Tags Posts tagged with "Economic Survey"

Economic Survey

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This year’s Economic Survey contains the mid-term economic analysis that is usually presented in December. Just one day prior to the Economic Survey, the Finance Minister presented to Parliament the Medium-Term Expenditure Framework statement FRBM Act, 2003.

According to the Economic Survey, India has moved to a low inflation trajectory, given that current inflation at 1.5% is running well below the 4% target.

The data presented suggests that both the consumer price index (CPI) and the whole-sale price index (WPI) have risen quickly in July mainly due to food inflation and the housing index reflecting the 7th Pay Commission recommendations, and so did the core index. Analysts now expect the inflation to rest at the 4%, which is the RBI target.

Deflationary pressure generates from fiscal tightening by States due to Ujwal DISCOM Assurance Yojana (UDAY), farm loan waivers, declining profitability of some key sectors like power and telecom, the shadow of unresolved twin balance sheet problems and transitional issues of the GST. The key to Macroeconomic stability is continued fiscal rectitude and inflation targeting. The Economic Survey cautions policymakers of a possible deflationary cycle.

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Modi government has advanced the presentation of the Budget by one month

Modi government has advanced the presentation of the Budget by one month, it has removed the separate Railways Budget and it has merged the two categories of “planned” and “non-planned” spending.

According to the Part I of the Economic Survey presented at the beginning of Budget session, growth for fiscal year 2016-17 was 7.1%. Its deflated value is due to demonetisation. Survey implicitly blames the high interest policy of the RBI for thwarting industrial growth.

According to it, the continuing deflationary trends rise from:

  • Lower investment ratio.
  • Low farm prices.
  • The cutting back on development spending by State governments.
  • The twin balance sheet problem.

The Survey mentions Uttar Pradesh which had to slash its development spending by 13% in order to waive the farm loan.

However, the situation at the Centre is improving. Exports are positive. Four major reforms are taken:

  • GST.
  • A new insolvency and bankruptcy code to deal with NPAs.
  • A new monetary policy framework.
  • Aadhaar linkage.