The Economic Survey 2014-15:

The Economy Survey 2014-15 which was released recently says that India is currently in a good position and that could propel the economy to a double-digit growth.

Highlights of the Survey:

  • It forecasts 8.1-8.5 per cent growth for 2015-16 against 7.4 per cent in the current financial year. The power of growth to lift all boats will depend critically on its employment creation potential.
  • Noting that India’s investment has been much below potential over the last few years, the survey said the private sector would find it challenging to drive growth through investments given highly leveraged
  • corporate balance sheets and a banking system under severe stress.
  • According to the Survey, India with over 3,100 start-ups is ranked as the fourth largest start-up hub in the world. This was mainly driven by ‘hyper-growth’ in the technology start-up and software product landscape.
  • The Survey has said that Software development and information technology-enabled services, including Business Process Management (BPM), software engineering R&D services and product development, have emerged as the most dynamic and vibrant sectors in India’s economy.
  • The survey said the IT-BPM industry, which posted revenues of $119 billion in 2014-15, is being driven by greater automation, expanding omni-channel presence and application of analytics across the entire value chain.
  • The Survey has said that India ranks lower than most BRICS nations in capacity for innovation.
  • According to the Global Competitiveness Report 2014-15, India’s capacity for innovation has been lower than that of many countries like the U.S., the U.K., South Korea, and even other BRICS countries (Brazil, Russia, India, China, and South Africa) except Russia.
  • Regarding the declining sex ratio in the country, the survey said the number of girls to boys at birth declined from 927 girls per 1,000 boys in 2001 to 918 girls for every 1,000 boys in 2011.
  • The Economic Survey emphasizes on the need for a national common agricultural market and identifies un-integrated and distortion ridden agricultural market as the one of the most striking problems in agriculture growth.

Recommendations made:

  • It has urged the Centre to bring down the fiscal deficit to 3% of the GDP from the current year target of 4.1%. It recommended compressing government expenditure for achieving this, saying tax collections were likely to be buoyant on account of faster growth and the rollout of the Goods and Services Tax.
  • Regarding subsidies, the Survey has said that price subsidies had not had a transformative effect on the living standards of the poor, though they helped poor households weather inflation.
  • It also found price subsidies regressive as the rich benefitted more from them than the poor.
  • Pointing to the lop-sidedness of policies, it said India’s public expenditure on agriculture was a fourth of the subsidy bill on food and fertilizer.
  • Regarding farm sector reforms, it said liberalisation of FDI in retail could help fill the massive investment and infrastructure deficit which resulted in supply-chain inefficiencies.
  • It has said that by adopting what it called the JAM Number Trinity — Jan Dhan Yojana accounts seeded with Aadhaar numbers and operated through mobile numbers — would allow the States to deliver the subsidies to the poor in a targeted and less distorted manner.
  • The Survey found that India’s manufacturing was skill-intensive, which was not in line with the country’s comparative advantage in unskilled labour and recommended rebalancing of policies.
  • Noting that the stalled projects had risen at an alarming rate during the last five years, especially in the private sector, the chief reason for declining investments, the Survey stressed the need for investment driven growth led by the public sector.
  • Highlighting the need to ensure place for women in India’s socio-economic set up, the Survey said the government has to play a pro-active role to change the “patriarchal mindset” prevalent in the country. With women accounting for nearly 48% of India’s population (Census 2011), there is need to ensure and safeguard their place in the socio-economic milieu.
  • The Survey has suggested that to promote ‘Make in India’ campaign, the government needs to shield domestic companies from foreign competition and eliminate those exemptions that work as ‘negative protection.’
  • The Survey has also called for “providing subsidies, lowering the cost of capital” and creating special economic zones for some or all manufacturing activity in particular to boost the Growth.

Sources: The Hindu, ET, PIB.

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