Economic Survey 2019 Highlights: On Economic Survey, KV Subramanian Says Investment A Key Driver

Delhi Chief Minister Arvind Kejriwal expressed concern over "worrying signs" for country's economy, pointing to "virtually stagnant" GDP growth rate, as the Economic Survey report was presented in Parliament on Thursday, reported news agency PTI.

India's economic growth will rebound from a five-year low this year, but would need a huge boost in spending and reforms to accelerate higher rate of expansion to double the economy's size to USD 5 trillion by 2024-25, the pre-Budget Economic Survey said.

Mr Kejriwal, however, feared a "slowdown" in the economy.

"Economic Survey presented in the Parliament today signals towards worrying signs for our economy. GDP growth rate is virtually stagnant and all indicators point that we are in a slowdown," he tweeted.

"From the highest level of economic policy uncertainty in 2011-12, India has made leap into the era of high economic policy certainty. The Graph of Indian growth story is on an upward trajectory," said former Finance Minister Arun Jaitley, tweeting about the Economic Survey.

India is set to witness a sharp slowdown in population growth over the next two decades, the Economic Survey said Thursday and suggested raising retirement age and merging schools as there would be less children, reported news agency PTI.

Although the country as a whole will enjoy the ''demographic dividend'' phase, some states will start transitioning to an ageing society by the 2030s, as per the Economic Survey 2018-19, presented in parliament by Finance Minister Nirmala Sitharaman.

"It will surprise many readers to learn that population in the 0-19 age bracket has already peaked due to sharp declines in total fertility rates (TFR) across the country," it said.

At present, TFR of 2.1 children per woman is called the replacement level fertility, which is the average number of children a woman would need to have in order for the population to replace itself.

The southern states, Himachal Pradesh, Punjab, West Bengal and Maharashtra now have fertility rates well below the replacement rate.

TFR in Bihar, Uttar Pradesh, Jharkhand, Chhattisgarh, Rajasthan and Madhya Pradesh are above the replacement rate but are also experiencing significant declines, reported PTI.

"The age distribution, however, implies that India''s working-age population will grow by roughly 9.7 mn per year during 2021-31 and 4.2mn per year in 2031-41," it said.

CPI(M) general secretary Sitaram Yechury Thursday alleged that the Economic Survey is full of "bombastic" claims and "grandiose" declarations, but lacks basic facts, reported news agency PTI.

The Left leader also said the survey "whitewashes" the "terrible" economic record of the last five years and hit out at the government over the resignation of top RBI officials.

The pre-Budget Economic Survey said India's economic growth will rebound from a five-year low this year, but would need a huge boost in spending and reforms to accelerate higher rate of expansion to double the economy's size to USD 5 trillion by 2024-25.

"The Economic Survey is full of bombastic claims and grandiose declarations without any basis in facts. Any growth strategy based on private investment will be a non-starter; economic growth needs more purchasing power amongst people, not more investment with higher unemployment," Mr Yechury tweeted.

The survey "glosses over the major challenges faced by millions of Indians and whitewashes the terrible economic record of past five years", he said.

Terming highways as a catalyst for economic growth, the Economic Survey Thursday said private sector investments in the sector remained "tardy" as such investors are interested in putting their money on a short-term basis.

Even though the investment in highways has grown more than three times to Rs 1.58 lakh crore in 2018-19 availability of funds for financing large projects remains a bottleneck, the key document said, reported news agency PTI.

The survey also noted that the National Highways Authority of India (NHAI) and the National Highways and Infrastructure Development Corporation Ltd were looking for long-term investments as the gestation period of road projects is long.

There are also the associated risks from the projected revenue streams not materialising from tolls because of uncertainty of traffic, it said.

Roads are part of an integrated multi-modal system of transport which provides crucial links to airports, railway stations, ports and other logistical hubs and acts as a catalyst for economic growth by playing a critical role in the supply chain management, the survey document noted.

"The major constraints faced are availability of funds for financing large projects, lengthy processes in acquisition of land and payment of compensation to the beneficiaries, environmental concerns, time and cost overruns due to delays in project implementation, procedural delays, lesser traffic growth than expected increasing the riskiness of the projects resulting in stalled or languishing projects and shortfall in funds for maintenance," it said.

