Jaitley presents Economic Survey ahead of Union Budget

The Economic Survey 2016-17 presented in the Parliament today by the Union Finance Minister Arun Jaitley states that such a sustenance is despite continuing global sluggishness.

It says,

• "As per the advance estimates released by the Central Statistics Office, the growth rate of GDP at constant market prices for the year 2016-17 is placed at 7.1 percent, as against 7.6 percent in 2015-16. This estimate is based mainly on information for the first seven to eight months of the financial year. Government final consumption expenditure is the major driver of GDP growth in the current year.
• Fixed investment (gross fixed capital formation) to GDP ratio (at current prices) is estimated to be 26.6 percent in 2016-17, vis-à-vis 29.3 percent in 2015-16.
• For 2017-18, it is expected that the growth would return to normal as the new currency notes in required quantities come back into circulation and as follow-up actions to demonetisation are taken. On balance, there is a likelihood that Indian economy may recover back to 6 ¾ per cent to 7 ½ per cent in 2017-18.

Fiscal

• Indirect taxes grew by 26.9 percent during April-November 2016.
• The strong growth in revenue expenditure during April-November 2016 was boosted mainly by a 23.2-percent increase in salaries due to the implementation of the Seventh Pay Commission and a 39.5-percent increase in the grants for creation of capital assets.

Industry

• Growth rate of the industrial sector is estimated to moderate to 5.2 percent in 2016-17 from 7.4 percent in 2015-16. During April-November 2016-17, a modest growth of 0.4 percent has been observed in the Index of Industrial Production (IIP).

Prices

• The headline inflation as measured by Consumer Price Index (CPI) remained under control for the third successive financial year. The average CPI inflation declined to 4.9 percent in 2015-16 from 5.9 percent in 2014-15 and stood at 4.8 percent during April-December 2015.
• Inflation based on Wholesale Price Index (WPI) declined to (-) 2.5 percent in 2015-16 from 2.0 per cent in 2014-15 and averaged 2.9 percent during April-December 2016.
• Inflation is repeatedly being driven by narrow group of food items, of these pulses continued to be the major contributor of food inflation.
• The CPI-based core inflation has remained sticky in the current fiscal year averaging around 5 percent.

Trade

• The trend of negative export growth was reversed somewhat during 2016-17 (April-December), with exports growing at 0.7 percent to $198.8 billion. During 2016-17 (April-December) imports declined by 7.4 percent to $275.4 billion.
• Trade deficit declined to $76.5 billion in 2016-17 (April-December) as compared to $ 100.1 billion in the corresponding period of the previous year.
• The current account deficit (CAD) narrowed in the first half (H1) of 2016-17 to 0.3 percent of GDP from 1.5 percent in H1 of 2015-16 and 1.1 percent in 2015-16 full year.
• Robust inflows of foreign direct investment and net positive inflow of foreign portfolio investment were sufficient to finance CAD leading to an accretion in foreign exchange reserves in H1 of 2016-17.
• In H1 of 2016-17, India’s foreign exchange reserves increased by $15.5 billion on BoP basis.
• During 2016-17 so far, the rupee has performed better than most of the other emerging market economies.

External debt

• At end-September 2016, India’s external debt stock stood at $484.3 billion, recording a decline of $0.8 billion over the level at end-March 2016.
• Most of the key external debt indicators showed an improvement in September 2016 vis-à-vis March 2016. The share of short-term debt in total external debt declined to 16.8 percent at end-September 2016 and foreign exchange reserves provided a cover of 76.8 percent to the total external debt stock.
• India’s key debt indicators compare well with other indebted developing countries and India continues to be among the less vulnerable countries.

Agriculture

• Agriculture sector is estimated to grow at 4.1 percent in 2016-17 as opposed to 1.2 percent in 2015-16; the higher growth in agriculture sector is not surprising as the monsoon rains were much better in the current year than the previous two years.
• The total area coverage under Rabi crops as on 13.01.2017 for 2016-17 is 616.2 lakh hectares which is 5.9 percent higher than that in the corresponding week of last year.
• The area coverage under wheat as on 13.01.2017 for 2016-17 is 7.1 percent higher than that in the corresponding week of last year. The area coverage under gram as on 13.01.2017 for 2016-17 is 10.6 percent higher than that in the corresponding week of last year.

Social Infrastructure, Employment and Human Development

• The Parliament has passed the 'Rights of Persons with Disabilities Act, 2016. The Act aims at securing and enhancing the rights and entitlements of Persons with Disabilities. The Act has proposed to increase the reservation in vacancies in government establishments from 3 percent to 4 percent for those persons with benchmark disability and high support needs."