...

New Economic Survey estimates Indian economy to grow at 7.1% in 2015-16

Other News Materials 2 February 2017 11:39 (UTC +04:00)
The new Economic Survey of India for 2016-17 presented in the Parliament on 31 January 2017 estimated the India’s GDP at constant market prices for the year 2016-17 will grow at 7.1% as against 7.6% in 2015-16
New Economic Survey estimates Indian economy to grow at 7.1% in 2015-16

The new Economic Survey of India for 2016-17 presented in the Parliament on 31 January 2017 estimated the India’s GDP at constant market prices for the year 2016-17 will grow at 7.1% as against 7.6% in 2015-16. It was expected that the growth would return to normal in 2017-18 as the new currency notes in required quantities were introduced into circulation and the follow-up actions to demonetisation were taken.

According to the Survey, the year was marked by some tumultuous external developments. In the short-run, world GDP growth was expected to increase because of a fiscal stimulus in the United States but there were considerable risks. These included higher oil prices, and eruption of trade tensions from sharp currency movements, especially involving the Chinese yuan, and from geo-political factors. Another serious medium-term risk was an upsurge in protectionism that could affect India’s exports.

The Survey mentioned that despite continuing global sluggishness, the Indian Economy has sustained a macro-economic environment of relatively lower inflation, fiscal discipline and moderate current account deficit coupled with broadly stable rupee-dollar exchange rate. Foreign exchange reserves were at comfortable levels and have risen to US$ 360 billion at end-December 2016. FDI inflows, which grew to 3.2% of GDP in the second quarter of FY 2017 showed an upsurge and helped the balance-of-payments.

India has managed to maintain export competitiveness despite capital inflows and inflation that has been greater than in trading partners. Reflecting this, India’s global market share in manufacturing exports has risen. For the period 2016-17 (April-December), exports grew by 0.7% to US$ 198.8 billion and imports declined by 7.4% to US$ 275.4 billion. Trade deficit declined to US$ 76.5 billion in 2016-17 (April-December) as compared to US$ 100.1 billion in the corresponding period of the previous year. India’s external debt stock stood at US$ 484.3 billion (end-Sept 2016), recording a decline of US$ 0.8 billion over the level at end-March 2016.

The Economic Survey noted that Agriculture sector was estimated to grow at 4.1% in 2016-17 because of the good monsoon rains compared to the previous two years. Growth rate of the industrial sector was estimated to moderate to 5.2% in 2016-17 from 7.4% in 2015-16. The eight-core infrastructure supportive industries, viz. coal, crude oil, natural gas, refinery products, fertilizers, steel, cement and electricity registered a cumulative growth of 4.9% per cent during April-November 2016-17. The production of refinery products, fertilizers, steel, electricity and cement increased substantially, while the production of crude oil, natural gas fell during April-November 2016-17. Coal production attained lower growth during the same period. Service sector was estimated to grow at 8.9% in 2016-17, almost the same as in 2015-16. Significant pick-up in public administration, defense and other services, boosted by the pay-outs of the Seventh Pay Commission is estimated to push up the growth in services.

Against the backdrop of robust macro-economic stability, 2016-17 was marked by two major domestic policy developments-the passage of the Constitutional Amendment, paving the way for implementing the transformational Goods and Services Tax (GST), and the action to demonetize the two highest denomination notes. The GST will create a common Indian market, improve tax compliance and governance, and boost investment and growth; it is also a bold new experiment in the governance of India’s cooperative federalism.

India seems to be a demographic sweet spot with its working age population projected to grow by a third over the next three decades providing it a potential the growth boost from the demographic divided which is likely to peak within next five years.

Tags:
Latest

Latest