The week has been busy and chaotic in newsrooms and for journalists all over the country, as the budget week is here. All the speculations and estimates are making the headlines. With the railway budget out and union budget to make its way, the Finance Minister unveiled a survey that is estimating the GDP growth rate to be 7-7.75 per cent, in the next fiscal year.
It is recorded to be less than the estimate of last year, which was 8.1-8.5 per cent growth rate for the financial year 2015-2016. While presenting the survey, Arun Jaitley informed that the survey indicates the optimality to stick to the deficit target of 3.5 per cent of GDP.
This year’s projection points a decline in the growth of the GDP from previous years and the reason for this projection is cited as the downside risk from the weak global scenario. So much, for boasting that India is unaffected by the global crisis.
While the survey was tabled, not many were in agreement to the estimates that were made in this survey. Ritika Mankar Mukherjee, senior economist, Ambit Group said, “We disagree with not just with the level of the GDP forecast made by the economic survey, but we also disagree with the direction of growth that the survey is implying.”
“My sense is that there is a 20-30 basis points slippage coming in the fiscal deficit number, so basically, I’m expecting a 3.7 or 3.8 per cent fiscal deficit number for 2017,” she added.
The survey went on to forecast that India will take another couple of years to reach the 8-10 per cent growth rate mark. The next fiscal year is going to be challenging as the government will have to allocate additional resources for implementing the 7th Pay Commission award.
If the growth rate is slow, there is one thing that looks like something that gives hope- the inflation is projected to decline to 4.5-5 per cent in the next fiscal year. But the current account deficit is still at a low at 1-1.5 per cent of the GDP. India also needs to prepare itself for major currency readjustment, as the value of rupee is depreciating gradually.
According to Deccan Herald, the survey expressed concern over delay in the implementation of the GST and shortfall in disinvestment target.