Peeking at Economic Survey Part 1

Modi government has advanced the presentation of the Budget by one month, it has removed the separate Railways Budget and it has merged the two categories of “planned” and “non-planned” spending.

According to the Part I of the Economic Survey presented at the beginning of Budget session, growth for fiscal year 2016-17 was 7.1%. Its deflated value is due to demonetisation. Survey implicitly blames the high interest policy of the RBI for thwarting industrial growth.

According to it, the continuing deflationary trends rise from:

• Lower investment ratio.
• Low farm prices.
• The cutting back on development spending by State governments.
• The twin balance sheet problem.

The Survey mentions Uttar Pradesh which had to slash its development spending by 13% in order to waive the farm loan.

However, the situation at the Centre is improving. Exports are positive. Four major reforms are taken:

• GST.
• A new insolvency and bankruptcy code to deal with NPAs.
• A new monetary policy framework.
• Aadhaar linkage.