On 26th February 2016, Finance minister Arun Jaitley tabled the Macro-Economic Survey 2015-16 in Parliament. The economic survey was prepared by the Chief Economic Advisor Arvind Subramanian.
- In accordance with survey, Indian economy is growing at a pace of 7-7.5% and it is expected to accelerate at 8% in the next couple of years.
- India’s macro-economy is sturdy and it is likely to be the fastest growing major economy in the world in 2016 as it shows an expansion from 7.2% in 2014-15 to 7.6% in current fiscal.
Before heading towards the other highlights lets us take a brief view on economic survey:
To showcase the ministry’s view on the annual economic development of the country, every year before the Union Budget, the economic survey is presented by Finance Ministry of India.
- Economic Survey summarizes the performance on major development programs and highlights the policy initiatives of the government and the prospects of the economy in the short to medium term.
- This document is presented to both houses of Parliament during the Budget Session.
Following are the highlights of the report:
Fiscal Deficit
- 2015 -16 fiscal deficits seen at 3.9% of GDP seems achievable
- 2016 – 17 expected to be challenging from fiscal point of view.
- Credibility and optimality argue for adhering to 3.5% of GDP fiscal deficit target.
Inflation
- CPI inflation seen around 4.5 to 5% in 2016 – 17.
- Confidence in price stability has improved and it is expected that RBI to meet 5% inflation target by March 2017.
- Prospect of lower oil prices over medium term likely to dampen inflationary expectations.
Current account deficit
- 2016 – 17 current account deficit seen around 1-1.5% of GDP.
Currency
- Rupee’s fair value can be achieved through monetary relaxation.
- India needs to prepare itself for a major currency readjustment in Asia.
- Gradual depreciation in rupee can be allowed if capital inflows are weak.
Taxes
- Proposes widening tax net from 5.5% of earning individuals to more than 20%.
- Tax revenue expected to be higher than budgeted levels in FY15 – 16.
- Favours review and phasing out of tax exemptions.
Banking & Corporate Sector
- Estimated capital requirement for banks likely around Rs 1.8 trillion by 2018 – 19.
- Corporate, bank balance sheets remain stretched, affecting prospects for reviving private investments.
- Underlying stressed assets in corporate sector must be sold or rehabilitated.
- Govt could sell off certain non-financial companies to infuse capital in state-run banks.
- Govt proposes to make available 700 bn rupees via budgetary allocations during current, succeeding years in banks.
India Ranks First in Milk Production
In accordance with the economic survey 2015-16, India ranks first in milk production, accounting for 18.5% of world production. It achieved an annual output of 146.3 million tons during 2014-15 as compared to 137.69 million tonnes during 2013-14 recording a growth of 6.26%.