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Economic Survey 2015-16- "Wiping every tear from every eye"

Tabled by- Shri Arun Jately

Economic Survey is an annual commentary on the state of the economy of India which is put together by Finance Ministry of India. It is a document which presents economic development during the course of the year.

  • The draft of the survey is prepared by Department of Economic Affairs and cleared by Chief economic Advisor(Arvind Subramanian) and the secretary Economic Affairs.
  • The final version is vetted by Finance secretary(Rajiv Mehrishi) and Finance Minister(Arun Jately).



Here are the Key Highlights of Economic Survey: 

FY15 ESTIMATES 

* FY15 fiscal deficit of 4.1% of GDP will be met
* FY15 CAD estimated at 1.3% of GDP
* States showed fall in share of mfg in their GDP FY15
* April-December major subsidies up 12.5% on year
* Services sector clocked double-digit growth in FY15
* Equity markets continued to do well in FY15
* FY15 price subsidy pegged at 4.24% of GDP

FY16 OUTLOOK 

* 8.5% GDP growth in FY16 in realm of possibility
* 8% economic growth on assumption of favourable monsoon
* FY16 econ growth seen 8.1-8.5%
* External sector outlook most favourable since      2008
* Liquidity conditions seen comfortable in FY16
* Economy to over perform on inflation, make        way for rate cut
* FY16 GDP deflator seen 2.8-3.0%
*Outlook for domestic macro economic                  parameters optimistic
* CAD seen less than 1.0% of GDP in FY16
* Outlook favourable for CAD, its financing
* Inflation to be 0.5-1.0% lower than RBI's            target
* FY16 CPI inflation to be in 5.0-5.5% range

INFLATION, GROWTH 

* Upside risk to inflation from monsoon, crude price
* Inflation showed declining trend during April-December
* Inflation not seen up significantly from current level
* Monetary framework to show commitment to low inflation
* Inflation likely to remain in 5.0-5.5% range

FISCAL HEALTH 

* Govt remains committed to fiscal consolidation
* Need medium to long-term fiscal policy framework
* Govt borrow should fund invest, not for current spend
* Fiscal consolidation quality key to make it sustainable
* Urge govt to aim to bring dn fiscal gap to 3.0% of GDP
* Higher tax share to states won't impact fiscal discipline
* Must start expenditure control process to cut fiscal gap

INDUSTRY, INFRASTRUCTURE 

* Divest mop-up so far Rs 240 billion this FY
* Coal price reform must factor in impact on power price
* Banking hobbled by policy that impedes competition
* Potential for further gains from coal pricing reforms
* Public invest in railways to be key to growth revival
* High rail freight rates hinder industry competitiveness
* Private investment must remain primary engine of longrun growth
* Railway freight rates among the highest in the world

REFORMS 

* Link post office with Aadhaar-based benefit transfers

AGRICULTURE 

* Need national common market for farm goods
* Need law amendment for trading in some agri commodities
* Market distortion key problem in farm growth
* FCI rejig panel report ideas useful for food policy
* Rs 107.82 billion food subsidy given as of January 9, up 20%
* Agricultural strategy must focus on raising yield, productivity
* Food grain output 2014-15 seen 257.07 mn tn

FINANCIAL SECTOR, MARKETS 

* Must remove market access barriers to boost services sector
* Must boost capital market, bond financing going forward
* Capital, labour, land market distortions hurting manufacturing

MISCELLANEOUS 

* Enhanced revenue generation remains govt priority
* Jan Dhan plan, Aadhaar & mobile (JAM) to help target subsidies
* Current study shows rich benefiting more from subsidy
* Subsidy doesn't seem best weapon to fight poverty
* Scope for big-bang reforms now
* FY15 price subsidy pegged at 4.24% of GDP
* May have to cut some spending FY15 to meet fiscal gap aim
* India forex reserves 2nd largest among economies with CAD
* Trade performance signals good time to scrap gold curbs
* PPP model should be revitalised
* Favour greater public invest in railways
* Fall in crude prices has compressed import bill
* Double digit economic growth trajectory now a possibility
* Potential for large gains from coal pricing reforms
* Skill development, employment major challenge
* Subsidies via direct benefit transfers laudable goal
* Investment stuck in stalled projects at about 7% of GDP
* Need to conclude monetary policy framework agreement
* Rural penetration of IT services to drive 'Make in India'
* India must adhere to medium term fiscal gap target of 3%
* Will soon scale up renewable energy capacity to 170 GW
* Private investment must be engine of long-term growth
* Insurance penetration up to 3.9% 2013 from 2.3% in 2000
* GST, direct benefit transfers to be game changers
* Evidence shows India recovering, but not yet surging
* PSUs, especially railways, must lead public investment
* Foreign portfolio flows have stabilised the rupee
* Low inflation makes space for easing monetary condition
* Recommend retail FDI reform to better farm supply chain
* Commercial banks saw increase in gross NPAs
* India ranks well above the mean for BBB invest grade
* See some stress on asset quality of commercial bank
* Steps taken by RBI played key role in liquidity management
* GST, direct benefit transfer to be game changers
* India in a sweet spot for big bang reforms now
* All states urged to drop fruits, vegetables from APMC

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