ECONOMIC SURVEY 2017-18 IMPORTANT POINTS

ECONOMIC SURVEY 2017-18

Economic Survey is a document that provides information about developments in Indian Economy in the current year vis-a- vis the budget plans. It is prepared under guidance of Chief Economic Advisor and tabled by Finance Minister in Parliament. Highlights are as under:

Major achievements of past year : Implementing GST, responding quickly to transitional challenges, tackling longfestering Twin Balance Sheet challenge by sending stressd debtors to IBC & bank recap validation and first sovereign upgrade in 14 years.

• Economic growth pegged at 7-7.5 per cent for FY’19.

• For the fiscal year 2016-17, the real GDP growth was 6.75% and the Economic Survey predicts 7-7.5% growth in 2017-18.

• The key focus areas in the medium term are employment, education and agriculture.

• In 2017-18, the Gross Value Added (GVA) at constant basic prices is expected to grow at the rate of 6.1% as compared to 6.6% in 2016-17. Agriculture, industry and services sectors are expected to grow at the rate of 2.1%, 4.4%, and 8.3% respectively in 2017-18.

•  India’s GDP growth is highest among major economies of the world having an average of 7.3% for the period from 2014-15 to 2017-18.

• The next year’s agenda include stabilizing the GST, solving twin balance sheet (TBS) problem and implementing necessary actions, privatizing Air India, and ensuring macroeconomic stability.

• 50% increase in the number of indirect taxpayers has been recorded.

• 18 lakh new individual income tax filers been recorded since Nov 2016.

• Exports of readymade garments (man-made fibers) increased by about 16% due to Rebate of State Levies (ROSL).

•  5 States namely Maharashtra, Gujarat, Karnataka, Tamil Nadu and Telangana account for 70% of India’s exports.

• India’s internal trade in goods and services is 60% of GDP.

• IBC mechanism is being used actively to resolve NPA problem.

• 2017-18 averaged the lowest inflation in the last six years.

• Rs20,339cr approved for interest subvention in 2017-18.

• The ratio of domestic saving to GDP reached 29.2% in 2013 to a peak of 38.3% in 2007, before falling back to 29% in 2016.

• Weighted average collection rate (incidence) of GST is about 15.6 per cent. As such, the single tax rate that would preserve revenue neutrality is between 15 to 16 per cent.

• Tax departments have gone in for contesting several tax disputes but also with a low success rate, which is below 30 per cent.

•  Largest firms account for much smaller exports than in other comparable countries. Top 1% of Indian firms account only for 38% of exports unlike in other countries where they account for substantially greater share – (72, 68, 67 and 55% in Brazil, Germany, Mexico, and USA, respectively).

•  Indian society exhibits a strong desire for a male child. Most parents continue to have children until they get the desired number of sons.

Sectoral Growth

• 2017-18 industry growth seen at 4.4 per cent

• 2017-18 farm sector growth seen at 2.1 per cent

• 2017-18 services sector growth seen at 8.3 per cent

Fiscal deficit

•  Current account deficit for 2017-18 expected to average 1.5-2 per cent of GDP

•  Pause in general government fiscal consolidation cannot be ruled out in 2017-18

•  Suggests modest (fiscal) consolidation that signals a return to path of gradual but steady deficit reductions

Inflation, policy rates

• Persistently high oil prices remain a key risk, to affect inflation

• If inflation doesn’t deviate from current levels, policy rates can be expected to remain stable

• Average CPI inflation seen at 3.7% in 2017-18

•  Policy vigilance required next fiscal if high oil prices persist or stock prices correct sharply

•  Policy agenda for next year — support agriculture, privatise Air India, finish bank recapitalisation.

•   Tax collection by states, local governments significantly lower than those in other federal countries

• Urban migration leading to feminisation of farm sector

•  Rs 20,339 cr approved for interest subvention for farmers in current fiscal

• FDI in services sector rises 15% in 2017-18 on reforms

•  Fiscal federalism, accountability to help avoid low equilibrium trap

•  India’s external sector to remain strong on likely improvement in global trade

• Swachh Bharat initiative improved sanitation coverage in rural areas from 39% in 2014 to 76% in Jan 2018

•  Priority to social infrastructure like education, health to promote inclusive growth

•  Centre, states should enhance cooperation to deal with severe air pollution

• Suvey 2017-18 in pink colour to highlight gender issues

• FDI in services sector rises 15% in 2017-18 on reforms

• For 2017-18, Gross national income at current prices and constant prices (2011-12 serices) is Rs.16438895 cr and Rs.12835004 cr. (annual growth rate 9.6% and 6.6%) repsectively.

