The backdrop of a global slowdown was weighing down very heavily on the expectations of this year’s Budget.
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Expressing concern over the condition of India’s fleet, it said it is aging and “42.42 per cent of the fleet is over 20 years old and 12.43 per cent in the 15-19 age group”.
Among other industries, the survey stated that media and entertainment services industry has recorded unprecedented growth over the last two decades, making it one of the fastest growing industries in India.
– Economic Survey predicts India’s long-run potential GDP growth to be between 8 per cent to 10 per cent.
“The IT-BPM (Information Technology-Business Process Management) sector is increasingly being challenged in its global journey… misconstruing mobility of skilled people as an immigration issue is a deterrent to the growth of this global business”, the survey said.
The top exporting sectors including engineering, petroleum products, gems and jewellery, textiles, chemicals and agriculture were not showing healthy growth rate. Interestingly, the Survey sees in the implementation of the Seventh Pay Commission recommendations a demand-booster. Hence to exploit this dividend and meet the growing aspiration of those entering the labor force, India’s Economy needs to create enough “good jobs”- jobs that are safe and pay well, and encourage firms and workers to improve skills and productivity.
– Current RBI policy rate seems neutral.
Subramanian’s survey has forecast that foreign demand would remain weak, forcing India to “activate domestic sources of demand to prevent growth from weakening”.
– April-January trade gap Rs 106.8 billion # FY17 expected to be challenging.
It projected capital requirement for banks at around Rs 1.8 lakh crore by 2018-19.
The Survey said that corporate and bank balance sheets remain stressed affecting the prospects for reviving private investments. The banking sector, which is known as the backbone of the economy, is suffering from rising NPA (non-performing asset).
The government, it said, should sell off certain non financial companies to infuse capital in state-run banks.
– Government proposes to make available 700 billion rupees via budgetary allocations during current, succeeding years in banks.
The survey also said breast-feeding illustrates how some state investments can lead to tangible changes in social norms in a relatively short time period.
India needs to gird itself for the possibility of turmoil on worldwide currency markets and contend with “an unusually weak external environment”.
Besides, the Survey estimates India’s R&D globalisation and services market to nearly double by 2020 to $38 billion. “Improving tax compliance through better tax administration, tapping new resources etc could help raise more revenue and keep the fiscal deficit at levels projected in the revised fiscal road map”, it said.
The emphasis is on widening tax base, increasing tax rates on property and reasonable increase in taxes from rich agriculturalists.
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“One of the low hanging fruit would be to refrain from raising exemption thresholds for the personal income tax, allowing natural growth in income to increase the number of taxpayers”.
