New Delhi : The Finance Minister Nirmala Sitharaman on Friday tabled the Economic Survey in the Lok Sabha. The Survey projected India’s economic growth at 6 per cent to 6.5 per cent in the 2020-21 financial year starting April 1, saying growth has bottomed out. The growth in 2020-21 compares to a projected 5 per cent expansion in 2019-20.
Weak global growth impacting India as well as investment slowdown due to financial sector issues had led to growth dropping to a decade low in current fiscal, it said, adding 5 per cent growth projected for 2019-20 is the lowest it could fall for now.
The Economic Survey 2019-20, observes that the Indian economy remains on the path of fiscal consolidation and fiscal prudence amidst weak global growth. Major structural reforms have been undertaken to revive growth in and spur investment. The Union Minister for Finance and Corporate Affairs, Smt. Nirmala Sitharaman tabled The Economic Survey 2019-20, in Parliament today.
The Economic Survey states that “The Medium Term Fiscal Policy (MTFP) presented with the Budget 2019-20, pegged the fiscal deficit target for 2019-20 at 3.3 per cent of Gross Domestic Product (GDP), which was further expected to follow a gradual path of reduction and attain the targeted level of 3 per cent of GDP in 2020-21.” The survey also states that MTFP projects “Central Government liabilities will come down to 48.0 per cent of GDP in 2019-20. The declining path of Central government debt was expected to continue with debt reaching 46.2 per cent of GDP and 44.4 per cent of GDP in 2020-21 and 2021-22, respectively.”
Government Finances
The Economic Survey highlights the improvement in central government finances over the last several years, with an increase in tax to GDP ratio and reduction in the Primary Deficit as a proportion of GDP. During the first eight months of 2019-20, the Revenue receipts registered growth of 13% in April-November 2019 compared to the same period last year, which was led by considerable growth in Non–Tax revenue.
Adding further, the Economic Survey notes that during 2019-20 (up to December 2019), the gross GST monthly collections have crossed the Rs. 1 lakh crore mark for a total of five times. Gross GST collections for the centre and the states were at Rs. 8.05 lakh crores in April to November 2019, which is an increase of 3.7 % over the corresponding period last year.
Within direct taxes, personal income tax has grown at 7% while major cut in Corporate Income tax rate aims to attract investment and create employment. Until November 2019, the actual realization of Net Tax Revenue to the Centre has been Rs. 7.51 lakh crore, which is 45.5 per cent of Budget Estimate (BE). Pre Budget Survey states that the actual realization of Non-debt Capital receipts to the centre has been Rs. 0.29 lakh crore which is likely to accelerate with significant pipeline of deals in process.
Inflation
The Economic Survey states that recently inflation has shown an uptick. Headline Consumer Price Index (CPI) inflation has increased from 3.7 per cent in 2018-19 (April to December 2018) to 4.1 per cent in 2019-20 for the corresponding period. Wholesale Price Index (WPI) inflation has seen an increase between 2015-16 and 2018-19. It, however, fell from 4.7 per cent in 2018-19 (April to December 2018) to 1.5 per cent during 2019-20 in the same period.
