School of Economics | Summary of Economic Survey 2017
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Summary of Economic Survey 2017

The Union Finance Minister Arun Jaitley on 31 January 2017 presented the Economic Survey 2017 in the Parliament.

The survey observed that the Indian Economy has sustained a macro-economic environment of relatively low inflation, fiscal discipline and moderate current account deficit coupled with broadly stable rupee-dollar exchange rate.

*Highlights of Economic Survey 2016-17*

  • *Macro economy*: As per the advance estimates released by the Central Statistics Office, the growth rate of GDP at constant market prices for the year 2016-17 is placed at 7.1 per cent, as against 7.6 per cent in 2015-16.
  • This estimate is based mainly on information for the first seven to eight months of the financial year.
  • For 2017-18, it is expected
    that the growth would return to normal as the new currency notes in required quantities come back into circulation and as follow-up actions to demonetisation are taken.
  • On balance, there is a likelihood that Indian economy may recover back to 6.75 per cent to 7.5 per cent in 2017-18.
  • *Fiscal*: Indirect taxes grew by 26.9 per cent during April-November 2016.
  • The strong growth in revenue expenditure during April-November 2016 was boosted mainly by a 23.2 per cent increase in salaries due to the implementation of the Seventh Pay Commission and a 39.5 per cent increase in the grants for creation of capital assets.
  • *Prices*: The headline inflation as measured by Consumer Price Index (CPI) remained under control for the third successive financial year.
  • The average CPI inflation declined to 4.9 per cent in 2015-16 from 5.9 per cent in 2014-15 and stood at 4.8 per cent during April-December 2015.
  • Inflation based on Wholesale Price Index (WPI) declined to (-) 2.5 per cent in 2015-16 from 2.0 per cent in 2014-15 and averaged 2.9 per cent during April-December 2016.
  • Inflation is repeatedly being driven by a narrow group of food items. Among them, pulses continued to be the major contributor of food inflation.
  • *Trade*: Trade deficit declined to USD 76.5 billion in 2016-17 (April-December) as compared to USD 100.1 billion in the corresponding period of the previous year.
  • The current account deficit (CAD) narrowed in the first half (H1) of 2016-17 to 0.3 per cent of GDP from 1.5 per cent in H1 of 2015-16 and 1.1 per cent in 2015-16 full year.
  • Robust inflows of foreign direct investment and net positive inflow of foreign portfolio investment were sufficient to finance CAD.
  • In H1 of 2016-17, India’s foreign exchange reserves increased by USD 15.5 billion on Balance of Payments (BoP) basis.
  • During 2016-17 so far, the rupee has performed better than most of the other emerging market economies.
  • *External Debt*: At end-September 2016, India’s external debt stock stood at USD 484.3 billion, recording a decline of USD 0.8 billion over the level at end-March 2016.
  • India’s key debt indicators compare well with other indebted developing countries and India continues to be among the less vulnerable countries.
  • *Agriculture*: Agriculture sector is estimated to grow at 4.1 per cent in 2016-17 as opposed to 1.2 per cent in 2015-16.
  • *Industry*: Growth rate of the industrial sector is estimated to moderate to 5.2 per cent in 2016-17 from 7.4 per cent in 2015-16.
  • During April-November 2016-17, a modest growth of 0.4 per cent has been observed in the Index of Industrial Production (IIP).
  • The eight core infrastructure supportive industries, viz. coal, crude oil, natural gas, refinery products, fertilizers, steel, cement and electricity registered a cumulative growth of 4.9 per cent during April-November 2016-17 as compared to 2.5 per cent during April-November 2015-16.
  • *Services*: Service sector is estimated to grow at 8.9 per cent in 2016-17, almost the same as in 2015-16.
  • The payouts of the Seventh Pay Commission are estimated to push up the growth in services.
  • Social Infrastructure, Employment and Human Development: The Parliament has passed the Rights of Persons with Disabilities Act, 2016.
  • The Act aims at securing and enhancing the rights and entitlements of Persons with disabilities.
  • The Act proposed to increase the reservation in vacancies in government establishments from 3 per cent to 4 per cent for those persons with benchmark disability and high support needs.
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