The Union Finance Minister Shri Arun Jaitley presented the Economic Survey 2016-17 in the Parliament on January 31, 2017 that provides a base for the government to prepare the annual Budget.
- The survey has been authored by Chief Economic Adviser Arvind Subramanian.The Economic Survey depicts the state of the economy and is generally presented in Parliament a day before the presentation of the annual Budget.
- It acts as a precursor to the budget. It states the outlook, prospects and challenges of the economy while recommending reform measures that are essential to propel and thrive the economy.
Important Highlights of the Economic Survey 2016-17
The Economic Survey has estimated that the GDP growth rate for FY18 will be in the range of 6.75 percent to 7.5 percent.
- Demonetization and rising oil prices have been identified as the major risk to the growth rate. However, remonetization and sufficient circulation of currency notes may return the growth rate to normal position.
- The growth rate for the current fiscal has been estimated at 7.1 percent from the previous 7.6 percent by the Central Statistics Office. This estimate does not take into account the effect of demonetization.
- Fixed investment (gross fixed capital formation) to GDP ratio (at current prices) is estimated to be 26.6 per cent in 2016-17 as compared to previous 29.3 percent.
The survey stated that the indirect taxes grew by 26.9 percent during April-November 2016.
- Besides, the revenue expenditure experienced a boost in the same period due to increase in the salaries of government employees by 23.2 percent with the Seventh Pay Commission and 39.5 percent increase in the grants for creation of capital assets.
As per the Consumer Price Index (CPI), inflation remained under control for the third successive financial year. The average CPI inflation was 5.9 percent in 2014-15, 4.9 percent in 2015-16 and 4.8 percent during April-December 2016.
- Based on Wholesale Price Index (WPI), inflation was 2.0 per cent in 2014-15 and lowered to (-)2.5 percent in 2015-16. During April-December 2016 it averaged to 2.9 percent. As per the report pulses contributed major risk to food inflation.
The survey stated that the growth in export was increased by 0.7 percent during April-December of 2016-17 amounting to USD 198.8 billion.
- Similarly, during April-December of 2016-17, imports declined by 7.4 per cent to USD 275.4 billion.
- Besides, trade deficit declined to USD 76.5 billion in 2016-17 (April-December) compared to USD 100.1 billion in the previous year.
- The current account deficit (CAD) too lowered in the first half (H1) of 2016-17 to 0.3 percent of GDP from 1.5 percent in H1 of 2015-16 and 1.1 percent in 2015-16 full year.
- In the first half of 2016-17, India’s Foreign Exchange Reserves increased by USD 15.5 billion.
India’s external debt declined from March 2016 by USD 0.8 billion to USD 484.3 billion in September 2016.
- The short-term debt that contributed major share in total external debt declined to 16.8 percent at end-September 2016 and foreign exchange reserves provided a cover of 76.8 percent to the total external debt stock.
Agriculture Sector Growth
As per the survey, the agriculture sector is estimated to grow at 4.1 percent in the current fiscal as compared to 1.2 percent in 2015-16 due to better monsoon.
- The total area coverage under Rabi crops was recorded to be 616.2 lakh hectare on January 13, 2017 which is 5.9 percent higher than previous year.
- Similarly the area coverage under wheat as on January 13, 2017 is 7.1 percent higher while the area coverage under gram is 10.6 percent higher than that in the corresponding week of last year.
The survey estimates a growth rate of the industrial sector to be moderate at 5.2 percent in 2016-17 from 7.4 percent in 2015-16.
The Service sector has been estimated to grow at 8.9 percent in 2016-17 which is almost similar to that in 2015-16.
Social Infrastructure, Employment and Human Development
The survey highlighted that the Parliament has passed the “Rights of Persons with Disabilities Act, 2016” to enhance the rights and entitlements of Persons with Disabilities. It envisages increasing the reservation in vacancies in government establishments from 3 percent to 4 percent for those persons with disability.
- The Survey says Apparel and Leather industry have immense opportunity for job creation for the weaker sections, especially for women and can lead to social transformation in the country.
- It points out that the capacity of the State to provide essential services such as health and education to weaker section of the society is weak due to low capacity, with high levels of corruption, clientelism, rules and red tapism.