Post on 07-Aug-2020
transcript
Economic Survey 2017-18
Analysis (Part 1)
Shyam S Kaggod
Economic Survey – Important Points
• Two Volumes• Volume 1-Theoreotical
• Volume 2-Factual
• Do not read all the pages of Vol 2
• Supplement the information from the budget
• Questions can from both the volumes in both Prelims and Mains
Vol 1-Contents• State of the Economy: An Analytical
Overview and Outlook for Policy
• A New, Exciting Bird’s-Eye View of the Indian Economy Through the GST
• Investment and Saving Slowdowns and Recoveries: Cross-Country Insights for India
• Reconciling Fiscal Federalism and Accountability: Is there a Low Equilibrium Trap
• Is there a “Late Converger Stall” in Economic Development? Can India Escape it?
• Climate, Climate Change, and Agriculture
• Gender and Son Meta-Preference: Is Development Itself an Antidote
• Transforming Science and Technology in India
• Ease of Doing Business’ Next Frontier: Timely Justice
Vol 2-Contents• An Overview of India’s Economic
Performance in 2017-18
• Review of Fiscal Developments
• Monetary Management and Financial Intermediation
• Prices and Inflation
• Sustainable Development, Energy and Climate Change
• External Sector
• Agriculture and Food Management
• Industry and Infrastructure
• Services Sector
• Social Infrastructure, Employment and Human Development
Some achievements
• GST council provides an opportunity
• IBC to take care of TBSP
• Rationalization of revenue expenditure
V1C1
Two Vulnerabilities – Twin Deficits
• FD
• CAD
V1C1
How to overcome FD?
V1C1
How to overcome CAD?
• Promote exports
• Promote Make In India
V1C1
Indian Decoupling
V1C1
Indian Decoupling-Reasons-Real Interest Rates (MP)
V1C1
Reasons for Decoupling – Real Interest Rates
V1C1
Indian Decoupling-Reasons-Demonetization
V1C1
Indian Decoupling-Reasons-TBS Challenge
V1C1
Indian Decoupling-Reasons-TBS Challenge
V1C1
Indian Decoupling-Reasons-Oil Prices
V1C1
Outlook
• For 2017-18
• For 2018-19
V1C1
The government needs to
• Banking Reforms (Recapitalization and Consolidation)
• Stable GST
• Privatizing Air India
• Counter disruptions to the economy
V1C1
The Global Outlook
• As per the World Economic Outlook, the global GDP growth • 2016 - 3.2%
• 2017 - 3.6%
• 2018 - 3.9%
V1C1
GST
• Is a unified indirect tax
• Is a destination/consumption based tax
• Came into effect from 1st July 2017
• Will lead to creation of a national market
• GST has a dual structure
• One hidden benefit is – Repository of Information
V1C2
Taxpayer Base
V1C2
Tax base & Spatial distribution
• The size of the tax base and Revenue Neutrality
• The concern of the manufacturing states that a destination based
V1C2
Concern of the manufacturing states
V1C2
Size of the firms and their transactionsV1C2
International Trade, Inter-state trade and Economic Prosperity
• 5 states-Maharashtra, Gujarat, Karnataka, Tamil Nadu and Telangana-account for 70% of India’s exports
• The inter-state trade in India is above 60% of the GDP• The five largest exporting states are Maharashtra, Gujarat, Haryana, Tamil
Nadu and Karnataka
• The five largest importing states are Maharashtra, Tamil Nadu, Uttar Pradesh, Karnataka and Gujarat
V1C2
Relation between prosperity and exports
V1C2
Formality and Informality of the Economy
V1C2
• Hard core Formal (part of tax net & social security net)
• Purely Informal
Savings & Investment - Gross Capital Formation
Gross Savings
Private
Households
(Financial and Physical)
companies
Public
V1C3
GCF
GFCF
Infrastructure such as building, machinery, means of transport,
roads, canal etc
Stock
Change in raw materials, inventories, finished/semi-finished
goods etc
V1C3Gross Capital Formation
Savings and Investment2003 (% of GDP) 2007 (% of GDP) 2017 (% of GDP)
GFCF 26.5% 35.6% 26.4%
Domestic Savings 29.2% 38.3% 29% (for 2016)
V1C3
Savings & Investment
V1C3
Changes in Savings/Investments
V1C3
Two questions
• What should be given more priority – policies to promote investment or policies to promote savings?
• What is the solution?
V1C3
Way Out
• The government has already• Stepped up public investment
• IBC
• Further it needs to• Easing the costs of doing business
• Creating a clear, transparent and stable tax and regulatory environment
• Creating a conducive environment for small and medium industries to prosper and invest, which will revive private investment
V1C3