The Indian economy, which is buffeted with several challenges, is expected to grow 6-6.5 percent in 2020-21, according to the Economic Survey tabled in Parliament on Friday. This GDP growth forecast is seen as somewhat ambitious, given that Indian economy is widely expected to close current fiscal with 5 per cent growth. The latest Economic Survey for 2019-20 was tabled in both Houses of Parliament by Finance Minister Nirmala Sitharaman.
Wealth creation goal With 'Wealth Creation' as the theme for this year's edition, the latest Economic Survey, which serves as the report card of the performance of the economy, has come up with ten new ideas on how to fulfil this wealth creation goal. An important suggestion is the Survey calling for "aggressive disinvestment" of Central Public Sector Enterprises (CPSEs) to bring in higher profitability, promote efficiency, increase competitiveness and promote professionalism. It may be recalled that last year the Economic Survey for 2018-19 was imbued by the spirit of the “unfettered blue sky thinking” to achieve the rainbow dream to become a $ 5 trillion economy by 2025. The latest Survey builds on the India's declared aspiration of becoming a $ 5 trillion economy.
Govt intervention The Survey also focused on the Government interventions, and said that though the interventions are well-intended, they often end up undermining the ability of the markets to support wealth creation, and they lead to outcomes opposite those intended. It listed four examples of anachronistic government interventions cited by the Survey are Essential Commodities Act related measures like blanket stock limits, Drug Price Control under ECA, Debt Waivers and Government intervention in grain markets.
The Survey suggests that Government must systemically examine areas of needless intervention and undermining of markets. At best, the Economic Survey, prepared by the Chief Economic Advisor in the Finance Ministry Krishnamurthy Subramanian and his team, serves only as a policy guide and could only hint the path that Government could take in the upcoming budget as regards fiscal management. The Government is not bound to follow the policy prescriptions recommended in the Survey. The Economic Survey for 2019-20 delves deep into the reasons for current economic slowdown while putting out a strategy for the manufacturing sector to focus on 'assemble in India' paradigm in the coming days.
Current Slowdown This Survey is being presented at a time when the country is faced with a economic slowdown and the budget is widely expected to sharply revise downwards the overall tax revenue projection by Rs 1-1.5 lakh crore so as to arrive at a realistic target. If the tax revenue projection are cut on Saturday, this will be the second time that the projection will be changed for the current fiscal year. Direct taxes collection (net of refunds) had declined 5.17 per cent till the previous week of January in 2019-20. This was due to whopping Rs 1.41 lakh crore refund.
Government had collected Rs 7.32 lakh crore for this period (Rs 7.71 lakh crore). Direct tax collection target for 2019-20 was Rs 13.35 lakh crore. This means government had to collect Rs 6 lakh crore in two months. The GST collections have also been less than projected in most of the months this fiscal.
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