Economic Survey Part II: Growth in tax revenue achieved by Centre

Economic Survey Vol II tabled 'Rekindled optimism on structural reforms'

Economic Survey Vol II tabled 'Rekindled optimism on structural reforms'

"These include: stressed farm revenues, as non-cereal food prices have declined; farm loan waivers and the fiscal tightening they will entail; and declining profitability in the power and telecommunication sectors, further exacerbating the TBS (twin balance sheet) problem", the Survey said.

# On farm loan waivers of many state governments, the survey said that there are rising concerns that the waivers may disrupt finances of the said state government.

He explained that while the Centre would not relax on the fiscal borrowing limit of the states, which, in order to make the farm loan waivers, would then be forced to either make cuts to expenditure or raise taxes, both of which would have a deflationary impact.

Noting that during 2016-17, gross bank credit outstanding grew at around 7 percent on an average, the Survey said: "The sluggish growth can be attributed to several factors, including incomplete transmission of the monetary policy as banks had not passed on the entire benefit of monetary easing to borrowers".

The second volume of the Economic Survey 2016-17, authored by Prime Minister Modi's chief economic adviser (CEA), Arvind Subramanian, released on Friday, cautioned that achieving the upper end of projections for economic growth at 6.75-7.5 percent for fiscal 2018 may be hard.

The Survey is concerned over the under-performance of the economy and said it is operating below its potential. The growth of this sector has moderated to 7.7 per cent in 2016-17 compared to 9.7 per cent achieved in the previous year, it added.

Expectedly the Survey said inflation is expected to remain below the Reserve Bank of India's 4 per cent target throughout the fiscal year so the scope for monetary easing as "considerable".

The Part-1 of the Survey, tabled in Parliament on January 31, had "predicted a range for GDP growth of between 6.75 and 75 per cent, factoring in more buoyant exports as global recovery gathered steam, a post-demonetisation catch-up in consumption, and a relaxation of monetary conditions".

The survey called for a further drop in interest rates - now at 6 percent after a 25 basis points cut last week. Since February 2017, the rupee has appreciated by about 1.5 per cent.

On the structural reform agenda, the Survey said the Government is implementing GST, Air India privatisation, further cutting down on energy subsidies, addressing twin balance sheet challenge facing banks.

Also, it added that the removal of checkposts and easing of transport constraints after GST implementation can provide some short-term fillip to economic activity.

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