Key Highlights of Economic Survey 2014-15

Keeping its stakes high, Narendra Modi government has forecasted an ambitious 8.5% growth of the economy for fiscal year 2015-16. The Modi government tabled Economic Survey 2014-15 in the Parliament on Friday and expects the growth rate of the current fiscal year to be at over 7%.

Reaffirming its focus on growth of the Indian economy, which has been on a decline in the past few years, the Modi Government has come up with a medium-term strategy. BI India lists down some key highlights of the Economic Survey 2014-15:

1. The government will implement the ‘golden rule’ of eliminating revenue deficit.

2. The medium-term fiscal deficit target is 3% of the GDP.

3. Tighten control over expenditures- expenditure control and expenditure switching.

4. Borrowing over the cycle to strictly be for capital formation.

5. To improve quality of public expenditure by slashing subsidies towards investments.

6. Government estimated the Current Account Deficit (CAD) at 1.3% of the GDP in FY15.

Current Scenario

1. Indian economy on recovery path.

2. Current Account Deficit(CAD) has come down to an estimated 1% in 2014-15 from the earlier level of 6.7% of the GDP.

3. Decline in inflation by over 6% points since late 2013.

4. Foreign portfolio flows have stabilized the rupee.

5. Real GDP has been growing at 7.2% after nearly 12 quarter phase of decline.

6. Direct fiscal cost of all subsidies is estimated to be nearly 4.2% of 2011-12 GDP that is about Rs 378,000 crore.

7. Stalled projects stands at nearly 7% of the GDP, which primarily are of the private sector.

8. Most of the stalled projects belong to crucial sectors such as manufacturing and infrastructure.

9. Interestingly, stock market valuations of the companies have been good despite stalled projects.

10. Food subsidy bill surges by 20% and is at 10.47 lakh crore.

11. Government estimated the food grain production for FY 15 257.07 to exceed by 8.5million tones, at 257.07 million tones.

12. Outlook for external sector favourable since the global meltdown in 2008 global meltdown.

13. Skill development and employment major challenges.

14. Banks are not performing well with rising number of NPAs. Balance sheets suffering.

Outlook

1. Inflation is estimated to remain between 5%-5.5%, thus allowing key policy rate cuts for the RBI.

2. GDP growth estimated over 8%.

3. GST to ensure medium-term goals are achieved.

4. Initiatives such as Jan Dhan Yojna Aadhaar and Mobile expected to eliminate leakages.

5. Scope for reviving public investments to meet short-term goals and attract private investments.