GDP growth rate at constant market prices for the current year 2016-17 is placed at 7.1 percent.
On account of better monsoon rains, growth in the agriculture sector is estimated at 4.15% in 2016-17, significantly higher than the 1.2% in 2015-16.
Growth in the industrial sector has been estimated to moderate to 5.2% in 2016-17 from 7.4% the previous financial year.
Service sector estimated to grow at 8.9% in 2016-17.
The survey argues that any comparison with last fiscal’s 7.6% pace would be “inappropriate “ as among other factors that influenced growth this year was that global oil prices stopped declining, lessening the updraught that soft energy prices lend to the economy.
It contends that latest growth estimates of the World Bank and the IMF, trimed its forecast to 7% from 7.6% and the IMF by 1% point to 6.65, both citing demonetisation as reason reflects a higher baseline assumption and ought be compared only on the extent of change in estimate.
Effects of Demonetisation:
Adverse impact of demonetisation on GDP growth will be transitional.
Demonetisation to affect growth rate by 0.25-0.5 per cent, but will generate long-term benefits.
Demonetisation may affect supplies of certain agricultural products like sugar, milk, potatoes and onions.
The remonetisation will ensure that the cash squeeze is eliminated by April 2017.
The survey recommends fast, demand – driven remonetisation, futher tax reforms , including bringing landand real estate under the ambit of the GST and reducing tax rates and stamp duties.
Fiscal Deficit:
Expecting fiscal windfall from Pradhan Mantri Garib Kalyan Yojana and low oil prices.
Fiscal gains from Goods and Services Tax (GST) will take time to realise.
The 13-year old Fiscal Responsibility and Budget Management (FRBM) Act needs to be modified to provide fiscal policy direction for “the India of tomorrow”.
The survey called for a need to set up a government – owned asset reconstruction company, PARA (Public Sector Asset Rehabilitation Agency) to resolve twin balance sheet problem i.e, over- leveraged companies and the rising bad loans in public sector banks.
Taxation:
Economic Survey Prescribes cut in individual I-T rates and real estate stamp duties.
Income Tax net could be widened gradually by encompassing all high income earners.
Time table for cutting corporate tax should be accelerated.
Universal Basic Income:
It is a form of social security in which all citizens or residents of a country regularly receive an unconditional sum of money, either from a government or some other public institution, in addition to any income received from elsewhere.
The survey floats the idea of a ‘universal basic income’ by implicitly suggesting that existing welfare schemes can be whittled down or done away with.
