The Economic Survey 2013-14, which was tabled on Wednesday in the Lok Sabha, has pegged GDP growth for the year 2014-15 in the range of 5.4-5.9 per cent.
"There are downside risks to the economy arising from a poor monsoon, the external environment and the poor investment climate. GDP growth slowed to below 5 per cent for two consecutive years, i.e. 2012-13 and 2013-14. The combination of domestic structural constraints, inflationary pressures, particularly food inflation and uncertainty in the global economy, has affected growth and posed challenges for macroeconomic stability," said the Survey.
Agriculture and allied sector grew at 4.7 per cent, while industry grew at 0.4 per cent in 2013-14.
"The key reasons for poor performance have been contraction in mining activities and deceleration in manufacturing output. Manufacturing and mining sector GDP declined by 0.7 per cent and 1.4 per cent respectively in 2013-14. The underlying cause of the poor performance of these two sectors has been considerable deceleration in investment, particularly by the private corporate sectorduring 2011-12 and 2012-13," it said.
Consumer price inflation declined from 10.21 per cent during FY 2013-14 to about 9.49 per cent in 2013-14. However, food inflation remained stubbornly high during FY 2013-14. Contribution of the commodity sub-groups, ‘fruits and vegetables’, as well as ‘egg, meat and fish’ to the food inflation has been very high.
India’s balance-of-payments position improved in 2013-14 with current account deficit (CAD) at 32.4 billion (1.7 per cent of GDP) as against $88.2 billion (4.7 per cent of GDP) in 2012-13.
"India's exports at $312.6 billion grew by a positive 4.1 per cent compared to the previous year’s negative growth of 1.8 percent. Import growth decelerated from 0.3 per cent in 2012-13 to a negative 8.3 per cent in 2013-14, owing to fall in non-oil imports by 12.8 per cent primarily due to restrictions on gold imports," said the document.
But public finances faced serious challenges, with a shortfall in tax revenues and disinvestment receipts and higher than budgeted subsidies, interest and pension payments, fiscal consolidation was mainly achieved through a reduction in grants for creation of capital assets and capital expenditure.
"An important factor in the increase in the Centre’s fiscal deficit after 2008-09 has been the sharp increase in subsidies from 1.42 per cent of GDP in 2007-08 to 2.56 per cent of GDP in 2012-13. For 2013-14 the subsidy bill is 2.26 per cent of GDP," it said.
The Survey identifies the need to address long run problems to improve the investment climate. It emphasises the need for creating a framework for low and stable inflation, setting public finances on a sustainable path by tax and expenditure reform, and creating the legal and institutionalframework for a well-functioning market economy.
"The Survey calls for putting public finances on the sustainable path through fiscal correction, a new Fiscal Responsibility and Budget Management (FRBM) Act with teeth, better accounting practices, greater transparency and improved budgetary management. It argues that improvements on both tax and expenditure are needed to obtain high quality fiscal adjustment," said a press release.
This year's Economic Survey also discusses the need for revamping some of the social sector schemes such as MNREGA, NRHM, SSA, etc.
"It is felt that the outlays for the different schemes have not often translated fully into outcomes owing to the poor delivery mechanism. Leveraging modern technology for efficient delivery of programmes, removing the multiple layers of governance, simplifying procedures, and greater participatory role by the beneficiaries can help in creating a better delivery mechanism," it said.
(Data from Press Information Bureau)