The Economic Survey 2009-10, presented to Parliament on Thursday, outlined the trajectory the economy took over the year, given the backdrop of the stimulus packages and monitoring by the government over 12 to15 months.
While applauding that the 7.2 per cent growth estimation for the year, supported by a better than expected performance in agriculture, it has expressed concern over the fiscal deficit and control over inflationary pressures.
The economy has turned around and, says the Survey, based on the high rate of savings and investment alongside the recovery of industry, gross domestic product (GDP) can be expected to grow by around 8.5 per cent in the coming year, 2010-11. With full recovery, GDP growth could exceed 9 per cent in 2011-12.
It says this requires the government to consider a number of aspects. Namely:
- Recommendations of the XIII Finance Commission with regard to reduction in centrally sponsored schemes, reduction in the target of debt to GDP ratio, elimination of revenue deficit, thereby returning to fiscal prudence, early implementation of the Goods and Services Tax (GST) and support to state governments in this respect;
- Reforms in tax administration, which should lead to more robust revenue collection;
- Overcoming structural delays in implementation of infrastructure projects;
- Reforms in and support to the farm sector, by way of innovative investment in irrigation and water resources, enhanced rural infrastructure and promotion of research and development in agri services;
- Increased focus on education and research, by restructuring the sector and tapping private resources;
- Addressing climate change, specifically relating to water resources, health, coastal zone infrastructure, forests, etc
- Implementing schemes to bring about more inclusive growth and reduction of poverty, resulting in a larger relative share in the overall growth
Tomorrow’s Union Budget could provide the direction the government would take to achieve these outcomes. Fast-tracking of reforms and putting important policy measures into effect could help India emerge as the fastest growing economy over the medium term.