A flagship annual document of the finance ministry, the Economic Survey reviews the developments in the Indian economy over the previous 12 months, summarises the performance on major development programmes, and highlights the policy initiatives of the government and the prospects of the economy in the short to medium term.
Along with being an excellent commentary on the state of the economy, the document also has some fascinating data.
Authored by Aravind Subramanian, India’s Chief Economic Adviser, the annual Economic Survey 2018 was tabled in the Parliament by Finance Minister Arun Jaitley on Monday.
The survey recommends that India must continue striving for rapid economic growth, on the strength of its two sustainable pillars—private investments and exports.
The survey pegged India’s GDP growth at 7-7.5 percent in the 2018 fiscal. Some other highlights were as follows:
1) Increase in taxpayers:
There was a substantial increase in the number of new taxpayers in India, thanks to demonetisation and the implementation of Goods and Services Tax (GST). While the taxpayers under the new GST regime have increased by 50 percent or 3.4 million, there has been an addition of about 18 lakh individual income tax filers since November 2016, the month when demonetisation was announced.
2) Increased GDP Growth:
The GDP growth accelerated, until early 2016. Post that, India’s economy didn’t perform so well, compared to that of the world. Again, the survey noted that India charted its own unique growth, due to five distinct factors.
First, policy interest rates increased, monetary conditions were tightened, and consumption and investment were low, compared to other nations. Capital inflows made the rupee stronger, dampening net services exports and the manufacturing trade balance.
Next, demonetisation hampered production, especially in the informal sector, where transactions are mostly in cash.
Third, GST affected supply chains, because small traders had a tough time with the paperwork involved. Large manufacturing companies, which relied on these small traders for raw materials, suffered consequently.
Cumulative, non-performing assets are the fourth reason. Banks are in a poor state, the profits of public sector banks has dipped, because of the substantial increase in bad loans. The banks, in turn, are finding it difficult to give credit to the industry.
The final factor, according to the survey, is oil prices. The survey mentions that in the first three quarters of 2017-2018, oil prices have been greater in dollar terms, than in the previous year. This is in contrast to the last three years when the country had fared better in this regard.
3) Rural Incomes and Demand:
Citing data provided by the Labour Bureau, the survey mentioned that agricultural and non-agricultural rural wages increased, thanks to a strong monsoon. However, just before the kharif season, wages fell, the reason being less demand for labour, during both the kharif and rabi seasons.
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The survey also notes that rural demand, quantifiable by the number of cars and motorcycles sold, has fallen, mostly for cars. Bike sales seem to have increased during the same period, i.e. the first-month high-denomination notes were banned.
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