The Economic Survey 2018 has estimated that the Indian economy will grow by 7-7.5% in 2018-19, thereby re-instating India as the world’s fastest-growing major economy.
Tabled in Parliament on Monday by Finance Minister Arun Jaitley, the Survey says the second half of Financial Year 2018 can clock 6.75% growth.
10 new economic facts
The Economic Survey has relied upon analysis of the new data to highlight 10 new economic facts:
Large increase in registered indirect and direct taxes
There has been a 50% increase in the number of indirect taxpayers. There has also been a large increase in voluntary registrations, especially by small enterprises that buy from large enterprises wanting to avail themselves of input tax credit.
The Survey states that major producing States’ fear that the shift to the new system would undermine their tax collections had been allayed as the distribution of the GST base among them got closely linked to the size of their economies.
Formal non-agricultural payroll much greater than believed
It became evident that when “formality” was defined in terms of social security provisions like EPFO/ESIC, the formal sector payroll was found to be about 31% of the non-agricultural work force. When “formality” was defined in terms of being part of the GST net, such formal sector payroll share was found to be 53%.
States' prosperity is positively correlated with their international and inter-State trade
States that export internationally and trade with other States were found to be richer. Such correlation is stronger between prosperity and international trade.
India's firm export structure is egalitarian
The top 1% of Indian firms account for only 38% of exports, unlike in other countries, where they account for a substantially greater share.
Clothing incentive package boosted exports of ready-made garments
It is pointed out that the Rebate of State Levies (ROSL) has increased exports of ready-made garments (man-made fibers) by about 16% but not of others.
Indian parents' preference for sons
The data highlights another seemingly known fact that Indian society exhibits a strong desire for a male child. It points out that most parents continued to have children until they get a desired number of sons. The survey gives details of various scenarios leading to skewed sex ratios and also gave a comparison on sex ratio by birth between India and Indonesia.
Substantial avoidable litigation in tax arena which government action could reduce
The survey points out that tax departments in India have contested in several tax disputes but with a low success rate of below 30%. About 66% of pending cases account for only 1.8% of value at stake. It further states that 0.2% of cases account for 56% of the value at stake.
To re-ignite growth, raising investment is more important than raising savings
Extrapolating the data, the survey indicates that growth in savings does not bring economic growth whereas growth in investment does.
Direct tax collections by States are significantly lower than those of their counterparts in other federal countries
The survey mentions that collections of direct taxes by the States and other local governments, where they have powers to collect them, is significantly lower than those of their counterparts in other federal countries. A comparison has been given between ratios of direct tax to total revenues of local governments in India, Brazil and Germany.
Extreme weather adversely impacts agricultural yields
The survey captures the footprints of climate change on the Indian territory and the consequent adverse impact on agricultural yields. Extreme temperature increases and deficiency in rainfall have been captured on the Indian map and the geographical changes in agricultural yields are brought out from such data. The impact was found to be twice as large in non-irrigated areas as in irrigated ones.
50% increase in number of indirect taxpayers
“A preliminary analysis of the Goods and Services Tax (GST) data reveals that there has been a 50% increase in the number of indirect taxpayers, besides a large increase in voluntary registrations, especially by small enterprises that buy from large enterprises and want to avail themselves of Input Tax Credits (ITC),” the Survey stated.
According to the Economic Survey, there were 9.8 million unique GST registrants, an increase by 3.4 million compared to the previous tax regime. While Maharashtra, UP, Tamil Nadu and Gujarat have the number of GST registrants, West Bengal has seen the largest increase in the number of tax registrants.
The Survey noted that five States — Maharashtra, Gujarat, Karnataka, Tamil Nadu and Telangana — account for 70% of India’s exports.
‘Feminisation’ of agri-sector
The Survey has observed that the growing rural to urban migration by men has led to ‘feminisation’ of the agriculture sector. There has been a substantial rise in the number of women in multiple roles as cultivators, entrepreneurs, and labourers. The Survey has suggested this change should be taken advantage of by providing women farmers with enhanced access to key resources such as land, water, credit, technology and training.
An ‘inclusive transformative agricultural policy’ should aim at gender-specific intervention to raise productivity of small farm holdings, integrate women as active agents in rural transformation, and engage men and women in extension services with gender expertise, the Survey has stated.
The Survey also noted that the mechanisation is picking up in farm sector. The Survey also suggested land holdings can be consolidated to reap the benefits of agricultural mechanisation.
India's commitment to fight climate change
A separate chapter in the Economic Survey is dedicated to climate change and environment. The Chapter on Sustainable Development, Energy and Climate Change noted that India has strengthened its response to the threat of climate change in accordance with the “Paris Pledge”.
While the share of renewables has trebled in the last 10 years, it stands only at 18% in the total installed capacity of electricity in the country.
Delhi's air pollution finds mention in the Survey
The Survey blames four factors for rising pollution in the National Capital Region — crop residue and biomass burning, vehicular emissions, redistributed road dust from industries and power plants, and winter temperature inversion due to lack of humidity and absence of wind.
It has also suggested short-, medium- and long-term solutions to combat air pollution. The suggestions range from levying fines to improving public transport to using technologies such as Happy Seeder machines and satellite mapping.
Pendency of cases taking its toll on economy
The Survey noted that both the government and the courts should come together to find a solution to address the large pendency of cases. It has made a few suggestions:
* Expanding judicial capacity in lower courts to reduce the burden in higher judiciary
* Tax department can exercise greater self restraint by limiting appeals
* Increasing state expenditure on the judiciary, especially on modernisation and digitisation
* Creation of subject- or stage-specific Benches in High Court just like Supreme Court
* Prioritising stayed cases and imposing stricter timelines
* Improving Courts Case Management and Court Automation Systems
Towards gender equality
While India has made notable progress in women development, the preference for son is resulting to a skewed sex ratio, the Survey has pointed out. The north-eastern States are showing the way to the rest of the country when it comes to gender equality.
The Survey has recommended that the nation must confront the societal preference for male offspring. Noting that schemes such as Beti Bachao, Beti Padhao, Sukanya Samridhi Yojana and mandatory maternity leave are steps in the right direction, the Survey has called for stronger commitment on the gender front just like how the government is committed towards Ease of Doing Business.
How much does a rural household save by using a toilet?
The Economic Survey has observed that the quality of hygiene and sanitation had a significant impact on improving the health outcomes. The Swachh Bharat Mission has increased the sanitation coverage in rural India from 39% in 2014 to 76% in January 2018.
Eight States and two Union Territories have been declared Open Defecation Free (ODF). Today, more than 90% of individuals have access to toilets.
Quoting a UNICEF report, the Survey has said a household in an ODF village saves up to Rs. 50,000 every year.
'India needs to be a net producer of knowledge'
As India emerges as one of the world’s largest economics, it needs to gradually move from being a net consumer of knowledge to becoming a net producer, the Survey has noted.
The Survey has suggested that the country has to “rekindle the excitement and purpose that would attract more young people to scientific enterprise”. It has also stressed the need to invest in science to address the multiple uncertainties arising due to climate change and new emerging threats, such as cyber warfare, to autonomous military systems.