The Economic Survey 2018-19 has been tabled in the Parliament, as it always is, a day before the Budget is presented. The Economic Survey reviews the economic developments over the past year. This year, this comprehensive document has been prepared by Chief Economic Advisor, Krishnamurthy Subramanian. Here we list out some of the key takeaways.
GDP Growth Rate
India continued to remain the fastest growing economy in the world with a GDP growth rate of 6.8% in 2018-19. This has declined from 7.2% in 2017-18, but even the world output growth has also declined from 3.8% in 2017 to 3.6% in 2018. But, interestingly, Economic Survey also puts India’s GDP growth forecast for 2019-20 at 7%. It should be noted here that the World Bank and International Monetary Fund have also forecasted India to grow at 7.5 and 7.3% respectively in 2019-20. Thus, India’s growth forecast at or above 7% amidst the general slowdown in the world economy shows the positive economic environment in the country.
Economic Survey estimated India’s fiscal deficit at 3.4% in 2018-19. This is in tune with Modi government’s goal of bringing it down or keeping it near 3% of the GDP, an ideal range in an economy. This shows the fiscal prudence and fiscal discipline maintained by the government. There was a time when Indian economy, during the UPA years, witnessed fiscal deficit crossing 6% of GDP.
This is one economic parameter where the Modi government has worked very hard and the results have also been very positive. The retail inflation or Consumer Price Index remained around 3.4% whereas Wholesale Price Index remained around 4.3% in the year 2018-19. Economic Survey 2018-19 has noted India’s transition from a period of high and variable inflation to a more stable and low level of inflation in the last 5 years. Among many measures taken by the Modi government, setting up of Monetary Policy Committee can be seen as institutional reform to contain inflation, especially retail inflation.
Foreign Exchange Reserves
Economic Survey puts India’s Foreign Exchange Reserves in an enviable position, above the $ 400 bn in 2018-19. The Survey has further noted that among the major economies with a Current Account Deficit, India is the second largest foreign exchange reserve holder after Brazil. It is interesting to know that India’s Foreign Exchange Reserves crossed $ 400 Bn for the first time under Modi government only.
Agriculture, Forestry & Fishing
Although the Economic Survey noted the tapering of growth in the Agriculture sector, the food grain production continues to be above 280 Mn Tonnes in 2018-19. The Survey has further mentioned that the agriculture sector in India typically goes through cyclical movement in terms of growth and production.
The industrial growth rate of Gross Value Added at basic prices in India has increased from 5.9% in 2017-18 to 6.9% in 2018-19 as per the provisional estimates. This is a positive sign for the economy as industrial growth, especially in the manufacturing sector, will create more employment opportunities in the country. This growth revival can also be attributed to the government’s flagship scheme Make-in-India.
The growth rate of services sector tapered from 8.1% in 2017-18 to 7.5% in 2018-19. However, the sector continues to be the main contributor to the growth of the Indian economy, noted the Economic Survey.