Economic Survey 2019 is candid about economy realities, say experts

India predicted on Thursday that economic growth in the current fiscal year could rise to 7% from 6.8% for the year that ended March 31, which was the slowest pace in five years.

The government’s economic survey, presented to parliament on Thursday, said India will face a challenge on the fiscal front following an economic slowdown impacting tax collections amid rising state expenditure on the farm sector.

The projection comes a day before the government is due to unveil its budget for the 2019/20 year.

COMMENTARY
 

JOSEPH THOMAS, HEAD RESEARCH, EMKAY WEALTH MANAGEMENT, MUMBAI

“The document is candid about the economy realities, the GDP growth of 7% for FY20 projected by the Economic Survey is realistic.

“Demand for consumer durables and consumer non-durables had gone down substantially. Revival can happen if both the government and the Reserve Bank of India (RBI) take sufficient actions on fiscal and monetary front. We need a slight boost.”

DEVENDRA PANT, CHIEF ECONOMIST, INDIA RATINGS, NEW DELHI
 

“The survey identifies problems and its core is India to be a $5 trillion economy by FY 2025, which looks a bit optimistic because it is banking on productivity growth of 70 basis point compared with the United States.

“With having a target, the entire focus of policy makers should be on what needs to be done to achieve it.

“We may find some reflection of this in Friday’s budget, and it will not be challenging because the government is aware of most of the issues raised in the survey.”

VIVEK KUMAR, SENIOR ECONOMIST - BUSINESS ECONOMICS BANKING, YES BANK, MUMBAI

“The Economic Survey highlights that while the government has stuck to the revised roadmap for fiscal consolidation, fiscal adjustment in the coming years could face challenges from moderation in nominal growth.

“It could face challenges with implications for revenue collections, expansion in resource commitment for new developmental schemes, geopolitical uncertainty on crude oil prices, and finally the recommendations of the 15th Finance Commission on tax devolution. The survey strikes the right note by calling for prioritisation of expansion of the direct tax base and stabilization of GST architecture while maintaining fiscal prudence.

“The survey paints a blue-sky scenario for scaling up Indian economy to a level of $5 trillion, in line with the Prime Minister’s key economic vision. It emphasizes on creating a virtuous cycle encompassing private investment, exports, domestic demand, with job creation as the underlying theme.”

ANAGHA DEODHAR, ECONOMIST, ICICI SECURITIES, MUMBAI
 

“The GDP growth of 7% for FY20 projected by the Economic Survey is in line with our expectations. High-frequency indicators show that growth in Q1FY20 remained weak and we expect Q2 to remain weak as well.

“Assuming inflation of 3.7% in FY20, nominal GDP growth for FY20 is likely to be Rs 10.7%. Hence, we expect the government to revise the tax collection target downwards.

“While aggregate capex growth is showing signs of bottoming out, it is largely driven by PSUs, while private capex growth remains weak. Hence, a broad-based and meaningful recovery in capex growth could take some time.

“The survey argues that accommodative monetary policy is likely to cut real lending rates, however, we believe slow transmission may limit gains.”