•  For 2017-18, Net national income at current prices and constant prices is Rs.14710563 cr and Rs.11404413 cr (annual growth rate 9.7% and 6.7%) respectively

• For 2017-18, Per capita net national income at current prices and constant prices is Rs.111782 and Rs.86660 (annual growth rate 8.3% and 5.3%) respectively.

•  For 2017-18, Gross Domestic Product at constant prices (2011-12) : Rs.12985363 cr and Rs.16627585 cr at current prices.

Key Indicators of Indian Economy

Data category	2015-16	2016-17	2017-18
GDP at constant prices (Rs.Cr)	11381002	12189854	12985363
GDP growth rate (%)	8.0	7.1	6.5
GVA at constant basic prices (Rs.cr) 10490514		11185440	11871321
GVA growth rate (%)	7.9	6.6	6.1
Per capita net national income (Rs.)	94130	103219	111782
Foodgrains (million tonnes)	251.6	275.7	134.7#
WPI Inflation (%)	-3.7	1.7	2.9
CPI Combined inflation (%)	4.9	4.5	3.3
Forex reserves (USD billion)	360	370	409
Gross Fiscal deficit to GDP (%)	3.9	3.5	3.2@
Revenue deficit to GDP (%)	2.5	2.1	1.9@
Primary deficit to GDP (%)	0.7	0.4	0.1@

# Apr-Nov 2017        @Budget estimate

•  Largest firms account for much smaller exports than in other comparable countries. Top 1% of Indian firms account only for 38% of exports unlike in other countries where they account for substantially greater share – (72, 68, 67 and 55% in Brazil, Germany, Mexico, and USA, respectively).

•  Indian society exhibits a strong desire for a male child. Most parents continue to have children until they get the desired number of sons.

Sectoral Growth

• 2017-18 industry growth seen at 4.4 per cent

• 2017-18 farm sector growth seen at 2.1 per cent

• 2017-18 services sector growth seen at 8.3 per cent

Fiscal deficit

•  Current account deficit for 2017-18 expected to average 1.5-2 per cent of GDP

•  Pause in general government fiscal consolidation cannot be ruled out in 2017-18

•  Suggests modest (fiscal) consolidation that signals a return to path of gradual but steady deficit reductions

Inflation, policy rates

• Persistently high oil prices remain a key risk, to affect inflation

• If inflation doesn’t deviate from current levels, policy rates can be expected to remain stable

• Average CPI inflation seen at 3.7% in 2017-18

•  Policy vigilance required next fiscal if high oil prices persist or stock prices correct sharply

•  Policy agenda for next year — support agriculture, privatise Air India, finish bank recapitalisation.

•   Tax collection by states, local governments significantly lower than those in other federal countries

• Urban migration leading to feminisation of farm sector

•  Rs 20,339 cr approved for interest subvention for farmers in current fiscal

• FDI in services sector rises 15% in 2017-18 on reforms

•  Fiscal federalism, accountability to help avoid low equilibrium trap

•  India’s external sector to remain strong on likely improvement in global trade

• Swachh Bharat initiative improved sanitation coverage in rural areas from 39% in 2014 to 76% in Jan 2018

•  Priority to social infrastructure like education, health to promote inclusive growth

•  Centre, states should enhance cooperation to deal with severe air pollution

• Suvey 2017-18 in pink colour to highlight gender issues

• FDI in services sector rises 15% in 2017-18 on reforms

• For 2017-18, Gross national income at current prices and constant prices (2011-12 serices) is Rs.16438895 cr and Rs.12835004 cr. (annual growth rate 9.6% and 6.6%) repsectively.

•  For 2017-18, Net national income at current prices and constant prices is Rs.14710563 cr and Rs.11404413 cr (annual growth rate 9.7% and 6.7%) respectively

• For 2017-18, Per capita net national income at current prices and constant prices is Rs.111782 and Rs.86660 (annual growth rate 8.3% and 5.3%) respectively.

•  For 2017-18, Gross Domestic Product at constant prices (2011-12) : Rs.12985363 cr and Rs.16627585 cr at current prices.