India 31 January 2017: The Government has presented the Economic Survey 2016-17 amidst structural changes in the economy on the back of demonetization and the proposed implementation of the goods and service tax. Given the uncertainty of demonetization, the survey has revised down the real GDP growth estimate for 2016-17 to 6.50%-6.75%, from 7.00%-7.75% estimated by the previous year’s survey. For 2017-18, the survey has projected a real GDP growth of 6.75%-7.50%. The adverse impact of demonetisation was clearly visible on the Indian economy.
Specifically, the Survey has suggested that the transition to digitalization must be gradual by taking full account of the digitally deprived and the government and RBI must bear the full cost of digitalization, instead of the consumers or financial intermediaries. This is part of All India Association of Industries’ (AIAI) earlier recommendations that the Government must create a progressive and enabling regulatory and licensing framework to safeguard all stakeholders and ensure minimal cost and time-efficient transactions. AIAI expect the government to follow these suggestions in the days to come.
Mr. Vijay Kalantri, President, All India Association of Industries said, “More importantly, we appreciate the efforts of the Government for the adoption of Universal Basic Income (UBI).” UBI refers to the unconditional transfer of cash in the bank accounts of beneficiaries, instead of running hundreds of government welfare schemes which are prone to leakages.
In the export sector, the survey has rightly pointed out that India must improve its competitive strengths in the apparel, leather and footwear sectors by taking advantage of the rising wages in China. Mr. Kalantri added, “The Government is strongly advocating Ease of doing Business. However the implementation needs lot of improvement. The Government must rationalize tax structure, reform labour laws and negotiate free trade agreements (FTAs) by weighing the costs and benefits.”
The Survey has raised concerns about the magnitude of NPAs in the banking sector and has suggested the setting up of the ‘Public Sector Asset Rehabilitation Agency’ (PARA), based on the successful experience of the East Asian countries in 1990s. AIAI welcomes this pragmatic initiative.
AIAI further expects that the Government would consider implementing some of the meaningful suggestions offered in the survey and take the economy to higher growth trajectory.