This dominant mode of transportation in comparison with rail, air traffic and inland waterways and accounts for about 3.14 per cent of GVA (Gross Value Added) and 69 per cent and 90 per cent of the country wide freight and passenger traffic respectively, the survey said.

It budgetary support accounted for 48 per cent of the investments in 2018-19 and Internal and External Budgetary Resources (IEBR) accounted for 39 per cent with private investment accounting for only 14 per cent.

India has a road network of about 58.98 lakh kilometres as on March 31, 2017 with rural roads constituting 70.65 per cent and the national highways constituting 1.94 per cent.

The Ministry of Road Transport and Highways (MORTH) has declared 2018-19 as the ''Year of Construction'' and has been making constant efforts to expand and upgrade the network of the national highways in the country as a result of which road construction in kilometres grew at 30 kilometres per day in 2018-19 as compared to 12 kilo metres per day in 2014-15, the survey said.

"Economic Survey2019 is pessimistic about the economy and makes a feeble attempt to wake up the ruling party from its deep slumber of inaction on the economic front," Mr Surjewala said in his tweet.

Former finance minister P Chidambaram on Thursday said there are no sector-wise growth projections in the pre-Budget Economic Survey tabled in parliament and the government itself appears to be pessimistic about the economy.

In a statement, the senior Congress leader said the findings of the economic survey 2018-19 were neither positive nor encouraging.

"It appears to me that the government, speaking through the economic survey, is pessimistic about the economy," he was quoted as saying by news agency PTI.

Mr Chidambaram said the economic survey 2018-19 is the first of the new government under Finance Minister Nirmala Sitharaman.

"I looked for the Outlook for 2019-20. It is in Volume-2, Chapter 01, but there is only a bland statement that growth of the economy expected to be 7 per cent in 2019-20. There are no growth projections sector-wise," he said.

The Congress leader said the closest in terms of describing the outlook for 2019-20 can be found in Volume-2, Chapter 02.

"The economic survey flags (1) slowing growth, (2) shortfall in revenue, (3) finding resources without compromising the fiscal deficit target, (4) impact of oil prices on the current account and (5) recommendations of the Fifteenth Finance Commission on central government finances. I am afraid, none of these is positive or encouraging," he said.

According to the economic survey, India's economic growth, which is expected to rebound from a five-year low to 7 per cent this year, now needs to shift gears to accelerate and sustain a higher growth rate to become a USD 5-trillion economy by 2024-25.

Chief Economic Adviser KV Subramanian  in a series of tweets elaborated the key aspects of the Economic Survey. "One of the biggest hurdles to #Economy5trillion is poor enforcement of contracts and dispute resolution," he said.

In an unpredictable world, policymaking needs: 1. Clear Vision: #Economy5trillion, 2. Strategic blueprint: #EcoSurvey2019,3. Tactical tools for constant recalibration based on real time data. Data must be created as a public good "of the people, by the people, for the people" 2/5

- K V Subramanian (@SubramanianKri) July 4, 2019

One of the biggest hurdles to #Economy5trillion is poor enforcement of contracts and dispute resolution. Steps to speed up legal process should be top priority. #EcoSurvey2019 shows that required efficiency gains & appointments are large but achievable 5/5

- K V Subramanian (@SubramanianKri) July 4, 2019

 

Investment rate, which was declining from 2011-12 seems to have bottomed out, is expected to pick up further in the year 2019-20 on the back of higher credit growth, said the Economic Survey. 

The Economic Survey analyses the trends in agricultural and industrial production, infrastructure, employment, money supply, prices, imports, exports, foreign exchange reserves and other relevant economic factors which have a bearing on the Budget. Read here to understand the  Economic Survey better.

An economic survey projecting the state of health of the country''s economy and outlining the challenges will be tabled in Parliament today.

The survey prepared by Chief Economic Adviser Krishnamurthy Subramanian is likely to flag headwinds that the economy might face in its pursuit to become the world''s fifth largest economy.

It is also likely to detail reforms road map needed to fulfil Modi''s goal of more than doubling the size of the economy to USD 5 trillion by 2024.

The survey, which traditionally has chapters on macro economy as well as industry and different sectors and the outlook, will come a day ahead of Finance Minister Nirmala Sitharaman presents the first budget of the Modi 2.0 government.