Economic Survey underlines effect of demonetisation, lowers growth forecast

Maintaining that the Indian economy has witnessed robust macroeconomic stability in the last financial year, the Economic Survey 2016-17, presented in the Parliament today by the Finance Minister Arun Jaitley, observed that fiscal prudence by the Centre as well as the states is needed in order to maintain overall fiscal health of the economy.

It also added that economic growth will return to normal as new currency notes in required quantities come back into circulation and follow-up action on demonetisation is taken.

Here are the key takeaways:

1. Swachh Bharat Mission has been part of serious policy issue to promote broader fundamental right to privacy for women
2. Upsurge in protectionism could affect India’s exports; pose a serious medium-term risk.
3. Indian states have much lower levels of fertility than countries internationally
4. Current system of indirect taxes, in some important cases, “perversely favours” inter-state trade over intra-state trade
5. Demonetisation led to job losses, decline in farm incomes, social disruption, especially in cash-intensive sectors
6. Demonetisation led to an increase in uncertainty leading to firms and households postponing purchases
7. Economic Survey suggested setting up of Public Sector Asset Rehabilitation Agency (PARA) that could make politically tough decisions to reduce debt
8. India’s NPA ratio higher than any other major emerging market, except Russia
9. Regional income/consumption inequality in #India is not narrowing despite such gaps narrowing in countries like China
10. The government’s capacity of delivering essential services like health and education is weak due to high levels of corruption
11. Modi's dream manufacturing way to prosperity hit by Bangladesh and Vietnam
12. Annual average migration between states is about 9 million, much higher than 4 million suggested by previous Census
13. Universal Basic Income will help in weeding out complex subsidies
14. The Economic Survey revealed that labour migration in India is increasing at an accelerating rate. It's particularly pronounced for females
15. Cash crunch to continue till April, economic growth will slow down to as much as 6.75 per cent
16. Economic Survey revealed failure of direct benefit transfer for subsidies in places where it is most needed.
17. The GDP growth in 2016-17 to dip to 6.5 per cent down from 7.6 per cent in last fiscal
18. Inflation is repeatedly being driven by narrow group of food items, pulses being major contributor of food inflation
19. Currency shortage to affect supply of some farm products
20. In the wake of four seasons of weak rainfall and consequent adversity, agriculture has served a wake-up call, demanding attention from policy makers