Economic Survey 2020: The government needs to relax the fiscal gap target for FY20 to boost growth, according to the economic survey 2020 tabled by the government in the Parliament on Friday.
Economic Survey 2020: The government needs to relax the fiscal gap target for FY20 to boost growth, according to the economic survey 2020 tabled by the government in the Parliament on Friday. FY21 is expected to pose challenges on the fiscal front, the Economic Survey also said, adding that the government needs to announce counter-cyclical measures to support growth. The second economic survey by the government, in its second term, also said that high non-tax revenue is not sustainable year after year. A cut in capital expenditure may adversely impact growth, it added. Since the last survey by CEA Krishnamurthy Subramanian, India’s economy has deteriorated further, with GDP growth at the slowest pace since 2008-09. India faces its worst economic slowdown in a decade. The government has announced a slew of measures in the last few months to prop up the slowing economy.
The central government had budgeted the fiscal deficit at 3.3 per cent of GDP in budget 2019-20. The medium-term fiscal policy cum fiscal policy strategy statement in the budget documents had projected the deficit at 3 per cent in 2020-21 and 2021-22.
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Meanwhile, Nirmala Sitharaman is slated to present her second budget of the Modi government’s second term on February 1, 2020. The budget comes at a time when the economy is seeing a growth slowdown on account of both global and domestic factors. The growth slipped to 4.5 per cent in the July-September quarter, imperiling job prospects for millions of young people entering the workforce each year. The economy is projected to grow at a mere 5 per cent in the fiscal year 2020, according to the first advance estimates of the economy. The second advance estimates are slated to be released by the government later in the day today.
“Overall, the data scan by the economic survey suggests that the economic slowdown may be tapering with green shoots visible in a few quarters of the economy. India can take advantage of the global situation as India remains an attractive investment destination because of the untapped potential of the domestic demand and massive infrastructure spending plans; rising number of millennials in the population (impacting both the nature of consumption and workforce); and the rapidly evolving entrepreneurial ecosystem. All eyes are now on tomorrow’s budget as the government walks a tightrope of balancing growth and inflation”, Rumki Majumdar, Economist, Deloitte India, said.
“The 6-6.5% growth rate for India’s GDP in the financial year 2020-21 will infuse the much-needed positive sentiments in our financial markets. The predictions of 5% GDP for the year 2019-20 is likely to translate into pro-market policies, which will keep the financial markets buoyant and will be in line with the goal of achieving USD 5 trillion economy. Strengthening the banking and NBFC sector will enhance liquidity in the markets and boost demand across sectors. 2020 promises to bring greater opportunities for foreign and domestic investors to reap benefits from India’s growth story”, Puneet Maheshwari, Director at Upstox, said.