India’s growth rate in FY21 is being seen in the range of 6-6.5 percent by the Economic Survey, which will be tabled later today in both houses of the parliament, signalling that the crushing slowdown is finally releasing its grip on the economy.
For the current year, the survey forecasts India’s gross domestic product (GDP) to grow at 5 percent — the slowest pace in 11 years — against the earlier estimate of 7 percent in July 2019, people familiar with the matter told CNBC-TV18. They asked not to be named.
The document, which maps the state of India’s economy and is prepared by a team of economists based in India’s finance ministry, believes that the downward slide in the country’s GDP has bottomed out. The overarching theme in this year’s economic survey is “Wealth Creation” and spells out 10 new ideas to achieve this, they said.
Annual economic growth slowed to 4.5 perecent in the July-September quarter, the weakest pace since 2013, owing to weakening demand and private investment. Earlier this month, the ministry of statistics said in a statement that GDP is estimated to grow 5.0 percent in 2019-20, slower than the 6.8 percent growth of 2018-19.
Slowing growth has put pressure on the government to expedite reforms as five rate cuts by Reserve Bank of India have hardly helped. It will also likely push finance minister Nirmala Sitharaman to go for extra fiscal stimulus when she presents the annual budget on Saturday.
The government is expected to announce tax concessions for individuals and increase spending on infrastructure after cutting corporate tax rates last year, according to officials.
Among other policy recommendations, the survey is understood to have recommended “Assemble In India For The Globe” strategy for the manufacturing sector. Moreover, Economic Survey 2020 also calls for super specialisation of India Inc in labour-intensive manufacturing sectors.
Chapters in the document analyse the reason for the slowdown in the economy, the effectiveness of price control measures, and the need for more Ease of Doing Business measures. The Economic Survey calls for strong reforms in Public Sector Banks and suggests the use of Artificial Intelligence to better utilise the wealth of data created by the government-owned banks.