Economic Survey report tabled by Union Finance Minister, Arun Jaitley on Tuesday projected that the India’s economy grows between 6.75 percent and 7.5 percent in the financial year beginning on April 1.
The survey was prepared by the finance ministry’s chief economic adviser Arvind Subramanian.
The survey also pointed out that demonetisation would have both short-term costs and long-term benefits as detailed in the attached table below.
Briefly, the costs include a contraction in cash money supply and subsequent, albeit temporary, slowdown in GDP growth and benefits include increased digitalisation, greater tax compliance and a reduction in real estate prices, which could increase long-run tax revenue collections and GDP growth.
On the benefits side, early evidence suggests that digitalization has increased since demonetisation.
On the cost side, effective cash in circulation fell sharply although by much less than commonly believed – a peak of 35 percent in December, rather than 62 percent in November since many of the old high denomination notes continued to be used for transactions in the weeks after November 8.
Additionally, remonetisation will ensure that the cash squeeze is eliminated by April 2017.
The survey also identified apparel and leather as two key sectors to boost employment and provide bang-for-buck in terms of job creation at a relatively low cost.
“India should reform labour laws and lower taxes on such sectors to boost productive employment. India should take advantage of the low wage structure in several states to accelerate job creation in sectors like apparel and leather,” survey said.
Here are key highlights of Economic survey 2017:
GDP growth in 2016-17 to dip to 6.5%, down from 7.6% in last fiscal
Economic growth to rebound to 6.75 to 7.5% in 2017-18
Economic Survey sees fiscal windfall from Pradhan Mantri Garib Kalyan Yojana, low oil prices.
Farm sector to grow at 4.1% in the current fiscal, up from 1.2% in 2015-16
Fiscal gains from Goods and Services Tax (GST) will take time to realise
Growth rate of industrial sector estimated to moderate to 5.2% in 2016-17 from 7.4% last fiscal
Has advocated the concept of Universal Basic Income (UBI) as an alternative to the various social welfare schemes in an effort to reduce poverty
