The Budget 2018 comes against the backdrop of minor fiscal slippage from the 3.2% target of the Budgetary allocation, along with rallying crude oil prices on the global front. Government’s advance GDP data showed that India’s economic growth at 6.5%, the lowest growth rate during the Modi government.
The Economic Survey report 2017-18 has estimated the economic growth rate in the fiscal year 2019 between 7% and 7.5%, while saying that the rising crude oil price has become a major concern and is expected to grow by average 12% in the FY19. The Budget 2018 comes against the backdrop of fiscal concerns from the 3.2% target of the Budgetary allocation, along with rallying crude oil prices on the global front.
The Economic Survey report 2017-18 also said that private investment is poised to rebound in the fiscal year 2019 and employment, education and agriculture will remain the focus in the medium term. The survey also said that exports will the biggest source of upside potential for the economy.
Government’s advance India GDP Growth data showed that India’s economic growth at 6.5%, the lowest growth rate during the Modi government. However, even as the structural reforms — the GST and demonetisation — are expected to ease out over the next few quarters Arun Jaitley will be required to work to improve purchasing power and create additional demand.
The GDP growth estimate for the fiscal year 2017-18 is at a four-year low of 6.5% in the current fiscal, the lowest under the Modi-led government, mainly due to the poor performance of agriculture and manufacturing sector, as against 7.1% in the last fiscal. In the second quarter (July-September), India made a comeback at 6.3% from a three-year low 5.7% in the previous quarter. However, massive rationalisation on as many as 178 products in November led to the fall in government’s revenue, which seems to be picking up in later months.
The fiscal deficit at the end of November breached the target and touched 112% of the budget estimate for 2017-18 mainly due to lower GST collections and higher expenditure.
The growth of real Gross Value Added (GVA) in 2017-18 is anticipated at 6.1% as against 6.6% in the previous year. As per the CSO data, the expansion in activities in ‘agriculture, forestry and fishing’ is likely to slow to 2.1% in the current fiscal from 4.9% in the preceding year. The growth in manufacturing sector, too, is expected to decelerate to 4.6% this fiscal, down from 7.9% in 2016-17.
The International Monetary Fund (IMF) has said that India could grow at 7.4% in the current year 2018, as against China’s 6.8%, making it the fastest growing country among emerging economies. Notably, the International Monetary Fund has projected a 7.8% growth rate for India in 2019.
Economic Survey is an annual document of the Ministry of Finance, Government of India, and reviews the developments in the Indian economy over the previous 12 months, summarises the performance on major development programs, and highlights the policy initiatives of the government and the prospects of the economy in the short to medium term.
Arun Jaitley will present the Union Budget 2018 for the fiscal year 2018-19 on February 1. This will be the first Budget in the post- GST era and the last full budget from Arun Jaitley before the General Election in 2019.