The Economic Survey 2013-14, which was tabled on Wednesday in the Lok
Sabha, has pegged GDP growth for the year 2014-15 in the range of
5.4-5.9 per cent. "There are downside risks to the economy arising from a poor monsoon,
the external environment and the poor investment climate. GDP growth
slowed to below 5 per cent for two consecutive years, i.e. 2012-13 and
2013-14. The combination of domestic structural constraints,
inflationary pressures, particularly food inflation and uncertainty in
the global economy, has affected growth and posed challenges for
macroeconomic stability," said the Survey.
Agriculture and allied sector grew at 4.7 per cent, while industry grew at 0.4 per cent in 2013-14."The key reasons for poor performance have been contraction in mining
activities and deceleration in manufacturing output. Manufacturing and
mining sector GDP declined by 0.7 per cent and 1.4 per cent respectively
in 2013-14. The underlying cause of the poor performance of these two
sectors has been considerable deceleration in investment, particularly
by the private corporate sectorduring 2011-12 and 2012-13," it said.Consumer price inflation declined from 10.21 per cent during FY 2013-14
to about 9.49 per cent in 2013-14. However, food inflation remained
stubbornly high during FY 2013-14. Contribution of the commodity
sub-groups, ‘fruits and vegetables’, as well as ‘egg, meat and fish’ to
the food inflation has been very high.
India’s balance-of-payments position improved in 2013-14 with current
account deficit (CAD) at 32.4 billion (1.7 per cent of GDP) as against
$88.2 billion (4.7 per cent of GDP) in 2012-13."India's exports at $312.6 billion grew by a positive 4.1 per cent
compared to the previous year’s negative growth of 1.8 percent. Import
growth decelerated from 0.3 per cent in 2012-13 to a negative 8.3 per
cent in 2013-14, owing to fall in non-oil imports by 12.8 per cent
primarily due to restrictions on gold imports," said the document.But public finances faced serious challenges, with a shortfall in tax
revenues and disinvestment receipts and higher than budgeted subsidies,
interest and pension payments, fiscal consolidation was mainly achieved
through a reduction in grants for creation of capital assets and capital
expenditure.
"An important factor in the increase in the Centre’s fiscal deficit
after 2008-09 has been the sharp increase in subsidies from 1.42 per
cent of GDP in 2007-08 to 2.56 per cent of GDP in 2012-13. For 2013-14
the subsidy bill is 2.26 per cent of GDP," it said.The Survey identifies the need to address long run problems to improve
the investment climate. It emphasises the need for creating a framework
for low and stable inflation, setting public finances on a sustainable
path by tax and expenditure reform, and creating the legal and
institutional framework for a well-functioning market economy.
"The Survey calls for putting public finances on the sustainable path
through fiscal correction, a new Fiscal Responsibility and Budget
Management (FRBM) Act with teeth, better accounting practices, greater
transparency and improved budgetary management. It argues that
improvements on both tax and expenditure are needed to obtain high
quality fiscal adjustment," said a press release.This year's Economic Survey also discusses the need for revamping some
of the social sector schemes such as MNREGA, NRHM, SSA, etc."It is felt that the outlays for the different schemes have not often
translated fully into outcomes owing to the poor delivery mechanism.
Leveraging modern technology for efficient delivery of programmes,
removing the multiple layers of governance, simplifying procedures, and
greater participatory role by the beneficiaries can help in creating a
better delivery mechanism," it said.
(Data from Press Information Bureau)
