Finance ministry on Friday(11th August) released 2nd part of the economic survey which highlighted the new issues related to the economy.
The survey depicted that the predicted growth of 6.75-7.5 will be difficult to achieve due to appreciation of rupee, farm loan waivers and challenges from implementing GST.
The survey pointed out that Fiscal deficit expected to decline to 3.2 per cent of GDP in FY2018 compared with 3.5 per cent in FY2017.
Drafted by Chief Economic Advisor Arvind Subramanian, the Survey said deflationary impulses — stressed farm revenues, decline in non-cereal food prices, farm loan waivers, fiscal tightening and declining profitability in the power and telecommunication sectors — are weighing on the economy.
Economic chief advisor Arvind panghariya prepared the half quarter economic surver which said, “Economy is yet to gather its full momentum and still away from its potential.” Survey also said inflation is expected to remain below the Reserve Bank of India’s 4 percent target.
Survey also shows some contradiction between the government’s promise for farm waive and its effect on budget the survey said, State farm loan waivers could touch Rs 2.7 lakh crore, Farm loan waivers could cut economic demand up to 0.7% of GDP and likely to give deflationary shock to the economy.
House rent allowance may push CPI by 40-100 bps the survey predicted. The survey shows confidence in economic reforms like privatization iof AIR india and implemetation of GST. Survey predicted that geopolitics is not as big a risk for oil prices as before.