Economic Survey 2017-18

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Last updated: Jan, 2018

The Economic Survey 2017-18, was tabled in the Parliament on January 29, 2018, by Mr Arun Jaitley, Union Minister for Finance, Government of India. The Survey forecasts a growth rate of 7 to 7.5 per cent for FY19, as compared to the expected growth rate of 6.75 per cent in FY18. Focus on private investments and exports, two truly sustainable engines of economic growth, will be crucial in improving the climate for rapid economic growth.

Key Highlights:

Fiscal Deficit:

  • Central Government is confident of achieving fiscal deficit of 3.2 per cent of GDP for 2017-18.
  • The fiscal deficit during April-November 2017 has reached 112 per cent of budgeted expenditure as compared to 85.8 per cent during the corresponding period last year.
  • Revenue and fiscal deficits of states as a percentage of corresponding budget estimates is lower in the current year as compared to the previous year.

GDP Growth:

  • GDP growth expected to be between 6.5 and 6.75 per cent in 2017-18.
  • Real GDP growth expected at 6.5 per cent in 2017-18
  • GVA growth at basic prices is expected to be 6.1 per cent in 2017-18

Inflation and monetary policy:

  • Average retail inflation, measured by Consumer Price Index (CPI), in 2017-18 (April – December) seen at 3.3 per cent.
  • Average Wholesale Price Index (WPI) inflation, in 2017-18 (April – December) seen at 2.9 per cent from 1.7 per cent in 2016-17.
  • The Reserve Bank of India (RBI) has cut the repo rate by 25 basis points to 6.0 per cent in August 2017.

External Sector:

  • The current account deficit has declined to reach about 1.8 per cent of GDP in the first half of FY2018.
  • During April-December 2017, trade deficit increased by 46.4 per cent over corresponding period of previous year.
  • During April-December 2017, exports grew 12.1 per cent to US$ 223.5 billion, while imports increased by 21.8 per cent to US$ 338.4 billion.
  • Private transfer receipts, most of which is composed of remittances from Indians working abroad, increased by 10 per cent to US$ 33.5 billion in first half of 2017-18.

Performance of key sectors:

  • Agriculture and food management:
    • The growth rate in Gross Value Added (GVA) by the agriculture and allied sectors is estimated to be 4.9 per cent for 2016-17, as per provisional estimates.
    • The production of Kharif food-grains during 2017-18 is estimated at 134.7 million tonnes compared to 138.5 million tonnes in 2016-17.
    • The area sown under rabi crops during 2017-18 has reached 61.78 million hectares as of January 19, 2018.
    • Around 840,000 hectares of land was brought under micro-irrigation during 2016-17.
    • Coverage of non-loanee farmers under the Pradhan Mantri Fasal Bima Yojana (PMFBY) increased 123.5 per cent in 2016-17 and the scheme is being implemented in 25 states/UTs in 2017. The scheme covers farmers from pre-sowing to post harvest against natural non-preventable risks.
  • Industries, corporate and infrastructure sector:
    • Growth rate in the Gross Value Added (GVA) by the industrial sector was 5.6 per cent in 2016-17 and 5.8 per cent in the second quarter of 2017-18..
    • During April-November 2017, the Index of Industrial Production (IIP) grew 3.2 per cent, while registering a growth rate of 8.4 per cent in November 2017, the highest in 25 months.
    • The eight core infrastructure supportive industries, viz. coal, crude oil, natural gas, refinery products, fertilizers, steel, cement and electricity that have a total weight of nearly 40 per cent in the IIP, registered a cumulative growth of 3.9 per cent during April-November 2017.
    • The performance of corporate sector highlighted that the growth in sales of more than 1700 non-government non-financial (NGNF) listed manufacturing companies was 9.5 per cent in Q2 2017-18 compared to 3.7 per cent in Q2 2016-17.
    • As of September 2017, India had 115,530 km of national highways, 176,166 km of state highways and 53,26,166 km of other roads. Under the new umbrella program ‘Bharatmala Pariyojana’ the government is aiming holistic development of highways in the country.
  • Services sector:
    • The services sector is projected to grow at 8.3 per cent in 2017-18, as against 7.7 per cent in 2016-17.
    • As per World Trade Organisation (WTO) data, India’s share in the exports of commercial services in the world increased to 3.4 per cent in 2016 from 3.3 per cent in 2015.
    • In terms of growth in tourism sector, between January-December 2017, Foreign Tourist Arrivals (FTAs) were 10.2 million with a growth of 15.6 per cent and foreign exchange earnings (FEE) were at US$ 27.7 billion with a growth of 20.8 per cent.

