Budget 2018: The Economic Survey report 2017-18 on Monday was tabled in both houses of the Parliament by Finance Minister Arun Jaitley ahead of the Union Budget 2018, in which it was projected that the economic growth for the fiscal year 2018-19 will be between 7% and 7.5%, while it also flagged concerns over rising crude oil price. 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.
Here are the key takeaways from the Economic Survey report 2017-18:
1. The GDP growth rate for the fiscal year 2017-2018 is pegged at 6.75% by the Economic Survey report. The government, in its advance GDP estimate, had estimated a growth of 6.5%.
2. In the fiscal year 2019, the survey said that the Indian economy is expected to grow between 7% and 7.5%. The International Monetary Fund (IMF) has also said that India could grow at 7.4% in the current year 2018, as against China’s 6.8%.
3. On the implementation of the Goods and Service Tax (GST), the survey said that there has been a 50% increase in number of indirect taxpayers; Large increase in voluntary registrations; distribution of GST base closely linked to size of economies; strong correlation between export performance and state’s standard of living and India’s formal sector was found to be substantially greater than currently believed, the economic survey said.
4. The level of tax filers by November 2017 was 31% greater. The economic survey said that it translated roughly into about 1.8 million additional taxpayers due to demonetization-cum-GST, representing 3% of existing taxpayers.
5. The Agriculture growth in FY18 likely to be at 2.1%, while the Industry growth for FY18 likely to be 4.4%.
6. Services growth for FY18 likely to be at 8.3% and the country’s economy should witness improvement in next fiscal year.
7. The IBC resolution process could prove a valuable technology for tackling this long-standing problem in the Indian corporate sector.
8. The apparel sector has immense potential to drive economic growth, increase employment, and empower women in India. This is especially true as China’s share of global apparel exports has come down in recent years. However, India has not, or not yet, capitalized on this opening.
9. In the last three fiscal years, India experienced a positive term of trade shock. But in the first three quarters of 2017-18, oil prices have been about 16 percent greater in dollar terms than in the previous year (Table 1). It is estimated that a $10 per barrel increase in the price of oil reduces growth by 0.2-0.3 percentage points, increases WPI inflation by about 1.7 percentage points and worsens the CAD by about $9-10 billion dollars. Economic Survey calls for “policy vigilance” in coming year if high oil prices persist or stock prices correct sharply.
10. The Headline inflation has been below 4 per cent for twelve straight months, from November, 2016 to October, 2017 and CPI food inflation averaged around one per cent during April-December in the current financial year. The Survey observes that the economy has witnessed a gradual transition from a period of high and variable inflation to more stable prices in the last four years.
11. Current account deficit expected to average 1.5-2% of the GDP this fiscal, while export growth is peged at 12.1%.
12. The survey said that India will need $4.5 trillion investment in infrastructure by 2040.
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.
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. 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.