The Centre on Tuesday tabled the Economic Survey 2016-17 on the first day of the Parliament’s Budget Session. In the survey, which was presented by Chief Economic Adviser Arvind Subramanian, the government predicted a gross domestic product growth rate between 6.75% and 7.5% in the 2017-18 financial year.
The survey examines the state of economy in the current financial year. It placed the GDP growth rate at constant market prices for the current financial year at 7.1%, in addition to 4.1% growth in the agriculture sector, 5.2% growth in the industrial sector and 8.9% growth in the service sector in 2016-17.
The current account deficit dropped in the first half of 2016-17 to 0.3 % of the GDP, according to the report. “Headline inflation as measured by Consumer Price Index remained under control for the third successive financial year.”
This is likely to be Subramanian’s last Economic Survey, unless his tenure is extended. The chief economic adviser also recommended implementing a Universal Basic Income scheme, which will guarantee a minimum wage to every citizen. The programme will serve “as an alternative to the various social welfare schemes in an effort to reduce poverty”.
On demonetisation, Subramanian noted in the survey that its impact on “real GDP growth” would only be temporary. A further drop in loan rates, an increase in the Centre and RBI’s wealth and the “now-launched digital revolution” towards online transactions are among the long-term affects of the currency ban, he predicted. Among the short-term affects he included in the survey, he found that black money stocks had indeed reduced since the move and had led to some holders falling under the tax radar.
After his presentation, Subramanian told reporters that complete remonetisation would take place during the next two months. Subramanian also said the aim of the drive was to reduce real estate prices, ANI reported.
The chief economic adviser said the impact of the note ban was less severe than it seems, and that it was inappropriate to do a before-after analysis of GDP growth.
Moreover, the survey recommended reforms in labour and tax policies to make the apparel and leather sector globally competitive. It also suggested establishing a centralised Public Sector Asset Rehabilitation Agency and “reforms to unleash economic dynamism and social justice”.
The survey is based on the International Monetary Fund’s World Economic Outlook. It is presented in two parts – volume I elaborates on future potential, while volume II traces recent developments in the economy.
The IMF had downgraded its growth forecast for India to 6.6% for 2016-17 and 7.2% in 2017-18 after factoring in the effects of demonetisation.