The Economic Survey, which sets the stage for Finance Minister Arun Jaitley’s annual budget on Thursday, forecast that India’s external sector will be resilient and strong in 2017-18. The Economic Survey 2018 expects India’s external trade sector growth to pick up in the coming year as the world trade growth is projected to be 4.2 percent and 4 percent in 2017 and 2018 respectively from 2.4 percent in 2016. However, oil prices may pose some downside risk, the Economic Survey 2017-18 predicts. The Economic Survey 2018 says that remittances have also started picking up and government’s reforms such as GST, logistics and trade facilitation policies could help moving ahead.
“India’s trade deficit (on custom basis) which had registered continuous decline since 2014-15, widened to $74.5 billion in HI of 2017-18 from $43.4 billion in HI of 2016-17. India’s trade deficit was $108.5 billion in 2016-17, with reduction in both POL deficit and non- POL deficit. In 2017-18 (April-December) trade deficit (on custom basis) shot up by 46.4 percent to $114.9 billion with POL deficit growing by 27.4 percent and non-POL deficit by 65.0 percent,” Economic Survey 2018 said.
Meanwhile, Economic Survey 2017-18 on Monday hinted that pause in government’s fiscal consolidation programme can’t be ruled out. Reflecting largely fiscal developments at the center, a pause in general government fiscal consolidation relative to 2016-17 cannot be ruled out, the Economic Survey 2018 stated.
“Setting overly ambitious targets for consolidation — especially in a pre-election year — based on optimistic forecasts that carry a high risk of not being realized will not garner credibility,” Chief Economic Adviser Arvind Subramanian said.
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The fiscal deficit for the first eight months of 2017-18 reached 112 percent of the total for the year, far above the 89 percent norm (average of last 5 years), largely because of a shortfall in non-tax revenue, reflecting reduced dividends from government agencies and enterprises. Expenditure also progressed at a faster pace, said Economic Survey 2018.