Economic Survey Highlights….Growth expected at 8% growth in 2015/16…
India can increase investments without borrowing more, a key government report said on Friday, in an indication that Finance Minister Arun Jaitley will stick to debt targets in his maiden full-year budget on Saturday.
The economic survey, the basis for Jaitley’s budget for the fiscal year starting April 1, forecast the economy would grow by 8.1-8.5 percent under a new calculation method that makes India the world’s top-growing big economy.
The survey was prepared by the finance ministry’s chief economic adviser Arvind Subramanian.
Following are the highlights of the survey:
FISCAL DEFICIT:
* India must meet its medium-term fiscal deficit target of 3 percent of GDP
* Government will adhere to fiscal deficit target of 4.1 percent of GDP in 2014/15
* Govt should ensure expenditure control to reduce fiscal deficit
* Expenditure control and expenditure switching to investment key
GROWTH:
* 2015/16 GDP growth seen at over 8 pct y/y
* Double digit economic growth trajectory now a possibility
* Economic growth at market prices seen between 8.1 – 8.5 percent in 2015/16 on new GDP calculation formula
* Total stalled projects seen at about 7 percent of GDP, mostly in private sector
REFORMS:
* There is scope for big bang reforms now
* India can increase public investments and still hit its borrowing targets
INFLATION:
* Inflation shows declining trend in 2014/15
* Inflation likely to be below central bank target by 0.5 – 1 percentage point
* Lower inflation opens up space for more monetary policy easing
* Govt and central bank need to conclude monetary framework pact to consolidate gains in inflation control
* Consumer inflation in 2015/16 likely to range between 5-5.5 percent
FISCAL CONSOLIDATION:
* Govt remains committed to fiscal consolidation
* India can balance short-term imperative of boosting public investment to revitalize growth with fiscal discipline
* Outlook for external financing is correspondingly favourable
CURRENT ACCOUNT DEFICIT:
* Estimated at about 1.3 percent of GDP in 2014/15 and less than 1.0 percent of GDP in 2015/16
SUBSIDIES:
* Overhauling of subsidy regime would pave the way for expenditure rationalisation
LIQUIDITY:
* Liquidity conditions expected to remain comfortable in 2015/16
Source: Reuters