Fiscal Outlook For This Year Is Uncertain, Says Government’s Economic Survey

The government on Friday presented its mid-year economic survey which notes that India is moving towards structurally low inflation, leaving room for further monetary easing. The comments are in keeping with the government’s demand for lower interest rates in the hope that this will help boost growth in the economy. Achieving the upper end of the targeted growth band of 6.5-7.5 percent in the current fiscal will be a challenge, the Economic Survey added. It also cautioned that the fiscal outlook for the current year is uncertain.

Economic Survey On Government Finances

• Fiscal outlook for this year is uncertain. Downside risks include reduced tax revenues from slower nominal growth than expected
• Risks include reduced GST collections on account of lower GST rates; transitional challenges
• Risk from reduced spectrum receipts on account of structural jolt to incumbent firms
• Higher expenditure from the 7th Pay Commission could pose a challenge

Economic Survey On Inflation

• India is undergoing a structural shift in the inflationary process
• Farm loan waivers could reduce aggregate demand by as much as 0.7 percent of GDP, imparting a significant deflationary shock to the economy
• Scope for monetary easing is considerable

Economic Survey On Growth

• Achieving upper end of 6.5-7.5 percent growth band will be challenging
• Growth in Indian economy still away from potential

Also Read: India's Mid-Year Economic Survey Says Fiscal Outlook Clouded

Economic Survey On External Debt And Trade

• The cross country comparison of external debt indicated that India continues to be among the less vulnerable countries.
• "Green shoots have started to appear in the trade horizon" with world trade growth projected at 3.9 percent in 2018. India's trade growth is also expected to pick up as a result.