10 Issues from the Economic Survey 2017 to be Stressed Upon
‘Indian Economy is vast and the most diversified in the world.’ If we rewind the tapes in the archives of our minds, we could recollect that we have started learning about our country’s economy since high school. We have grown to acquire the development of the Indian Economy theoretically. The notion of development and progress has always been with us. We have aspirations about how we would like to live.
Similarly, we have ideas about what our country should be like. Before you could frame the questions arising out of these curiosities, we recommend you to go through the Economical Survey of our country. Believe us, you will realize that it was the Economic Survey in the background that created a buzz about the budget in the foreground. So, what is the Economic Survey of India? And, why is it so crucial?
In simple words, the Economic Survey of India is the view of finance ministry on the annual economic growth of the country. This is an annual survey that reports of the developments in the economy during the previous year. Acting as a precursor to the budget, this survey highlights the outlooks and challenges of the economy and suggests the essential reform measures for its growth. This report projects growth trajectory and covers up the policy reviews related to the rural economy, infrastructure, real estate, corporates, social security, and all the economic issues. Are these recommendations mandatorily followed by the government? The government is unbound to follow all the recommendations made in the survey.
The economic survey of 2017-18 was presented a day before the budget, by the Chief Economic Advisor (CEA) Dr. Arvind Subramanian. He shared that he learnt 10 new things about the Indian Economy while preparing the survey. Let us have a look at those 10 points in this year’s survey that are worth concentrating upon.
- India’s economy grows to 6.5% in fiscal year 2017-2018 but all of this growth came from two sectors private consumption and government expenditure. 65% of this growth came from the people’s consumption and spending whereas 30% came from the government’s own expenditure.
- Investment as a percentage of GDP grew from 26% in 2003 to 36% in 2007 and fell to 26% again in 2017. This ‘Boom and Bust’ of investment in India, is the biggest among all the economies in the world, including the 2008 global financial crisis.
- We have all heard of ‘Tax Terrorism.’ The economic survey teaches us about the tax litigation and its cost. Tax litigation of direct and indirect taxes across all the levels of judiciary including the Supreme Court amounts to nearly Rs. 7.5 lac crores which accounts to 5% of the GDP. This clearly shows that in this case ‘Justice delayed is Investment delayed.’
- What is the demonetization’s impact on new taxpayers? There were 1.8 million new taxpayers presumably due to demonetization. But there were no additional revenues from these taxpayers because almost all of them reported incomes that were less than the Income Tax threshold of Rs. 2.5 lacs.
- Nearly 10 million businesses are registered under GST but around 2 million of these registrations were needless as they fall below the GST revenue threshold. So, why did they register? They registered for the Input Tax Credits which is precisely the design and objective of GST.
- Just five of the 29 states of India accounted for the 50% of the GST revenues and also for the half of the economic activity of the country. So, this puts rest to fear that the prime producing states will end up as losers in GST.
- While states are guaranteeing the revenues from GST, local bodies and Municipal Corporation within these states are not collecting enough tax revenues. In fact, they collect only 1/10th of the potential tax revenues from the property taxes.
- GST, in short, is formalization which means registering employees for the provident funds like EPFO. But this does not necessarily mean the income levels are very good. Nearly 90% of the employees registered with EPFO earn less than Rs. 15000 a month.
- What is the impact on climate change in India? India is getting hotter and drier which means the farm incomes could fall down as much as 15 – 25% for both irrigated and un-irrigated farm lands.
- Finally, there are nearly 2 million women going missing every year in India due to female infanticide and sex selective abortions. Can the Prime Minister’s ‘Beti Bachao, Beti Padhao’ scheme stops this?
These points highlight the coarser facts, but aren’t the aforementioned issues worth worrying? Frankly, we don’t think these facts ever distilled to general public and by “Politics’ Grace” the mystery will continue. Our sole concern is that hopefully the government take their own survey seriously.
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