Current fiscal growth at 6.75%, next at 7-7.5%: Economic Survey. The Survey, tabled in parliament by Finance Minister Arun Jaitley on Monday, also said the reform measures undertaken in 2017-18 can be strengthened further in 2018-19….reports Asian Lite News
The Economic Survey 2017-18 which was presented in Parliament by Finance Minister Arun Jaitley on Monday said that there was an increase in the number of taxpayers post-demonetisation.
“… Taking seasonality into account it is found that there is a 0.8 per cent monthly trend increase in new tax filers (annual growth of 10 per cent),” the survey report said.
“The level of tax filers by November 2017 was 31 per cent greater than what this trend would suggest, a statistically significant difference. This translates roughly into about 1.8 million additional tax payers due to demonetisation-cum-GST, representing 3 per cent of existing taxpayers.”
According to the survey, new filers reported an average income close to the income tax threshold of Rs 2.5 lakh, “limiting the early revenue impact”.
“As income growth over time pushes many of the new tax filers over the threshold, the revenue dividends should increase robustly,” the survey said.
As per the survey, one of the main aims of demonetisation and the GST was to increase the formalisation of the economy and bring more Indians into the income tax net.
Resolving the non-performing assets (NPAs), or bad loans, of state-run banks and implementing GST are among the major factors that will aid India log GDP growth of 6.75 per cent in the current fiscal, the Economic Survey said.
The Survey also cited the recapitalisation plan for government-owned banks, the recent easing on foreign direct investment (FDI) rules and boosting of Indian exports amidst a global recovery as other factors underpinning its gross domestic product (GDP) growth projection, which is higher than the 6.5 per cent growth projected by last month by the Central statistics Office (CSO).
“Decisive action was taken to grasp the nettle of the Twin Balance Sheet (TBS) challenge, arguably the festering, binding constraint on Indian growth prospects. On the 4 R’s of the TBS — Recognition, Resolution, Recapitalization and Reforms — Recognition was advanced further, while major measures were taken to address two other R’s,” the Survey, authored by Chief Economic Advisor (CEA) Arvind Subramanian, said.
“The new Indian Bankruptcy Code (IBC) has provided a resolution framework that will help corporates clean up their balance sheets and reduce their debts. And in another critical move, the government announced a large recapitalisation package (about 1.2 percent of GDP) to strengthen the balance sheets of the public sector banks (PSBs),” it said.
India’s Economic Survey for 2017-18 has pegged the country’s growth at 6.75 per cent for the current fiscal and 7 to 7.5 per cent for 2018-19.
“A series of major reforms undertaken over the past year will allow real GDP growth to reach 6.75 per cent this fiscal and will rise to 7.0 to 7.5 percent in 2018-19, thereby re-instating India as the world’s fastest growing major economy,” the Survey said here on Monday.
The Survey underlined that the economy began to accelerate in the second half of the year and can clock 6.75 per cent growth this fiscal due to the launch of transformational Goods and Services Tax reform on July 1, 2017 and resolution of the long-festering Twin Balance Sheet problem by sending the major stressed companies for resolution under the new Indian Bankruptcy Code.
It also said implementing a major recapitalisation package to strengthen the public sector banks, further liberalisation of foreign direct investment and the export uplift from the global recovery had played a major role in boosting the growth.
The Survey, however, pointed out that as per the quarterly estimates there was a reversal of the declining trend of GDP growth in the second quarter of 2017-18, led by the industry sector.
It said that India can be rated as among the best performing economies in the world as the average growth during last three years is around 4 percentage points higher than global growth and nearly 3 percentage points higher than that of emerging market and developing economies.
The survey cautioned some of the factors could have dampening effect on GDP growth in the coming year are like the possibility of an increase in crude oil prices in the international market.
The performance of the banking sector in general and those in the public sector in particular continued to be subdued in the current fiscal.