Mumbai: A first look at the Economic Survey 2016 presented to Parliament by Union Finance Minister Arun Jaitley on Friday reveals a break from the traditional mould -- it's bold, realistic and has some pathbreaking suggestions as a forerunner to the Union Budget to be presented Monday.
Authored by the chief economic adviser Arvind Subramanian it has stressed the need for maintaining the fiscal target at 3.9 per cent in the interest of credibility and stressed the fundamental task of the Budget is to preserve fiscal stability.
The survey has revised the growth figures from last year’s 8 per cent to 7-7.5 per cent for this year which is more realistic and acknowledges the dire headwinds in global economic weakness that threaten all engines of India’s growth.
It talks of the need to widen the tax base from 5 per cent to 20 per cent and suggests a reasonable tax for rich farmers and that Rs 1 lakh crore subsidy should not go to well-off farmers. It also suggests big farmers should buy urea at market prices. It highlights the need to protect agriculture from the vagaries of nature and the monsoon through the crop insurance scheme as 42 per cent of the population derive their income from agriculture.
On the issue of stressed assets of corporates and banks, the Economic Survey says the situation is not sustainable and that banks must sell off these stressed assets.
The survey sees the current account deficit at 1-1.5 per cent and says it can be comfortably financed through inflows. It also cautions the government not to depend on exports to boost the GDP.
Most important is that it batted for an easy monetary and liquidity policy saying the benign outlook for inflation, widening output gaps, the uncertainty about the growth outlook and over-indebtedness of the corporate sector all imply there is room for easing.
This is hardly likely to go down well with RBI governor Raghuram Rajan.
