Economic Survey 2014-15; Indian economy to grow 8% in 2015-16

Economic Survey 2014 – 15, is tabled by the
Finance Minister Arun Jaitely today in the Parliament. The survey has projected
economic growth rate between 8.1 – 8.5 per cent in 2015-16 on the basis of new
GDP calculation formula. As per the survey, the government is committed
to fiscal consolidation and will restrict fiscal deficit to 4.1 per cent of the
GDP in the current financial year.

Background: Economic Survey is presented by the Union
Finance Minister of India every year in the Parliament, before the Union Budget.
It is an annual document of the Ministry of Finance, Government of India, which
reviews the developments of Indian Economy over the previous year. It also
summarizes the performance on major development programmes and highlights the
policy initiatives of the government and prospect of the economy in the short
to medium term.

Highlights of Economic Survey 2014-15:

Fiscal Deficit

i. India must meet its medium-term fiscal deficit
target of 3 per cent of GDP

ii. Government will stick on to fiscal deficit target
of 4.1 percent of GDP in 2014/15

iii. Govt should ensure expenditure control to reduce
fiscal deficit

iv. Expenditure control and expenditure switching to
investment key

Economic Growth

i. 2015-16 GDP growth seen at over 8 pct year-on-year

ii. Double digit economic growth trajectory now a
possibility

iii. Economic growth at market prices seen between
8.1-8.5 per cent in 2015-16 on new GDP calculation formula

iv. Total stalled projects seen at about 7 per cent of
GDP, mostly in private sector

Current Account Deficit

Estimated to fall 1 pct of GDP in coming fiscal
year

Inflation

i. Inflation shows declining trend in 2014-15

ii. Inflation likely to be below central bank
target by 0.5-1 percentage point

iii. Lower inflation opens up space for more
monetary policy easing

iv. Government and central bank need to conclude
monetary framework pact to consolidate gains in inflation control

v. Consumer inflation in 2015-16 likely to range
between 5-5.5 per cent

Reforms

i. There is scope for big bang reforms now

ii. India can increase public investments and still
hit its borrowing targets

Fiscal Consolidation

i. Government remains committed to fiscal
consolidation

ii. India can balance short-term imperative of
boosting public investment to revitalize growth with fiscal discipline

iii. Outlook for external financing is
correspondingly favourable

Agriculture

Food grains production for 2014-15 estimated at 257
million tonnes

Liquidity

Liquidity conditions expected to remain comfortable
in 2015-16

The Economic Survey is compiled by Chief
Economic Advisor of India Arvind Subramanian.

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