Even as headwinds continue to hurt various sectors especially manufacturing, the Economic Survey has projected India would grow at 7 per cent in 2019-20 and maintain its fastest growing large economy tag in the world.
Guided by the dictum of "blue sky thinking", the Economic Survey 2018-19 on Thursday laid out the ambitious agenda of applying principles of behavioural economics to achieve 8 per cent of sustained GDP growth to make India a USD 5-trillion economy by 2024-25.
The Economic Survey 2018-19, tabled in Parliament, is the first for the new government, which came to power with an overwhelming mandate.
The forecast has come close on the heels of India registering slowdown in the last four quarters with the January-March period recording the slowest pace in last five years.
To this end, Chief Economic Advisor K Subramanian addressed the media on Thursday afternoon and explained what the Economic Survey stood for. He also stressed upon the underlying theme of the survey.
HIGHLIGHTS FROM THE CEA'S ADDRESS:
- With the aspirations that have been kindled among our predominantly young population, India stands at a historic moment when sustained high economic growth has become a national imperative
- Theme that underlies this economic survey is the sky blue colour. The colour used for the survey captures unfettered blue sky thinking which is what we've indulged in trying to come with the idea for this survey
- The cover design captures the idea of complementary inter-linkages between these macroeconomic variables using the pictorial description of several inter-linked gears
- In an uncertain world in which we all work, there are three key elements critical for ensuring that policies really help in reaching common people. Firstly, a vision that has already been provided by PM Modi -- of a 5 trillion dollar economy by 2024-25
- To achieve that vision, a strategic blueprint is necessary. This year the Economic Survey makes a concerted effort to try and provide that blueprint -- for achieving vision laid down by PM Modi
- The third key element is the set of tactical tools necessary to calibrate into this blueprint
- The Survey departs from traditional thinking by viewing the economy as being either in a virtuous or a vicious cycle, and thus never in equilibrium. Rather than viewing the national priorities of fostering economic growth, demand, exports and job creation as separate problems, the Survey views these macroeconomic phenomena as complementary to each other
- Given India's rich cultural and spiritual heritage, social norms play an important role in shaping the behaviour of each one of us
- The Survey, therefore, lays out an ambitious agenda for behavioural change by applying the principles of behavioural economics to several issues including gender equality, a healthy and beautiful India, savings, tax compliance and credit quality
- Volume I of the Survey, which attempts to capture "blue sky thinking", provides evidence-based economic analyses of recent economic developments to enable informed policymaking.
- Volume II reviews recent developments in the major sectors of the economy and is supported by relevant statistical tables and data. This would serve as the ready reckoner for the existing status and policies in a sector
KEY POINTS OF THE ECONOMIC SURVEY:
"The year 2019-20 has delivered a huge political mandate for the government, which augurs well for high economic growth. Real GDP growth for the year 2019-20 is projected at 7 per cent, reflecting a recovery in the economy after a deceleration in the growth momentum throughout 2018-19," the Survey said.
Maintaining that both downside risks and upside prospects persist in 2019-20, the Survey said that investment cycle is expected to pick up in FY20 on the back of higher credit growth and improved demand.
Further, the accommodative monetary policy is expected to reduce lending rates provided transmission mechanism improves. The decline in non-performing assets (NPAs) as a result of resolution of stressed assets is set to push the capex cycle.
The Modi government's flagship economic document said that political stability in the country should push the animal spirits of the economy, while higher capacity utilisation and uptick in business expectations should increase investment activity in 2019-20.
Revival of consumption would, however, be key for growth. The newly-launched PM Kisan Scheme, that promises to transfer Rs 6,000 cash in the bank accounts of rural households, is expected to push rural wages and hence demand.
"However, downside risks to consumption remain. The extent of recovery in the farm sector and farm prices will decide the push to rural consumption, which is also dependent on the situation of the monsoon," the Survey noted.