Economic Survey 2015-16: Highlights of the Survey

Highlights of the Economic Survey 2015-16

What is Economic Survey?

 

·         Economic Survey is an annual commentary on the state of the economy of India which is put together by Finance Ministry of India. It is a document which presents economic development during the course of the year.

Draft of the survey is prepared by	Department of Economic Affairs
Cleared by	Chief economic Advisor and the secretary Economic Affairs
Final version is vetted by	Finance secretary and Finance Minister.

·         Economic survey is presented every year shortly before presenting the Union Budget of Govt. of India.

·         According to the Economic Survey India expects its economy to grow 7-7.5% in the fiscal year to March 2017.

·         The Economic Survey, the basis for Jaitley's Budget for the fiscal year starting April 1, projected India to grow 8% in the next couple of years.

·         The survey was prepared by the finance ministry's chief economic adviser Arvind Subramanian.

Highlights:

FISCAL DEFICIT

* 2015/16 fiscal deficit seen at 3.9 percent 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

* Time is right for a review of medium-term fiscal framework

INFLATION

* CPI inflation seen around 4.5 to 5% in 2016/17

* Low inflation has taken hold, confidence in price stability has improved* Expect RBI to meet 5 percent inflation target by March 2017

* Prospect of lower oil prices over medium term likely to dampen inflationary expectations

* Low inflation has taken hold, confidence in price stability has improved

CURRENT ACCOUNT DEFICIT

* 2016/17 current account deficit seen around 1-1.5% of GDP

CURRENCY

* Rupee's value must be fair, avoiding strengthening; fair value can be achieved through monetary relaxation

* India needs to prepare itself for a major currency readjustment in Asia in wake of a similar adjustment in China

* 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

* Easiest way to widen the tax base would be not to raise exemption thresholds

* 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 bln rupees via budgetary allocations during current, succeeding years in banks

 

ü  Source: PIB/Economic Survey/TOI