- Date : 10/07/2019
- Read: 4 mins
Find out all the highlights of this year’s Economic Policy. A look at the Indian Economy with an eye into the future.
Economic Survey of India is presented in the Parliament a day before the presentation of the Union Budget. It is presented by the Department of Economic Affairs, Finance Ministry of India, under the guidance of the Chief Economic Adviser. It portrays the Ministry’s observations on the country’s economic development and also highlights its focus areas. The survey not only comments on the present state of economic affairs in detail, but also gives out growth forecasts. This survey can also suggest new recommendations and offers a glimpse of policy changes to be introduced. These recommendations are, however, in the nature of guidance and are not binding on the government.
This year’s Economic Survey was tabled in the Parliament on July 4 by Finance Minister Mrs Nirmala Sitharaman.
- The survey underlines the agenda of making India a 5 trillion dollar economy by 2024-25. This can be achieved through a sustained GDP growth of 8%. The GDP growth for FY20 was found to be 7% and averaged at 7.5% in the last five years. The survey takes about shifting gears to bridge the gap.
- It identifies investment as the key driver for growth in demands, exports, jobs and productivity. Positivity in investments seems to be having a growth effect.
- The survey has attributed the FY19 slowdown down to the stress and liquidity crunch faced by NBFCs. On the other hand, the slowdown in the last quarter was largely due to poll-related activities.
- The survey observed that the government has been on track with fiscal consolidation and deficit reduction. It has credited the fiscal reform to revenue expansion, expenditure reprioritisation and rationalisation. Fiscal deficit of 3% of GDP has been targeted for FY20-21, as against 5.8% in FY19 and 6.4% in FY18.
- Signs of continuing resolution of non-performing assets in the banking sector is expected to give a push to the CapEx cycle. Banks have been feeling the pressure of bad loans but the asset quality has improved in the last FY, with the stressed advances ratio decreasing from 12.1% to 10.5% in nine months ending December 2018.
- Growth in investment has been observed since it bottomed out in 2017-18. The survey expects the investment rate to accelerate in FY20, riding on higher credit growth and improved demand.
- The survey noted an increase in rural wage from the middle of 2018. Notably, last year December saw the lowest rural wage growth rate for the month in the last five years, lower than the UPA regime.
- It also predicted a decline in oil prices. One can expect the same to happen due to a slowdown in US demand and global economic concerns.
- The unemployment rate was measured to be 6.1% overall, with 5.3% in rural areas and 7.8% in urban areas. However, the current weekly status approach for measuring unemployment declared the same at 8.9% overall (8.5% in rural areas and 9.6% in urban areas).
- The survey also highlighted certain government priorities and laid importance on specific agendas, some of which are,
1. Using the aspirational agenda for social change, like:
- The shift from ‘Beti Bachao Beti Padhao’ to ‘BADLAV’ (Beti Aapki Dhan Lakshmi Aur Vijay Lakshmi).
- From ‘Swachh Bharat’ to ‘Sundar Bharat’.
- From ‘Give it up” for the LPG subsidy to ‘Think about the Subsidy’.
- From ‘Tax evasion’ to ‘Tax compliance’.
2. Strengthening Indian MSMEs and empower them as centres of innovation, employment generation and economic growth. The policies should aid the growth and profitability of the MSMEs.
3. The contribution and promise of MGNREGS were acknowledged, particularly for its contribution to skill development and use of technology.
4. The need for a national floor level minimum wage structure was highlighted. The rationalisation of minimum wage can push the domestic demand curve upwards and strengthen the middle class.
5. Plans of awarding diplomatic privileges to top taxpayers with encouragements like naming roads after them.
6. Making data for the people, of the people and by the people. Creation of data as a public good within the legalities of data privacy.
7. Ramping up the capacity of lower judiciary and faster judicial disposals and resolutions, with special emphasis to Uttar Pradesh, Bihar, Odisha and West Bengal.
8. Observations on demography were made with predictions of fall in population growth, fertility rate to be below replacement rate by 2021 and consequently, school-going population.
9. 2.5 times increase in the per capita energy consumption and ensuring inclusive growth through sustainable and cheaper energy.
10. With regard to sustainable development and climate change, the need for a national policy on Resource Efficiency was mentioned. Read this piece to know more about Budget 2019 and its impact on the economy at a macro level.