Economic Survey Volume II
admits achieving 7.5% growth target for this fiscal as tough
12 Aug. 2017
Economic Survey Volume two for the year 2016-17 was tabled today in
Parliament. It said achieving the high end of the 6.75-7.5 per cent growth
projected previously will be difficult due to appreciation of rupee, farm
loan waivers and transitionary challenges from implementing GST. The
survey, however, noticed a rekindled optimism on structural reforms in
Indian economy riding on various factors such as launch of the GST;
Positive impacts of demonetization; decision in principle to privatize Air
India; further rationalization of energy subsidies and Actions to address
the Twin Balance Sheet (TBS) challenge.
The document also adds that a growing confidence that macro-economic
stability has become entrenched is evident because of a series of
government and RBI actions and because of structural changes in the oil
market have reduced the risk of sustained price increases.
However the Survey cautions that anxiety reigns because a series of
deflationary impulses are weighing on an economy, yet to gather its full
momentum and still away from its potential. These include: stressed farm
revenues, as non-cereal food prices have declined; farm loan waivers and
the fiscal tightening they will entail; and declining profitability in the
power and telecommunication sectors.
The Survey notes that the oil market is very different today than a few
years ago in a way that imparts a downward bias to oil prices, or at least
has capped the upside risks to oil prices.
The Survey said Farm loan waivers could reduce aggregate demand by as much
as 0.7 percent of GDP, imparting a significant deflationary shock to an
It also said spurt in New Tax Payers and Reported Income After
Demonetization; 5.4 lakh New Tax Payers Post-Demonetization.
Demonetizationís impact on the informal economy increased demand for
social insurance, particularly in less developed states.
For the first time today, the government presented a second or a mid-year
economic survey for the year 2016-17 highlighting the new factors that the
economy faces since the last such exercise in February.