Amidst continuous confusing signals about the health of Indian economy, the Economic Survey forecasts give a sigh of relief. It foresees India's GDP to grow by 7 to 7.5 per cent in 2018-19, which may reposition it as one of the fastest growing economies of the world. Statistics indicate that the ill effect of demonetisation has waned and the GST is moving towards stability. But, the survey is ambiguous about the revival of the informal sector, which has been the worst hit by the two disruptions.
The statistics are, however, encouraging — higher growth, rising exports, bulging foreign exchange reserves, increasing number of taxpayers, lower inflation and cautious borrowings. While the 3.2 per cent fiscal deficit target for the current financial year seems achievable, it would be difficult for the government to adhere to the fiscal consolidation roadmap next year due to the impending general election.
The survey has rightly sought policy focus on the three key sectors — education, employment and agriculture. The last two sectors are also politically crucial and their revival would depend on huge public investments. The stagnant agricultural income is fast becoming a concern for the government, which has promised a doubling of farmers' income by 2022.
The survey has also pointed out that climate change is squeezing farmers' income by almost a quarter and the decline could be arrested by improving irrigation and the use of modern technologies. Expectedly, Finance Minister Arun Jaitley is likely to announce a major bounty for rural India in his Budget speech on Thursday.
Although, average inflation is expected to be ‘moderate' in 2017-18, the survey has cautioned that a spike in global crude oil prices may stoke it. Food inflation has been on the rise in recent months. The government needs to join hands with states in checking rising prices before it becomes a menace.
Actions against hoarding and black marketing cannot be successful without effective coordination with states. The survey has rightly located the spirit of ‘cooperative federalism' in the GST Council, which exhibited excellent vertical cooperation between the Centre and states during the GST negotiations and its implementation.
New Delhi ought to develop an institutional mechanism within the council for effective implementation of its developmental programmes.
While economists could be differing over their expectations based on numbers and the threat perception, the commoners only hope that the glowing numbers would get reflected in their lives too. Whatever it is going to be we should remember that the forecast is based on trends.
