Economic Survey sees pick up in growth but calls for expansionary policy

The Economic Survey on Friday projected revival of economic growth to 6-6.5 per cent next fiscal and suggested that the government should relax the budget deficit target to boost growth from a decade low of 5 per cent this year.

The Survey, released a day before Finance Minister Nirmala Sitharaman presents the Union Budget for 2020-21, suggested a cut in food subsidy to create fiscal space at a time when tax revenues were falling.

Facing the worst economic slowdown since the global financial crisis of 2008-09 that worsened job prospects, the Survey said businessmen should be respected as they create wealth and jobs.

For India to become a USD 5 trillion economy by 2025, it prescribed strengthening trust in the economy, enabling and empowering markets, promotion of pro-business policies, and measures to enhance farmers' income.

It also suggested reforms to make it easier to open new businesses, register property, pay taxes and enforce contracts.

The Survey called for boosting manufacturing with 'assemble in India for the world' concept and underlined the need to spend USD 1.4 trillion in infrastructure to nearly double the size of the economy to USD 5 trillion.

It batted for aggressive disinvestment to bring higher profitability and efficiency, minimal government intervention in markets, encouraging entrepreneurship, and supporting wealth creation.

For the current fiscal, it projected a GDP growth of 5 per cent, the lowest in 11 years.

Commenting on the Survey, Prime Minister Narendra Modi said the report focuses on wealth creation for Indians. "It outlines a multi-faceted strategy to achieve a USD 5 trillion economy through enterprise, exports, ease of doing business and more," he tweeted.

Some economists believe the Survey's growth forecast is too optimistic as the recovery is likely to be slow and shallow amid rising inflation and declining investment.

The Survey has been wide of the mark in forecasting growth in four out of past five years.

"The deceleration in GDP growth can be understood within the framework of a slowing cycle of growth with the financial sector acting as a drag on the real sector," it said. "The government must use its strong mandate to deliver expeditiously on reforms, which will enable the economy to strongly rebound in 2020-21."
Stating that only when wealth is created, it can be distributed, Subramanian said, "A feeling of suspicion and disrespect towards India's wealth creators is ill-advised."