While fingers are crossed whether the NDA regime will keep up its reformist zeal in the forthcoming budget — with general elections looming in 2019 — Economic Survey 2017-18 has painted a largely glowing picture of the country’s economy. It has projected that the series of major reforms undertaken last year will push up real GDP growth to 6.75 percent in current fiscal. If the momentum is kept up, growth rate will rise to 7-7.5 percent in 2018-19, which will reinstate India as the world’s “fastest growing major economy”. The economy accelerated in the second half of 2017-18 due to GST, bank recapitalisation, liberalisation of foreign direct investment and higher exports, the survey states. In fact, India, despite its slowdown last year, can be rated as among the best performing economies because its average growth in past 3 years has been 4 percentage points higher than the global figure. Inflation has been largely under control, while the government’s massive recapitalisation exercise has infused some market confidence about tackling the problem of huge non-performing assets (NPAs) of banks. Along with this, there has been a welcome move to reduce corporate debt through tighter insolvency and bankruptcy laws. The survey is bullish on GST (Goods and Services Tax), calling it a boon for tax collection because there has been a 50 percent increase in the number of registered indirect taxpayers in the first year of its rollout. There has also been an increase in the number of direct taxpayers, which can be attributed to the Prime Minister’s demonetisation move in making transactions digital and thereby bringing in more taxpayers. The survey plumps for an export oriented economy, furnishing data to argue that states which export more to other states or countries get richer. The survey claims that in the export sector, inequality is far less than otherwise — the top 1 percent of Indian firms account for 38 percent of exports, which is relatively more skewed in many other countries. This is all very well, but the fact remains that India has been facing a continuing slack in export demand in last 3-4 years, which in turn has hurt investment. Where the government can make a real difference is in trying to improve domestic demand. A large part of this can come about by raising industrial capacity, which is still stagting at around 70 percent on average.
Rosier picture of economy
The Economic Survey has red flagged rising crude oil prices which has been impacting the import bill strongly. Oil prices rose 11.4 percent in 2016-17 and may rise further by 16 percent in 2017-18. However, some economists are more worried about Chinese goods flooding Indian markets, with domestic manufacturers simply uble to withstand the onslaught so far. They point to the country’s trade deficit with Chi presently translating to nearly 2.75 percent of our GDP. The survey has struck a cautious note about “a pause in fiscal consolidation”, which indicates that the target of keeping fiscal deficit within 3.2 percent of GDP may be slightly overshot in 2017-18. Considering Fince Minister Arun Jaitley’s stress on keeping a tight rein on fiscal deficit, the slippage may not be more than 3.5 percent though. While painting a rosier picture of the economy, the survey also seeks to drive home a serious message on the social front by being brought out in pink colour this year. While the colour pink symbolises support to the growing worldwide movement to end violence against women, the survey report highlights the continuing challenge of adverse sex ratio (of females to males) due to Indian society’s over-riding preference for a son — translating to a yawning imbalance of 6.3 crore “missing women”. In terms of employment, there is a worrisome statistic showing the declining proportion of working women from 36 percent in 2005-06 to 24 percent in 2015-16. Another interesting point is that due to more men from villages migrating to towns in search of jobs, the country is witnessing a growing ‘feminisation’ of its agriculture sector with more women working the fields as labourers, cultivators and entrepreneurs. Governments should take advantage by providing better access to women in key resources like land, water, farm credit, technology and training, the survey suggests. One continuing problem is women’s lack of control over the reproductive process, with the survey noting that almost 47 percent of women still do not use any contraception at all; while of those who do, less than one-third use female-controlled reversible contraception. Overall, there has been improvement in 12 of the 17 parameters related to women, like increase in median age at first childbirth and women taking decisions about their own health; it is also gratifying that the Northeast States have been consistently performing better on this front compared to other States. The survey, while appreciating Central schemes like ‘Beti Bachao, Beti Padhao’ and ‘Sukanya Samridhi Yoja’, has called upon the States to do much more towards increasing opportunities for women in education and employment. But then, this is part of the larger problem of poor spending on education, public health and welfare of the poor, which presently stands at only 6.6 percent of the country’s GDP. The targeting of beneficiaries under various welfare schemes also leaves a lot to be desired. Farm distress and jobless growth continue to be major challenges as well. How these are dealt with this year will influence the country’s politics in 2019.