JULY 08, 2019 News the Newsbehind 37
indianeconomicpanoramacases at the lower judiciary level which
leads to delay in contract enforcement
is hampering India’s further growth on
the ease of doing business index. Th e
Survey talks about fi xing this gap within
the lower judiciary through various
means.
Incentivise top taxpayer: Th e Survey
recommends incentivising top tax
payers of the country. Th is includes
VIP-like privileges such as expedited
boarding privileges at airports, fast-lane
privileges on roads and toll booths,
special “diplomatic” type lanes at
immigration counters, etc.
Electric Vehicles: Th e Survey says, “EVs
hold enormous potential for India not
only because it is environment friendly
but also because India can emerge
as a hub of manufacturing of EVs
generating employment and growth
opportunities. It may not be unrealistic
to visualise one of the Indian cities
emerging as the Detroit of EVs in the
future.”
Reducing policy uncertainty:
Policymakers should reduce the scope
of any uncertainty in economic policy
making as it aff ects investor sentiment.
Th e Survey recommends tracking the
economic policy uncertainty index a
priority for the government.
Labour laws: Th e Survey recommends
deregulating labour law restrictions to
help create more jobs. “Deregulating
labour law restrictions can create
significantly more jobs, as seen by
the recent changes in Rajasthan when
compared to the rest of the states,” the
Survey said.
Focus on large fi rms: Th e government
should foster the growth of large fi rms
which employ more than 100 people
instead of focusing on smaller fi rms
with less than 100 workers. Large fi rms
account for around 90 per cent of
overall productivity and three quarters
of job creation.
Behavioural Economics: Th e Survey
takes insights from various government
schemes which rely heavily on
behavioural change. It recommends
setting up a “Behavioural Economics”
unit in Niti Aayog and a “Behavioural
Economics” audit for every government
programme.
Data revolution: The Survey
recommends using public data to
revolutionise development in the
country. Since data is the new oil, the
Survey says that data should be made a
public good.
KEY HIGHLIGHTS
State of the Economy in 2018-19- India still the fastest growing major
economy in 2018-19. - Growth of GDP moderated to 6.8
per cent in 2018-19 from 7.2 per
cent in 2017-18. - Infl ation contained at 3.4 per cent
in 2018-19. - Non-Performing Assets as percentage
of Gross Advances reduced to 10.1
per cent at end December 2018 from
11.5 per cent at end March 2018. - Investment growth recovering since
2017-18
Fiscal Developments - Fiscal defi cit of Central Government
declined from 3.5 per cent of GDP
in 2017-18 to 3.4 per cent in 2018-
19. - Prospects of pickup in growth in
2019-20 on the back of further
increase in private investment and
acceleration in consumption. - Th e General Government (Centre
and states) is on the path of fi scal
consolidation and fi scal discipline. - Th e revised fi scal glide path envisages
achieving fi scal defi cit of 3 per cent
of GDP by FY 2020-21 and Central
Government debt to 40 per cent of
GDP by 2024-25.
Prices and Infl ation - The headline inflation based on
CPI-C continued on its declining
trend for fi fth straight fi nancial year,
it remained below 4.0 per cent in the
last two years.- The food inflation based on
Consumer Food Price Index (CFPI)
also continued its declining trend for
fi fth fi nancial year and has remained
below 2.0 per cent for the last two
consecutive years. - CPI-C based core inflation (CPI
excluding the food and fuel group)
started declining since March 2019,
after increment during FY2018-19
as compared to FY2017-18.
Investment for growth - Th e Survey states that pathways for
trickle-down opened up during the
last fi ve years, and benefi ts of growth
and macroeconomic stability reached
the bottom of the pyramid. - Sustained real GDP growth rate of
8 per cent needed for a $5 trillion
economy by 2024-25. - “Virtuous Cycle” of savings,
investment and exports catalyzed
and supported by a favorable
demographic phase required for
sustainable growth. - Private investment- key driver for
demand, capacity, labor productivity,
new technology, creative destruction
and job creation. - Key ingredients for a self-sustaining
virtuous cycle:
1 Presenting data as a public good.
2 Emphasizing legal reforms.
3 Ensuring policy consistency.
4 Encouraging behavior change using
principles of behavioral economics.
5 Nourishing MSMEs to create more
jobs and become more productive.
6 Reducing the cost of capital.
7 Rationalizing the risk-return trade-
off for investments.
Focus on MSME growth - The Survey focuses on enabling
MSMEs to grow for achieving
greater profits, job creation and