New Delhi, Jan 29: The first Economic Survey after the introduction of Goods and Services Tax, considered to Independent India’s biggest tax reform, has pegged country’s growth at 7-7.5 per cent in the financial year 2018-19. The Economic Survey 2017-18, tabled in Lok Sabha by Finance Minister Arun Jaitley, highlighted that while services sector is expected to grow for at 8.3 per cent in FY18, industrial growth will be at 4.4 per cent, and agriculture sector will grow at 2.1 per cent. Also Read - Late Arun Jaitley's Son Rohan Files Nomination For DDCA President's Post
Explaining the major points of the Economic Survey during a press conference in New Delhi, Chief Economic Adviser Dr Arvind Subramanian listed Goods and Services Tax (GST) as one of the three big achievements of the Modi government as far as country’s economy is concerned. Also Read - 'Miss my Friend a Lot,' Says PM Modi on 1st Death Anniversary of Arun Jaitley; Many Political Leaders Pay Tribute
“Major achievements this year gone are the launch of Goods & Services Tax, decisive tackling of Twin Balance Sheet challenge and validation of achievements and recognition of medium term prospects,” Subramanian said. Also Read - Year-Ender 2019: Country's Political Bigwigs Who Left us in The Year Gone by
The Survey underlined that the economy began to accelerate in the second half of the year and can clock 6.75 per cent growth this fiscal due to the launch of transformational Goods and Services Tax reform on July 1, 2017 and resolution of the long-festering Twin Balance Sheet problem by sending the major stressed companies for resolution under the new Indian Bankruptcy Code.
“The transformational Goods and Services Tax (GST) was launched in July 2017. With a policy change of such scale, scope, and complexity, the transition unsurprisingly encountered challenges of policy, law, and information technology systems, which especially affected the informal sector. Expeditious responses followed to rationalize and reduce rates, and simplify compliance burdens,” the Economic Survey said. (Also Read: Economic Survey 2018: Rising Oil Prices Cause of Concern – Highlights)
“The first new issue—yet in some ways the oldest issue—is agriculture. Successful economic and social transformation has always happened against the background of rising agricultural productivity. In the last four years, the level of real agricultural GDP and real agriculture revenues has remained constant, owing in part to weak monsoons in two of those years,” it added.
The Economic Survey also pointed out that the economy management is likely to be challenging in the financial year 2018-19.
DeMo Hampered Production
The Economic Survey further adds that the Modi Government’s November 8, 2016 step of demonetisation particularly affected the informal production section which mainly deals in cash.
“Demonetisation temporarily reduced demand and hampered production, especially in the informal sector, which transacts mainly in cash. This shock largely faded away by mid-2017, when the cash-GDP ratio stabilised. But at that point GST was introduced, affecting supply chains, especially those in which small traders (who found it difficult to comply with the paperwork demands) were suppliers of intermediates to larger manufacturing companies,” the Economic Survey says. (Also Read: Govt Committed to Empowerment and not Appeasement’, Says President Kovind in Parliament)
It said that India can be rated as among the best performing economies in the world as the average growth during last three years is around 4 percentage points higher than global growth and nearly 3 percentage points higher than that of emerging market and developing economies.
Finance Minister Arun Jaitley will be presenting the Union Budget 2018 for the fiscal year 2018-19 on February 1.