rs 762 crore.1)
- The Economic Survey expects India’s GDP to growth at 7-7.75 per cent in FY17, the same pace as in the current fiscal (7.6 per cent); the wide range is on account of external and monsoon uncertainties, the Survey said. India can grow at 8 per cent or higher in next two years, according to the Economic Survey.
- Consumer price or retail inflation is seen around 4.5 to 5 per cent in FY17 as against 4.9 per cent between April to January 2016. Inflationary expectations are muted because of the weakness in crude oil prices, the Economic Survey said.
- India’s current account deficit is seen around 1-1.5 per cent of GDP in FY17, the Economic Survey said.
Note: Economic Survey enumerated three downside risks – turmoil in global economy could worsen the outlook of exports, contrary to expectations oil price rise would increase the drag from consumption and the most serious risk is the combination of these two factors.
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