Finance Minister Nirmala Sitharaman tabled the Economic Survey 2018-19 in the Parliament one day before the government is set to present its full budget after coming to power for a second term.
Prepared by Chief Economic Adviser Krishnamurthy Subramanian, the survey predicts 7% GDP growth in FY20 on stable macro conditions. It has pegged fiscal deficit at 5.8% in FY19 as against 6.4% in FY18. However, it also says that slow growth, GST, and farm schemes would pose challenges on the fiscal front.
The Economic Survey summarises and reviews the performance of the Indian economy in the last year, while projecting its health and pointing out challenges for the coming year. This is KV Subramanian’s first Economic Survey.
To become a $5 trillion economy by 2025, the survey says that India needs to sustain a GDP growth rate of 8%.
The GDP growth in FY20 is seen picking up on the back of private investment, according to the survey.
The Economic Survey says that India continues to be the fastest growing major economy in the world, despite the fall in world output growth to 3.6% in 2018. (The world output is total amount of output produced by the individual countries in the world. In other words, it is like the GDP of the world.)
The survey also says investment will be the key driver to sustain growth. “The survey makes a case for investment-driven “virtuous cycle” to sustain growth at 8%. Investment is the key driver of simultaneous growth in demand, jobs, exports and productivity. The survey says that policymaking needs a clear vision to becoming a $5 trillion economy and a strategic blueprint along with tactical tools for constant recalibration based on real time data,” KV Subramanian said.
The survey also outlines the importance of MSMEs in spurring growth and job creation. “Indian MSMEs need to be freed from the shackles that convert them into dwarfs. MSMEs need to be seen as a source of innovation, growth, and job creation,” Subramanian added.
One of the biggest hurdles to the $5 trillion economy vision is poor enforcement of contracts and dispute resolution. Steps to speed up legal process should be a top priority. The Economic Survey shows that required efficiency gains and appointments are large but achievable.
The economic survey blames the January-March slowdown partly on poll-related uncertainty and the NBFC crisis. It requests the government to not compromise on fiscal gap aim to fund new schemes.
In terms of exports, the survey says that increased uncertainty over trade tensions and lower global growth may hit exports and says that aggressive export strategy must be part of investment-driven model.
According to the survey, slow growth, GST, and farm schemes may pose challenges on the fiscal front in FY20.
Touching upon data, the Economic Survey says that in recent years, the world has witnessed an information explosion - exponential increases in the amount of published data.
Calling for government intervention, it says, “While private sector does a good job of harnessing data where it is profitable, government intervention is needed in social sectors of the country where private investment in data remains inadequate. Governments already hold a rich repository of administrative, survey, institutional and transactions data about citizens, but these data are scattered across numerous government bodies.”
The survey says that data should be "Of the People, By the People, For the People". The marginal cost of data is decreasing while marginal benefit of its usage is increasing and utilising the rich repository of government data can have limitless applications.