Ahead of Budget 2019, Finance Minister Nirmala Sitharaman tabled her first Economic Survey today. Prepared by the new Chief Economic Adviser Krishnamurthy Subramanian, Economic Survey 2019 lays out the roadmap for the Modi government's next five years. The government has estimated gross domestic product growth of 7% for the fiscal year 2019-2020. The theme of the Economic Survey 2019 is about enabling a “shifting of gears" to sustained economic growth for objective of $5 trillion by 2024-25. The Survey says that it departs from “traditional thinking by advocating a growth model for India that views economy as being either in a virtuous or a vicious cycle, and thus never in equilibrium."
Here are the highlights from the Economic Survey 2019
— Investment the "key driver" of simultaneous growth in demand, jobs, exports & productivity
— Govt proposes to increase retirement age
— Data should be “of the people, by the people, for the people", says govt
— Govt proposes complete overhaul of minimum wages in India
— Dwarfs (firms with less than 100 workers) despite being more than 10 years old, account for more than 50% of all organized firms in manufacturing by number. Contribution of dwarfs to employment is only 14% and to productivity is a mere 8%.
— To achieve the PM Narendra Modi's vision of $5 trillion economy by 2024, India needs to shift its gears to accelerate and sustain a real GDP growth rate of 8%, says Economic Survey
— Using insights from behavioral economics to create an aspirational agenda for social change:
From ‘Beti Baco Beti Padhao’ to ‘BADLAV’ (Beti Aapki Dhan Lakshmi Aur Vijay Lakshmi).
From ‘Swachh Bharat’ to ‘Sundar Bharat’.
From ‘Give it up" for the LPG subsidy to ‘Think about the Subsidy’.
From ‘Tax evasion’ to ‘Tax compliance’.
— Behavioral economics provides insights to ‘nudge’ people towards desirable behavior.
Key principles of behavioral economics:
Emphasizing the beneficial social norm.
Changing the default option.
— Private investment- key driver for demand, capacity, labor productivity, new technology, creative destruction and job creation.
— Swachh Bharat mission: 93.1% of the households have access to toilets. 96.5% of those with access to toilets are using them in rural India.
— India still the fastest growing major economy in 2018-19. Growth of GDP moderated to 6.8 per cent in 2018-19 from 7.2 per cent in 2017-18.
— Accommodative RBI policy will help to cut real lending rates.
— Political stability should push animal spirits of economy
— January-March economic slowdown due to poll related activity.
— NBFC sector stress reason for FY19 slowdown.
— Oil prices seen declining in FY20.
— Declining in NPA should push up capex cycle
— Government policies expected to further lift restrictions on FDI inflows.
— 2019-20 GDP growth seen picking up on higher private investment and robust consumption.
— Lower global growth, increased uncertainty over trade tension may hit exports.
— Investment rate picking up in FY2020 on higher credit growth and improved demand.
— Economic Survey provisionally estimates 2.9% growth rate for the agriculture,forestry and fishing sector.
— Survey predicts that working-age population will grow by about 97 lakhs per year in the upcoming decade.
With inputs from PIB