The Survey, however, cautions that the country might face a challenge from an economic slowdown impacting tax collections amid rising state expenditure on the farm sector
Economic Survey 2019, tabled in Parliament on Thursday, painted an optimistic picture of the Indian economy, projecting the country’s gross domestic product (GDP) would grow at seven per cent in 2019-20, against a five-year low of 6.8 per cent the previous year, with political stability aiding a pick-up in demand and investments. India would need to grow at 8 per cent annually to become a $5-trillion economy by FY25, the Survey estimated.
The forecast is the same as the Reserve Bank of India’s reading, which in June lowered its projection by 20 basis points from 7.2 per cent. A gloomy global outlook spawned by US-China trade tensions also prompted the central bank to cut interest rates three times this year, with the focus now shifting to the government’s Budget on Friday for measures to support the economy.
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The finance ministry said in its annual Economic Survey report that upside and downside risks to growth were evenly balanced, with monsoon rainfall seen tipping the scales. “The political stability in the country should push the animal spirits of the economy, while the higher capacity utilisation and uptick in business expectations should increase investment activity,” said the Survey, authored by Chief Economic Advisor Krishnamurthy Subramanian.
Prime Minister Narendra Modi’s government is widely expected to push up spending to spur economic growth through tax incentives to boost consumer demand and investment, officials of the Bharatiya Janata Party (BJP) said. Modi won a second term with a landslide victory in general elections held in April and May.
Source: Business Standard
