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The Economic Survey for 2015-16, tabled in Parliament by Finance Minister Arun Jaitley on Friday, pegged India’s gross domestic product (GDP) to grow by 7-7.75 per cent next financial over this year. The upper part of the range given in the Survey is slightly higher than the 7.6 per cent, officially pegged for the current financial year, while the lower part is way down.
The Survey was hopeful that the economy could clock eight per cent economic growth in a couple of years due to reform measures initiated by the government.
Amid debate on a dilemma between sticking to fiscal consolidation road map and perking up the economy, the survey said the coming year is expected to be a challenging one from the fiscal point of view. As per the road map, the centre's fiscal deficit should come down at 3.5 per cent of country's gross domestic product (GDP) in 2016-17 from 3.9 per cent in the current financial year. The survey was, however, hopeful that meeting the target of 3.9 per cent fiscal deficit is achievable for the current financial year.
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The survey said: "The chances of India’s growth rate in 2016-17 increasing significantly beyond 2015-16 levels are not very high, due to likelihood of persistence of Global slowdown. Further the implementation of the Pay Commission recommendations and the One Rank One Pay (OROP) scheme will put additional burden on expenditure. Improving tax compliance through better tax administration, tapping new resources etc. could help raise more revenue and keep the fiscal deficit at levels projected in the revised fiscal roadmap. Improving the quality of expenditure has been indicated as important for achieving sustained fiscal consolidation."
The survey termed the proposed Goods and Services Tax (GST) as a reforms measure perhaps unprecedented in the modern global tax history. The GST, to be implemented by the Centre, 28 States and 7 Union Territories, awaits a Constitutional amendment requiring broad political consensus. Estimated to affect between 2 to 2.5 million Excise and Service Tax payers, the survey said the GST would impact dramatic changes in the Indian tax system.
GDP Growth
Production of Foodgrains
Industrial Sector Growth
Service Sector Growth
Inflation
India's Foreign Trade
Amid a gloomy international economic landscape, the Survey saw India as a haven of stability. Besides, it said an increase in wages because of the implementation of the 7th Pay Commission award was unlikely to destabilise prices and would have little impact on inflation.
The survey, penned by chief economic adviser Arvind Subramanian and his team in North Block, said despite the global meltdown, Indian economy will continue to grow more than 7 percent for the third year in succession in 2016-17 helped by a normal monsoon,.
The survey stated that due to Government’s commitment to carry the reform process forward, conditions do exist for raising the economy’s growth momentum to 8 percent or more in the next couple of years. The survey underlines that despite global headwinds and a truant monsoon, India registered 7.2 per cent growth in 2014-15 and 7.6 per cent in 2015-16, becoming the fastest growing major economy in the world.
