Day before presenting Union Budget, Finance Minister Nirmala Sitharaman tabled the Economic Survey in Parliament today. Latest media reports suggest that the Economic Survey expects 7 per cent GDP growth the present financial year. The Economic Survey that is seen as the roadmap for the government’s financial policies says that the January-March slowdown was due to poll-related uncertainty. General fiscal deficit seen at 5.8% in FY19 vs 6.4% in FY18.
It comes at a time when the economy is facing headwinds in manufacturing and agriculture sectors that saw growth rate slowing down to 5-year low of 5.8 per cent in the January-March quarter. The Economic Survey, the annual report of the Indian economy for the year gone by (2018-19), also comes at a time when some critics sais that the Modi government in its first term delivered a job less growth and it needed to re-invent to propel the economy and create jobs.
There are also concerns that the government might this year again slip on the fiscal deficit front given sluggish GST collections and lower-than-expected growth in direct taxes. After breaching the Rs 1 lakh crore mark in goods and services tax (GST) collections for two consecutive months, indirect tax mop-up in June fell marginally to Rs 99,936 crore.
However, the average monthly collection for the April-June quarter stood at Rs 1.04 lakh crore, up by 7 per cent from the corresponding period of last year. There are also concerns with regard to lower than expected direct tax collection due to slow down in the economy.
The survey comes weeks after Subramanian's predecessor Arvind Subramanian in a research paper claimed India was overestimating its economic growth rate by up to 2.5 percentage points. The incumbent CEA has not commented on the findings of the research papers even as government bodies like EAC to the Prime Minister have not agreed with the conclusion. Also, questions have been raised on the credibility of the methodology of collecting data used to project macro economic numbers and the survey will be critically seen if it addresses these challenges.
The Economic Survey serves as a useful policy document since it also contains policy ideas, key statistics on economic parameters and in-depth research on macro and sectoral trends. Often, the survey serves as a policy guideline for the Union Budget. However, its recommendations are not binding on the government.
(With inputs from PTI)