Economic Survey 2018 crucial findings, projections: Mixing caution & optimism

Budget 2018

Cautious, optimistic, or both? Either way, the Economic Survey 2018 has been described as "a must-read for all seeking to improve their understanding of the Indian economy". Pegging GDP growth for FY19 at 7-7.5 per cent, the survey also flagged various hurdles the economy and its sectors would face, including the threat from rising oil prices and climate change.

For the "first time in India's history", as stated by the survey, state-wise data on international exports was dwelt upon in the document. The data indicate a strong correlation between export performance and the standard of living in states. Further, Chief Economic Advisor Arvind Subramanian said in the Economic Survey, presented in Parliament on Monday, that the government cannot rule out a pause in its fiscal consolidation plan in the coming financial year.

ALSO READ: Economic Survey prescription: Beat investment slowdown with public spending

Other issues, such as the health of Indian markets, the impact of oil prices on growth, climate change, and the impact of the Goods and Services Tax (GST) and other reforms, etc, were also discussed in the survey.

ALSO READ: Economic Survey: Revamp judicial system to ensure ease of doing business

Here are the key details the survey presented:

1) Optimistic about growth

Writing for the Business Standard, Mihir S Sharma says that Subramanian struck an optimistic note about economic growth going forward. The survey said that in the second half of the financial year, there were "robust signs of growth". It predicted that growth for the full 2017-18 financial year would be higher than the Central Statistics Office's prediction of 6.5 per cent at 6.75 per cent year on year. Further, it projected that growth in FY19 would be between 7-7.5 per cent, having received a boost from the fading of the disruption caused by demonetisation, a recovery in global demand, and select domestic policy actions. If the survey is accurate, India will reclaim the tag of the fastest-growing large economy in the world.

ALSO READ: Economic Survey 2018 may not shape Budget, but it is a treasure of insights

However, Sharma writes that the survey has gone with an optimistic view of growth, based on certain aspects of its analysis of the ongoing financial year. The survey noted the "higher than expected" fiscal deficits, current account deficit, and inflation in 2017-18. It added that the manufacturing sector continued to struggle, with the ratio of factory exports to GDP and the manufacturing trade balance declining. The survey also noted that the agriculture sector has not witnessed an increase in real value added for the past four years.