The Economic Survey, 2018-19, the first by chief economic adviser in the finance ministry Krishnamurthy Subramanian is quite forthright about the challenges facing the economy. Here is a list of eight risks before the economy as identified by Subramanian.

1

Downside risks to consumption remain. The extent of recovery in farm sector and farm prices will decide the push to rural consumption, which is also dependent on the situation of monsoon.

2

If the impact of stress in the NBFC sector spills over to this year as well, it may lead to lower credit offtake from NBFCs, which may dampen growth in consumption spending.

3

Prospects of export growth remain weak for 2019-20 if status quo is maintained. However, reorientation of export policies to target countries/markets based on our own relative comparative advantage and the importing country’s exposure to Indian goods can foster export performance. Under status quo, the outlook for the global economy is bleak in 2019, with most of the countries projected to slow down. The lower global growth and the increased uncertainty about trade tensions may negatively affect export demand, including that of India’s, which in turn will further lower GDP growth rates of several countries.

4

Turning to challenges on fiscal front, the Survey says there are apprehensions of slowing of growth, which will have implications for revenue collections.

5

The financial year 2018-19 has ended with shortfall in GST collections. Therefore, revenue buoyancy of GST will be key to improved resource position of both Central and State Governments.

6

Resources for now expanded Pradhan Mantri Kisan Samman Nidhi (PM-KISAN) and Ayushmaan Bharat, as well as new initiatives of the new government, will have to be found without compromising the fiscal deficit target as per the revised glide path.

7

The US sanctions on oil import from Iran is likely to have impact on oil prices and thereby on the petroleum subsidy, apart from implications for current account balances.

8

Finally, Fifteenth Finance Commission will submit its report for next five years beginning April 2020. Its recommendation especially on tax devolution will have implications for Central Government finances.

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