REUTERS - India expects its economy to grow 7-7.5 percent in the fiscal year to March 2017, the Economic Survey said on Friday, ahead of the presentation of the annual budget by Finance Minister Arun Jaitley on Monday.
The economic survey, the basis for Jaitley's budget for the fiscal year starting April 1, projected India to grow 8 percent in the next couple of years.
The survey was prepared by the finance ministry's chief economic adviser Arvind Subramanian.
Following are the highlights of the report:
FISCAL DEFICIT
* 2015/16 fiscal deficit seen at 3.9 percent of GDP seems achievable
* 2016/17 expected to be challenging from fiscal point of view
* Credibility and optimality argue for adhering to 3.5 percent 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 percent in 2016/17
* Low inflation has taken hold, confidence in price stability has improved* Expect RBI to meet 5 percent inflation target by March 2017
* Prospect of lower oil prices over medium term likely to dampen inflationary expectations
* Low inflation has taken hold, confidence in price stability has improved
CURRENT ACCOUNT DEFICIT
* 2016/17 current account deficit seen around 1-1.5 percent of GDP
CURRENCY
* Rupee's value must be fair, avoiding strengthening; fair value can be achieved through monetary relaxation
* India needs to prepare itself for a major currency readjustment in Asia in wake of a similar adjustment in China
* Gradual depreciation in rupee can be allowed if capital inflows are weak
TAXES
* Proposes widening tax net from 5.5 percent of earning individuals to more than 20 percent
* Tax revenue expected to be higher than budgeted levels in FY15/16
* Easiest way to widen the tax base would be not to raise exemption thresholds
* Favours review and phasing out of tax exemptions
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 companies to infuse capital in state-run banks
* Govt proposes to make available 700 bln rupees via budgetary allocations during current, succeeding years in banks
(Compiled by Sankalp Phartiyal and Tommy Wilkes in NEW DELHI)
