Ahead of the Union Budget on Saturday, Finance Minister Arun Jaitley tables Economic Survey 2015 report;economic growth in India seen at 8.5 pct in 2015-16 – indicating scope for big bang reforms.
As per the Economic Survey 2015 tabled in Parliament today, India must adhere to medium-term fiscal deficit target of 3 percent of the country’s gross domestic product (GDP).
Key Highlights of Economic Survey
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.
Following are the highlights of the report:
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
Note
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