Economic survey scales down growth figures
NEW DELHI (The Statesman/ ANN) - First mid-year survey report tabled in Parliament projects uncertain fiscal outlook
Highlighting an uncertain fiscal outlook for the current financial year, the Economic Survey Part II for FY 2016-2017, tabled in Parliament on Friday, said attaining 6.75-7.5 per cent GDP growth projected previously will be difficult due to farm loan waivers, stressed farm revenues and declining profitability in the power and communication sectors.
For the first time ever, the government presented a second or a mid-year Economic Survey, highlighting the new factors that the economy faces since the last such exercise at the beginning of the year. Addressing the media, Chief Economic Adviser Arvind Subramanian started off the presentation saying “It is going to be a boring survey. So today, I would be more of a ‘professor’ rather than a ‘maverick political economist’."
The survey, authored by him, noted that farm loan waivers could reduce economic demand by up to 0.7 per cent of GDP. Warning against providing such waivers, the survey said if all states start offering them, the total burden could swell to Rs 2.7 lakh crore and cause deflationary shock to the economy. Subramanian said, “The impact of the farm loan waiver will be deflationary and not inflationary. The Centre will not relax fiscal borrowing limits. Therefore, the states will either have to cut expenses, or raise taxes.”
In its growth forecast for the year, the survey said, “The balance of risks seems to have shifted to the downside. The balance of probabilities has changed accordingly, with outcomes closer to the upper end having much less weight than previously.”
Rekindling optimism on economic reforms, Subramanian asserted, “The Goods and Services Tax (GST) is an astonishing feat of politics, administration and technology, which has been in the making for nearly a decade’’