Finance Minister Arun Jaitley tabled the Economic Survey on Wednesday afternoon, a day before announcing the Union Budget in the Parliament.
This is the first time in two decades that the Economic Survey was presented in the absence of the government's chief economic advisor (CEA), reported The New Indian Express. The post has been vacant since last September, following Raghuram Rajan's appointment as the Governor of the Reserve Bank of India. The annual report was prepared by economist Ila Patnaik, who was appointed senior economic advisor to the finance ministry in April.
Here are some highlights of the report.
Looking ahead (2014-15)
Growth to reach 5.9% - GDP Growth for the current fiscal year is estimated to be between 5.4 percent to 5.9 percent, the Narendra Modi government stated in the Economic Survey on Wednesday.
However, Jaitley also virtually issued a warning that growth may be on the lower side of projections because of weak monsoons, citing concerns over El Nino in particular.
The report said that in the coming years, the growth could reach up to 7 to 8 percent due to measures taken to improve investment climate and governance.
Inflation to moderate - The Wholesale Price Index (WPI) inflation is expected to moderate by the end of this year. It had reached a five-month high of 6.01 percent in May. The Consumer Price Index (CPI) inflation also showed signs of moderation, according to the survey.
"With the global economy expected to recover moderately, particularly on account of performance in some advanced economies, the economy can look forward to better growth prospects in 2014-15 and beyond," the report said.
Manufacturing to improve - The survey sees an improvement in manufacturing growth in 2014-15 as compared to nearly flat growth in 2013-14.
Better Balance of Payment - The economic survey underlines significant improvement in Balance of Payment position this fiscal year.
Looking back (2013-14)
High inflation - The survey said that the economic growth had slowed down due to external factors. High inflation, particularly food inflation, was the result of structural as well as seasonal factors, it said.
Slow growth - After recovering in 2009-10 and 2010-11, GDP growth slowed down to decade's low of 4.5 percent in 2012-13. It picked up marginally to 4.7 percent in 2013-14.
Stressed sectors - Five sectors were identified as the most 'stressed' - infrastructure, iron and steel, textiles, aviation and mining. The survey also cautioned about the deteriorating quality of banks loans.
Industrial standstill - Industry grew by just 1.0 percent in 2012-13 and slowed further in 2013-14, posting a modest increase of 0.4 percent.
Low FDI - During 2013-14, FDI inflow (including equity inflows, reinvested earnings and other capital) was USD 36.4 billion.
Plans for the government
- The report said that the priority for the government was to revive business sentiments to restart the investment cycle.
- The government needs to move towards low and stable inflation through fiscal consolidation.
- Fiscal Correction - The government said there was a need for subsidy reforms to bring in fiscal correction, stating that the fiscal situation is worse than it appears. "Shortfall in revenues can be contained through better mobilisation and reforms," the report says. On a positive note, the report stated that the external debt continues to remain within manageable limits.
- It needs to create a competitive national market for food.
- It needs to rationalize subsidies such as fertilizer and food.
- It needs to shift subsidy programme from price subsidies to income support.
- Taxation -The government needs to move towards simple tax regime, fewer tax exemptions, single rate of goods and services tax, the report said.