Economic Survey 2019-20 highlights: GDP growth to rebound in FY21, share of formal employment rises; 2.62 cr new jobs created

India’s economic growth is expected to “strongly rebound” to 6-6.5 percent in 2020-21 from 5 percent estimated in the current fiscal, the Economic Survey said on Friday, adding that the government with a strong mandate has the capacity to expedite reforms. The Economic Survey 2019-20 tabled in Parliament said there are tentative signs of bottoming out of slowdown in manufacturing activity and global trade, which will have a positive impact on growth in the next fiscal. The government’s thrust on affordable housing, Make in India, reduction in corporate tax rate, and improvement in ease of doing business, besides others factors, will help in boosting economic growth, it said.

Uptick in GDP Growth Expected in Second Half of 2019-20; First Advance Estimates peg Growth for Overall Fiscal at 5%

GDP Growth expected to grow in the range of 6.0% to 6.5% in 2020-21

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However, it has also cautioned that continued global trade problems, escalation in US-Iran geopolitical tensions, and weak economic recovery in advanced economies are the downside risk which have the potential to drag down the growth. “On a net assessment, it appears that the upside risks should prevail, particularly when the government, with a strong mandate, has the capacity to deliver expeditiously on reforms. “GDP growth of India should strongly rebound in 2020-21 and more so on a low statistical base of 5 percent growth in 2019-20,” said the survey tabled by Finance Minister Nirmala Sitharaman. Other highlights of Economic Survey 2019-20:

• Fiscal deficit target for current fiscal may need to be relaxed to revive growth
• Uptick in growth projected in second half of current fiscal based on 10 factors including higher FDI flows, build up of demand pressure, positive GST revenue growth
• Survey asks government to deliver expeditiously on reforms to revive growth
• Ethical wealth creation key to India becoming $5 trillion economy by 2025
• Share of formal employment increased from 17.9 percent in 2011 -12 to 22.8 percent in 2017-18 reflecting formalisation in the economy
• Theme of Survey is wealth creation, promotion of pro-business policies, strengthening of trust in the economy
• To achieve GDP of $5 trillion by 2024-25, India needs to spend about $1.4 trillion over these years on infrastructure
• 2.62 crore new jobs created in rural, urban areas between 2011-12 and 2017-18 among regular wage/salaried employees
• 8 percent increase in regular employment of women in 2017-18 over 2011-12
• Excessive government intervention in markets, especially when the market can do the job of enhancing citizens welfare perfectly well, stifles economic freedom
• Debt waivers disrupt the credit culture, reduces formal credit to same farmers
• Suggests government to systematically examine areas where it needlessly intervenes and undermines markets
• Calls for improving governance in public sector banks, more disclosures to build trust
• Calls for measures to make it easier to start new business, register property, pay taxes, enforce contracts
• Easing of crude prices lowers current account deficit; imports contract more sharply than exports in first half of current fiscal
• Declining inflation from 3.2 percent in April 2019 to 2.6 percent in December 2019, reflecting weakening demand pressure in the economy
• GST collections grew by 4.1 percent for the centre during April-November 2019.

(With PTI inputs)