The Economic Survey for 2014-15 forecasts around 8.5% growth in FY16 for India, which would make it one of the fastest growing economies, surpassing China. The survey emphasizes more on the small effective policies which can have impact in the long–run as opposed to any “Big-Bang” reforms. The government should shift its spending from public consumption to public investment which can trigger private investment. The survey lays down roadmap to kickstart stalled projects worth Rs. 8.8 Lakh crores including converting Land Ordinance into the Bill to boost investor’s confidence and lowering Debt-overhang plaguing the private sector.
The survey forecasts inflation of 5-5.5% and Current Account Deficit to be at 1%, suggesting headroom for the RBI to ease the monetary policy in the short-run in the light of declining global oil prices. However the government needs to be cautious in its spending as the Survey advises fiscal consolidation and targeting Fiscal deficit of 3% of GDP by 2017-18.The Government needs to control expenditure and eliminate subsidy leakages. To eliminate subsidy leakages and ensure efficient delivery of public resources to the needy, the government will use the Jan-Dhan Yojana, Aadhar and Mobile Banking for Cash-Based transfer.
To boost the “Make-In-India” programme of the government, the survey advocates special subsidies to SEZs, lowering corporate taxes and removing the negative protectionism surrounding the industry. To boost agricultural sector, the survey suggests investing in technology and irrigation systems along with liberalizing agricultural markets and opening them to the private sector. Foreign investment (FDI) in Retail infrastructure like warehousing and cold storage can fill infrastructure deficit which results in supply chain inefficiencies. Eliminating middlemen will also help lower prices for consumers and raising prices for farmers. The government should aim to establish a unified agricultural market to deal with price fluctuations and demand-supply imbalances.
Meanwhile, the government will have to tackle some of the challenges including low employment growth, enacting the GST legislation and passing the Land Amendment Bill in the near future to put the growth on track.