Highlights of Economic Survey for IAS Examination: The most competitive civil services recruitment paper, UPSC IAS Civil Services Exam is just a few months away. It is regarded as one of the most challenging papers of the country. Millions of aspirants appear for the Civil Services Examination every year. As of now, IAS Prelims 2017 is scheduled on 18th June, 2017.
Union finance minister Arun Jaitley on Tuesday tabled the Economic Survey 2016-17 in Parliament budget session. Today we bring the Highlights of Economic Survey 2016-17 review which is important in the preparation of UPSC Exam Preparation. But first let us give you an overview on what is Economic Survey.
What is Economic Survey
Economic Survey of India is a flagship annual document of the Ministry of Finance, Government of India. It analyses the developments in the Indian economy over the previous 12 months in a review format, provides a report of the performance of major development programs and creates special focus on the policies and initiatives of the government.
The Survey brings out Government’s policy on diverse range of issues. It records development/ stagnation in various schemes, and charts country’s progress in comparison with past, with South Asian Countries, Asian Countries, and the World Economy.
Highlights of Economic Survey 2016-2017
The survey projects the economy to grow in the range of 6.75% to 7.25% in fiscal year 2017-18 in the post-demonetisation year. It says that the adverse impact of demonetisation on GDP growth will be transitional.
The Economic Survey 2016-17 advocates the concept of Universal Basic Income (UBI) as an alternative to the various social welfare schemes in an effort to reduce poverty. Here are the major highlights of Economic Survey 2016-17:
- GDP growth seen between 6.75 and 7.5 per cent year on year
- GDP growth rate at constant market prices for the current year 2016/17 is placed at 7.1 per cent
- The federal statistics office’s estimate of 7.1 per cent growth for 2016/17 likely to be revised downwards
- Service sector is estimated to grow at 8.9 per cent in 2016/17
- Industrial growth rate expected to moderate to 5.2 per cent in 2016/17 from 7.4 per cent in 2015/16
- The agriculture sector is estimated to grow at 4.1 percent in 2016/17 as opposed to 1.2 percent in 2015/16.
Next we will discuss the impact of demonetisation of Indian Economy.
The Economic Survey 2016-17 looked at the demonetisation impact from 5 indicators:
- Agricultural (rabi) sowing;
- Indirect tax revenue, as a broad gauge of production and sales;
- Auto sales, as a measure of discretionary consumer spending
- Real credit growth; and
- Real estate prices
The government says the adverse impact of demonetisation on GDP growth will be transitional. Real GDP growth in 2017-18 is projected to be in the range of 6.75 – 7.5 per cent, once the cash supply is replenished.
The Economic Survey 2017 has suggested quick remonetisation, push for digitisation, bringing land and real estate under GST ambit, reduction in taxes and stamp duties and an improved tax administration system as key reform measures to ensure long term economic benefits.
Universal Basic Income
The Survey has advocated the concept of Universal Basic Income (UBI) as an alternative to the various social welfare schemes in an effort to reduce poverty. The Survey points out that the two prerequisites for a successful UBI are: (a) functional JAM (Jan Dhan, Aadhar and Mobile) system as it ensures that the cash transfer goes directly into the account of a beneficiary and (b) Centre-State negotiations on cost sharing for the programme.
Sharp rise in prices in 2017/18 may cap monetary easing headroom. Also, Market interest rates seen lower in 2017/18 due to demonetisation.
The Consumer Price Index (CPI)-New Series inflation, which averaged 4.9 per cent during April-December 2016, has displayed a downward trend since July. The second distinctive feature has been the reversal of WPI inflation, from a trough of (-)5.1 percent in August 2015 to 3.4 percent at end-December 2016, on the back of rising international oil prices.
- Indirect taxes grew by 26.9% during April-November 2016.
- The strong growth in revenue expenditure during April-November 2016 was boosted mainly by a 23.2% increase in salaries due to the implementation of the Seventh Pay Commission and a 39.5% increase in the grants for creation of capital assets.
Lets move further with the demographic trends in indian economy.
Arvind Subramanian, pointed out that the growth boost from the demographic dividend is likely to peak within the next five years, as India’s working age population plateaus. However, there is no cause for panic as India may not see the sharp deceleration in growth experienced by the East Asian countries because its working age ratio will fall much more gradually than in other countries.
Suggests setting up public sector asset rehabilitation agency (PSARA) to take charge of large bad loans in banks. With government backing, PSAR can overcome coordination and political issues on bad loans.
Prescribes cut in individual Income Tax rates, real estate stamp duties. IT 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. Goods and Services Tax (GST): Fiscal gains from GST will take time to realise.
Flagging the “disproportionate” burden that falls on women and girls due to deficiencies in sanitation facilities, the Economic Survey said ensuring safe and adequate sanitation is becoming a serious policy issue.
“When these services are denied, women face considerable insecurity and nutritional risks. For this reason, ensuring safe and adequate sanitation, water security and hygiene—the objectives of Swachh Bharat—as part of a broader fundamental right to privacy is becoming a serious policy issue,” the survey said.
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Here we conclude our article on Highlights of Economic Survey for IAS Examination. Stay tuned with us for more information on IAS Examination.