Highlights of Macro-Economic Survey 2016-17

Finance minister Arun Jaitley on Friday tabled the ruling party government’s Macro-Economic Survey 2016-17 in Parliament. According to the survey, the government sees the economy growing at 7-7.5 percent in the fiscal year to March 2017.

The economic survey, the basis for Jaitley’s budget for the fiscal year starting April 1, projected India to grow 8% in the next couple of years.

The survey was prepared by the finance ministry’s chief economic adviser Arvind Subramanian.

Highlights:

Fiscal deficit
* 2015/16 fiscal deficit seen at 3.9% of GDP seems achievable
* 2016/17 expected to be challenging from fiscal point of view
* Credibility and optimality argue for adhering to 3.5% of GDP fiscal deficit target
* Time is right for a review of medium-term fiscal framework

Inflation
* CPI inflation seen around 4.5% to 5% in 2016/17
* Low inflation has taken hold, confidence in price stability has improved
* Expect RBI to meet 5% inflation target by March 2017
* Low inflation has taken hold, confidence in price stability has improved

Current account deficit
* 2016/17 current account deficit seen around 1-1.5% of GDP

Taxes
* Proposes widening tax net from 5.5 percent of earning individuals to more than 20%
* Tax revenue expected to be higher than budgeted levels in FY15/16
Banking & corporate sector
* Estimated capital requirement for banks likely around 1.8 trln rupees by 2018/19
* Corporate, bank balance sheets remain stretched, affecting prospects for reviving private investments
* Underlying stressed assets in corporate sector must be sold or rehabilitated
* Govt could sell off certain non financial cos to infuse capital in state-run banks
* Govt proposes to make available 700 bln rupees via budgetary allocations during current, succeeding years in banks

Read More: Economic Survey for 2015-16 to be tabled in Parliament on Friday

Wefornews Bureau

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