Public Finance:

  • The growth in non-debt receipts at 4.58 per cent during April-November 2017 as against the growth rate of 25.8 per cent in the previous year.
  • The realisation of the gross tax revenue during April-November 2017 as ratio of the budget estimates for 2017-18 was 56.9 per cent compared to 57.2 per cent in the corresponding period of the previous year.

Ease of Doing Business in India:

  • Various reforms taken by the Government of India have led to increase in India’s ranking in the World Bank’s Ease of Doing Business Index from 130 in 2017 to 100 in 2018.
  • India’s ranking in the taxation and insolvency parameters improved by 53 and 33 spots, respectively, on the back of administrative reforms undertaken by the Government of India in the areas of taxation and passage of Insolvency and Bankruptcy Code (IBC), 2016.
  • To improve the ease of doing business in the country, the government has taken various initiatives to improve contract enforcement. Over 1,000 redundant legislations have been scrapped.
  • The Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Act, 2015 have been passed while intra-government litigation has been reduced.
  • The National Judicial Data Grid (NJDG) is being expanded under which every high court in the country will be digitized very soon. The same was recognized in the rankings by the World Bank.

GST data and the Indian Economy:

  • The number of indirect taxpayers in the country witnessed growth of 50 per cent to 9.8 million unique GST registrants, as of December 2017.
  • India’s internal trade in goods and services (excluding non-GST goods and services) at 60 per cent is even higher than that estimated in last year’s economic survey.
  • The current GST tax base (excluding exports) is around 6.5 to 7 million, broadly similar to the estimates of Revenue Neutral Rate Committee and GST Council.
  • Based on the average collections from GST, the implied weighted average collection rate (incidence) is 15.6 per cent. This is similar to the estimate of 15-16 per cent made by the RNR committee.
  • Non-agricultural workforce in the formal sector in India is considerably greater than previously held beliefs about the size of formal sector non-farm payroll. Estimates, on the basis of enterprise-based definition of employment, imply that nearly 53 per cent of non-agricultural workforce is in the formal sector.

Changing face of Science, Research and Technology in India

  • Public expenditure on R&D as a percentage of GDP has remained constant between 0.6-0.7 per cent over the past two decades; however in value terms, the gross expenditure on R&D has increased at a CAGR of 13.03 per cent from Rs 24,117 crore (US$ 3.8 billion) in 2004-05 to Rs 104,864 crore (US$ 16.5 billion) in 2016-17.
  • The number of students enrolled in PhD programs in India has increased over the years, with 126,451 PhD enrolments in 2015-16, backed by concerted efforts by the Government of India such as increase in the number and quantum of fellowships like the Prime Minister Research Fellowships at the IITs.
  • The number of annual publications in India grew 14 per cent between 2009-14, which increased India’s share in global publications from 3.1 per cent in 2009 to 4.4 per cent in 2014.
  • India was ranked 13 in 2017 by Nature Index, which publishes tables based on counts of high-quality research outputs based on natural sciences in the previous year.
  • As per WIPO, India’s Patent Filing Office is the 7th largest in the world with 45,658 registered patents as of 2015.
  • About 200,000 patents were pending for examination as there were only 132 patent examiners as of 2016-17; however the government has hired 450 patent examiners and created an expedited filing system for Indian residents in 2017, which will improve the existing patent system.
  • In order to encourage investigator-led research, the Science and Engineering research Board (SERB) was established in 2008, which has sanctioned nearly 3,500 new R&D projects to individual scientists so far.
  • India can become a global leader outright in various areas with willingness to invest and focus on key areas. For this purpose, the government has chosen few missions for their strategic importance and potential for societal impact such as National Mission on Dark Matter, National Mission on Genomics, National Mission on Energy Storage Systems, National Mission on Mathematics, National Mission on Cyber Physical Systems, and National Mission on Agriculture.

Click here for more details on the Economic Survey 2017-18.