On 26th February, the Union Finance Minister Arun Jaitley presented the Economic Survey 2016 -17 for the current fiscal year in the Parliament. Prepared by the Chief Economic Adviser Arvind Subramanian, it is a key government survey released before the Union Budget. The survey has projected India’s growth to be in the range of 7.0% to 7.75% in 2016-17.
The key points of the economic survey can be important for your understanding and the upcoming competitive exams. Therefore, in this article, let us take a look at the highlights of the Economic Survey 2016 – 17.
Key Highlights:
Economic Growth
- The growth rate of the Indian economy has been estimated to be in the range of 7-7.5% in 2016-17.
- The medium-term growth trajectory has been pegged at 7-7.5% percent.
- The survey has emphasised that an 8% growth is possible only after two years, with continued economic reforms.
Fiscal Deficit
- Fiscal deficit refers to the difference between total revenue/income and total expenditure of the government. It indicates the total value of the government’s borrowings.
- The survey states that fiscal deficit target of 3.9% for 2015-16 is attainable. However, the government wants to adhere to the fiscal deficit target of 3.5% in 2016-17.
- The survey points out that in 2016-17, the 7th Pay Commission recommendations and demands of the OROP scheme will pose a challenge to achieve fiscal target.
Inflation
- Inflation is the percentage change in the value of prices of a basket of goods and services in a year.
- CPI inflation seen around 4.5-5% in 2016-17.
- The RBI is expected to meet 5% inflation target by March 2017.
Current Account Deficit
- CAD is a measurement of country’s trade when value of goods and services imported is higher than the value of goods and services exported. It includes net income, such as interest and dividends as well as foreign aid/grants.
- Current account deficit is seen at around 1-1.5% of GDP in 2016-17.
Agriculture sector
- The growth in agriculture sector in 2015-16 has continued to be lower than the average of the last decade, mainly due to second successive year of lower-than-normal monsoon.
- As per the information of the Department of Agriculture, Cooperation and Farmers Welfare for 2015-16, the production of food-grains and oil-seeds is estimated to decrease by 0.5% and 4.1% respectively, while the production of fruits and vegetables is likely to witness a marginal rise.
- A brighter picture is expected to emerge from the allied sectors like livestock products, forestry and fisheries, with growth exceeding 5% in 2015-16, which will improve rural incomes.
Subsidies
- It refers to a sum of money extended through a government grant to keep the price of a commodity low.
- The Economic Survey states that rationalisation and reprioritisation of subsidies through better targeting would be crucial role for fiscal consolidation and for targeting more expenditure towards inclusive development.
- The total subsidy bill as a proportion of GDP is expected to be below 2% of GDP as per Budget estimates for 2015-16.
- The 1.7% decline in majors subsidies was a result of nearly 44.7% decline in petroleum subsidy during April – December 2015, while other major subsidies-food and fertiliser -increased by 10.4% and 13.7% respectively during the period.
Industry sector
- Growth in the industry sector accelerated during the current year due to improved manufacturing activity.
- The Index of Industrial Production (IIP) showed that manufacturing production grew by 3.1% during April-December 2015-16, vis-à-vis a growth of 1.8% in the corresponding period of the previous year.
- The ongoing manufacturing recovery is supported by vigorous growth in petroleum refining, automobiles, apparels, chemicals, electrical machinery and wood products, including furniture.
- Apart from manufacturing, other three segments of the industry sector-electricity, gas, water supply-and related utilities, mining and quarrying and construction activities are witnessing a slump in growth.
Service sector
- The growth in service sector is moderated slightly but remains robust.
- Being the main driver of the economy, the service sector has contributed about 69% of the total growth during 2011-12 to 2015-16. It has, therefore, expanded its share in the economy to 53% from 49%.
Other key points:
- The Goods and Services Tax bill will mark an unprecedented reform measure.
- The year 2015 was a landmark year for India in terms of climate change initiatives.
- India ranks first in milk production, thereby accounting for 18.5% of the world production.
- The emphasis is on widening tax base, increasing tax rates on property and reasonable increase in taxes from rich agriculturalists.
- Stock markets in India are more resilient vis-à-vis its peers. India is the fastest-growing major global economy despite emerging economies affected by a slowdown.
To download the Economic Survey 2015- 16 click here:
Volume 1 – http://indiabudget.nic.in/es2015-16/echapter-vol2.pdf
Volume 2 – http://indiabudget.nic.in/es2015-16/echapter-vol1.pdf
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