Economic growth likely to be 8% with big reforms

Economic survey tells government to improve public expenditure

GN Bureau | February 27, 2015




The Economic Survey for 2014-2015, which normally gives indications of economic performance of the country and broad directions for the general budget forecasts a growth rate of over 8% for the financial year 2015-2016. However, farm output growth is likely to lag behind at 4 percent. It calls for quality public expenditure and a shift away from public consumption.

The survey, tabled on the floor of the parliament on Friday, has been prepared by the finance ministry's chief economic adviser Arvind Subramanian on the state of Asia's third-largest economy.

The growth estimates of over 8% are the basis of the new GDP (gross dometic product) calculation formula. Economic growth at market prices is expected to be between 8.1 and 8.5 percent, it said. As a consequence there is scope for big bang reforms now.

"The Economic Survey indicates that a clear political mandate for reform and a benign external environment now is expected to propel India on to a double digit trajectory. Indian economy appears to have now gone past the economic slowdown, persistent inflation, elevated fiscal deficit, slackening domestic demand, external account imbalances and oscillating value of the rupee," the survey said.

The government should ensure expenditure control to reduce fiscal deficit. So expenditure control and expenditure switching is key for government to achieve its fiscal deficit target. India must adhere to medium-term fiscal deficit target of 3 percent of the country's gross domestic product (GDP), says the survey. It says overhauling of subsidy regime would pave the way for expenditure rationalization.

The governments are expected to borrow over the cycle only to finance investment, and not to fund current expenditures. The survey says short-term targets should be set accordingly. Outlook for external sector is perhaps most favourable since 2008 financial crisis.

On employment the survey has shown that the cause for concern is the deceleration in the compound annual growth rate of employment during 2004-05 to 2011-12 to 0.5 percent from 2.8 percent during 1999-2000 to 2004-05 as against growth rate of 2.9 percent and 0.4 percent respectively in the labour force for the same periods.

Survey says that skill development and employment are the major challenged faced by the economy today. Dearth of formal vocational education, lack of variation quality, high school dropout rates, inadequate skill training capacity, negative perception towards skilling, and lack of industry ready skills even in processional courses are the major cause of poor skill levels of India’s workforce, it said.

Expressing serious concern over stalled projects, it suggested revitalizing public private partnership model of investment.

The survey has been divided into 17 chapters:  http://indiabudget.nic.in/survey.asp

1. Economic Outlook, Prospects, and Policy Challenges

2.  Fiscal Framework

3. 'Wiping Every Tear From Every Eye' : The JAM Number Trinity Solution

4. The Investment Climate: Stalled Projects, Debt Overhang and The Equity Puzzle

5. Credit, Structure and Double Financial Repression: A Diagnosis of the Banking Sector

6. Putting Public Investment on Track: The Rail Route to Higher Growth

7. What to Make in India? Manufacturing or Services?

8. A National Market for Agricultural Commodities - Some Issues and Way Forward

9.  From Carbon Subsidy to Carbon Tax: India’s Green Actions

10. The Fourteenth Finance Commission (FFC) - Implications for Fiscal Federalism in India?

11. State of the economy and Public Finance

12.Monetary management and financial intermediation

13.External sector and Service sector

14.Prices, agriculture and food management

15.Industrial, corporate and infrastructure performance

16.Climate change and sustainabke development

17.Social infrastructure, employment and human development

Comments

 

Other News

Improving livelihood with financial access is the task ahead

“Demonetisation has created an entire system of digitisation and financial inclusion,” said PK Gupta, managing director (Retail and Digital Banking), State Bank of India, at the launch of the Governance Now India Financial Inclusion Case Book in Mumbai on Friday. He further stated though there

How Bhutan is enuring food security

When Bhupen Gurung from the Royal University of Bhutan told the audience at the TERI School of Advanced Studies, New Delhi, about dropping levels of poverty in Bhutan, many public policy academicians were left intrigued. Coming from the ‘Land of Happiness’ (Bhutan ranked 97 among 155 countr

Uncivil servants

An IPS officer of Tamil Nadu cadre holding the post of assistant superintendent of police was caught cheating, using high-tech gadgets, while appearing in the IAS examination in October, as was widely reported in the media. The case has shaken the conscience of the enlightened citizenry and shows the rot t

Manufacturing will remain dark horse for economy: Niti Aayog expert

Manufacturing will remain the dark horse for the Indian economy, especially as labour-intensive industries shift from China, writes Sukhgeet Kaur, director, project appraisal and management division, Niti Aayog in an official

The un-importance of being Pravin Togadia

Vishwa Hindu Parishad (VHP) working president Pravin Togadia is in the news after a long time. This week, Togadia went `missing` for an entire day as the Gujarat and Rajasthan police were on the lookout for him, arrest warrant in hand. Togadia was later brought to a hospital in an unconscious state. At a p

Confused signals

Of late, there have been some anxious moments for broadcasters and no one knows where it’s been coming from, and why it’s happening. For starters, the ministry of information and broadcasting is the licensor for TV channels, in two categories: (i) news and current affairs (&lsquo

Current Issue

Current Issue

Video

CM Nitish’s convoy attacked in Buxar

Opinion

Facebook    Twitter    Google Plus    Linkedin    Subscribe Newsletter

Twitter