Containing Fiscal Deficit a Challenge Next Fiscal: Economic Survey

Likening the Indian economy in the 21st century to the Charkravyuha legend of the Mahabharata – the ability to enter but not exit – the Economic Survey 2015-16 today cautioned that the country is facing adverse consequences due to the lack of a way out for failed ventures.

“The Economic Survey has rightly highlighted the need for being prepared to face any spillover of major currency adjustments in China and other Asian economies”, said Sunil Kanoria, president of the Associated Chambers of Commerce and Industry of India.

The survey, in its outlook, clearly points out, though the emerging market economies have clearly slowed down, the Indian economy stands out as a haven of macroeconomic stability, resilience and optimism and can be expected to register GDP growth that could be in the range of 7 percent to 7.75 per cent in the coming year.

The top one per cent, 0.5 per cent and 0.1 per cent of people in the overall income distribution (the three highest income groups) accounted for 12.4 per cent, 9.4 per cent and five per cent of the entire income of the Indian economy.

The Economic Survey 2015-16 tabled in Parliament on Friday also said with limited resources and competing demands in the health sector, it is essential for the government to prioritise its expenditure in the sector.

The cost of production is higher than the global prices. “The Union Budget will carefully assess these questions”.

“The inventory overhang in the western and southern region is much better at 30 and 22 months”, the survey said.

Country’s $143 billion IT-BPM sector is being impacted by increased protectionism even as India is being urged to open up its markets under various trade agreements, the Economic Survey said on Friday. It is encouraging macro-economic indicators such as low inflation, increasing public investment and fiscal consolidation said, Director General CII, Chandrajit Banerjee.

The Current Account Deficit has declined and foreign exchange reserves have risen to $ 351.5 billion in early February, 2016.

India’s growth is more tied with the global economy than ever, says survey.

“If we add the subsidies inherent in just the PPF [Public Provident Fund] schemes, the total subsidy to the well-off amounts to above Rs 1 lakh crore”.

It said that supply side bottlenecks, infrastructural and structural constraints hindering the achievement of medium-term growth and job creation, are being addressed on priority basis. Elaborating on the global situation, it said that the upcoming Budget and economic policy would have to contend with an unusually challenging and weak external environment.

A critical short-term challenge confronting the economy is the “twin balance sheet problem” – the impaired financial positions of public sector banks and some corporate houses.

Programmes like Make in India, Ease of Doing Business, Skill India, Startup India and reforms in various industrial and infrastructure sectors are some of the major initiatives in the direction of attracting more investment to ensure high industrial growth, the government said.