Economic Survey expects GDP to grow at 7% in 2019-20

The Economic Survey 2019 was tabled in Parliament today. The Economic Survey expects Indias gross domestic product (GDP) to grow at seven per cent for financial year 2019-20. The GDP growth rate for the previous fiscal was 6.8 per cent.

It put the general fiscal deficit at 5.8 per cent for 2018-19 against 6.4 per cent in 2017-18. At 5.8 per cent, the fiscal deficit is up from revised budget estimate of 3.4 per cent and a cause of concern for the government.

The Economic Survey referred to Prime Minister Narendra Modi’s stated target of making India a $5 trillion economy by 2025 and said that to achieve the target, the country needs to grow at eight percent.

The GDP growth rate has remained below that mark for some time now. The survey said fall in nominal GDP growth rate has been due to problems faced by manufacturing sector.

The Economic Survey has said that decline in the non-performing assets (NPAs) should help push the capital expenditure cycle.

Key pointers from Economic Survey

  • Farmers may have produced less in FY19 on food price fall.
  • January-March economic slowdown due to poll related activity.
  • The survey says revenue collection would be adversely affected in 2019-20 if GDP growth rate slows down.
  • The government stood by the fiscal consolidation path.
  • NBFC stress among the reasons for slowdown in 2018-19.
  • Greenshoots in investment seems to be taking hold.
  • Accommodative policy of the Monetary Policy Committee of the Reserve Bank of India is likely to help cut real lending rates.
  • Investment rate was seen higher in 2019-20 on higher credit growth.
  • Investment rate seems to have bottomed out.
  • Decline in NPAs should push up CAPEX cycle.
  • Oil prices are likely to decline.
  • Good news from rural India is that rural wage growth has gone up since mid-2018.