Chief Economic Advisor Arvind Subramanian while addressing the media after tabling of Economic Survey ahead of the budget day, defended the government's demonetisation move as a radical social engineering measure to weed out the black money.
Volatility from both US election and demonetisation has been weathered by the economy, Subramanian added.
The past year has had robust macroeconomic stability, reserves at all time high, CPI inflation has come down, Arvind Subramanian said.
Here are the highlights of the Economic Survey:
- GDP growth for next fiscal pegged at 6.75-7.5 per cent
- Prescribes cut in individual I-T rates, 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
- Tax administration could be improved to reduce discretion and improve accountability
- Growth to return to normal as new currency comes in circulation
- Demonetisation to affect growth rate by 0.25-0.5 pc, but to have long-term benefits
- GST, other structural reforms should take the trend growth rate to 8-10 pc
- Fiscal windfall likely from Pradhan Mantri Garib Kalyan Yojana, low oil price
- Farm sector to grow at 4.1% this fiscal, up from 1.2% last year
- Fiscal gains from GST will take time to realise
- Demonetisation may affect supplies of certain agricultural products like sugar, milk, potatoes and onions
- Growth rate of industrial sector to moderate to 5.2% this fiscal, from 7.4% last fiscal
- Efforts to collect taxes on disclosed and undisclosed wealth should not lead to tax harassment
- Universal Basic Income Scheme is an alternative to plethora of state subsidies for poverty alleviation.
- Demonetisation should be followed up with fast and demand-driven remonetisation, tax reforms, GST and lower taxes
- These would allow in returning to trend growth in 2017-18, making India the fastest-growing major economy
- Middle class to get affordable housing due to fall in real estate prices
- Remonetisation to eliminate cash crunch by April 2017
- Balance sheet problem of over-leveraged companies and bad-loan-encumbered banks has continued to fester
- A centralised public sector asset rehabilitation agency needs to look after the largest, most difficult cases and make politically tough decisions to reduce debt
- Addressing the twin balance sheet problem will be vital
- Suggests incentivising states for good fiscal performance
- Demographic dividend to peak in next five years
- Fiscal activism embraced by advanced economies not relevant for India
- Swachh Bharat to promote a broader fundamental right to privacy for women
- Service sector estimated to grow at 8.9% in 2016-17.