Economic Survey Projects India’s GDP to Grow at 6.75-7.5% Next Year

The Survey highlights the opportunity for India in this sector in global context by saying that India has an opportunity to push exports since rising wage levels in China has resulted in China stabilizing or losing market share in these products. The growth rate for the coming financial year has been estimated to rise from 6.5% to 7.5%.

Nearly three years into its tenure, the Narendra Modi government has a major worry.

By contrast, the International Monetary Fund slashed its India growth forecast for the current fiscal year by a full point to 6.6 percent, handing the title of the world’s fastest-growing economy back to China, which reported 6.7 percent growth for 2016.

The Survey has clearly identified that the private sector wealth has declined, since some high denomination notes were not returned and real estate prices fell.

The government said that the adverse impact of demonetisation on GDP growth will be transitional.

Once the cash supply is replenished, which is likely to be achieved by end March 2017, the economy would revert to the normal.

Indirect taxes grew by 26.9 per cent during April-November 2016. In contrast, India’s has moved in opposite direction and growth has increased.

According to the Economic Survey, net out-of-state flows of migrant labourers across India peaked at nearly 9.4 million in 2013-14, before falling to 9.1 million in 2014-15 and just over 8.4 million in 2015-16. The fiscal gains from implementing the goods and services tax and demonetisation may not be fully realized immediately.

According to the fine print of the economic survey, it is too early to quantify the magnitude and long term effect of demonetisaion.

It said demonetisation may shave off around 0.25-0.5 points from a baseline growth rate of 7% in 2016-17. “Even under this forecast, India would remain the fastest growing major economy in the world”.

The survey sees “fiscal windfall from Pradhan Mantri Garib Kalyan Yojana, low oil prices”.

“Many new initiatives have been taken up by the government to facilitate investment and ease of doing business in the country”, the survey said.

“A capacity addition of 14.30 GW of renewable energy has been reported during the last two and half years under Grid Connected Renewable Power, which include 5.8 GW from Solar Power, 7.04 GW from Wind Power, 0.53 GW from Small Hydro Power and 0.93 GW from Bio-power”, it said.

He also maintained the currency squeeze was “less severe than is commonly perceived”.

The success of the scheme, however, hinges on the efficiency of JAM (Jan Dhan, Aadhaar and mobile) and if a cost-sharing agreement can be reached among the Centre and the states.