AMN /
The Economic Survey 2016-17 has projected the real Gross Domestic Products, GDP to be in 6.75 percent to 7.5 per cent during fiscal year 2018.
The Economic Survey which was tabled in Parliament by Finance minister Arun Jaitley on the first day of Budget Session, also said, India would remain fastest growing major economy in the world.
The survey pegs GDP growth rate at constant market prices for the current year 2016-17 is placed at 7.1 per cent. It also said, Agriculture sector to grow at 4.1 per cent in the current year which is up from 1.2 per cent in 2015-16. The survey sees fiscal windfall from Pradhan Manttri Garib Kaalyan Yojan and low oil prices.
The Survey Report says that demonetisation has had short-term costs but holds the potential for long-term benefits. Follow-up actions to minimize the costs and maximize the benefits include: fast, demand-driven, remonetisation; further tax reforms, including bringing land and real estate into the GST, reducing tax rates and stamp duties; and acting to allay anxieties about over-zealous tax administration. These actions would allow growth to return to trend in 2017-18, possibly making it the fastest-growing major economy in the world, following a temporary dip in 2016-17.
The report also said the cash squeeze in the meantime will have significant implications for GDP, reducing 2016-17 growth by0.25 per cent to 0.5 percentage points compared to the baseline of 7 percent.
The Survey also listed the some of the challenges that might impede country’s progress. These challenges are classified by the Survey as follows: ambivalence about property rights and the private sector, deficiencies in State capacity, especially in delivering essential services and inefficient redistribution.
The Survey highlights difficulties in privatizing public enterprises, even for firms where economists have made strong arguments that they belong in the private sector. In this context, the Survey points towards the need to further privatize the Civil Aviation, Banking and Fertilizer sectors.
The Survey points out that the capacity of the State in delivering essential services such as health and education is weak due to low capacity, with high levels of corruption, clientelism, rules and red tape. At the level of the states, competitive populism is more in evidence than competitive service delivery, the Survey adds. Constraints to policy making due to strict adherence to rules and abundant caution in bureaucratic decision-making favours status quo, the Survey cautions.
According to the Survey, redistribution by the government is far from efficient in targeting the poor. This is intrinsic to current programs because spending is likely to be greatest in states with better institutions and which will therefore have fewer poor.
The Survey notes that over the past two years, the government has made considerable progress toward reducing subsidies, especially related to petroleum products. Technology has been the main instrument for addressing the leakage problem and the pilots for direct benefit transfer in fertilizer represent a very important new direction in this regard.