New Delhi: India’s economy is expected to grow by 7 per cent in the 2019-2020 fiscal year, up slightly from a five-year low recorded in the past year, according to an annual government forecast released on Thursday.
The “Economic Survey” is based on key economic indicators and informs the annual budget, which will be presented in parliament today by the re-elected government of Prime Minister Narendra Modi.
India’s economy grew at an annual rate of just 6.8 per cent in the 2018-2019 period, according to preliminary estimates, marking the lowest rate in five years. India’s fiscal year runs from April to end-March of the following year.
GDP growth slowed even further towards the end of the last fiscal year falling to 5.8 per cent in the first three months of 2019.That meant the country lost the tag of fastest growing major economy to China.
The latest estimates come “on the back of an anticipated pick-up in growth of investment and acceleration in growth of consumption,” the survey said.
Modi, who was re-elected for his second term at the end of May, faces a daunting challenge in reviving India’s sluggish economy amid concerns over unemployment and a deepening agrarian crisis. The survey, prepared by the government’s chief economic adviser, Krishnamurthy Subramanian, also presents a blueprint to reach Modi’s goal of turning India into a 5-trillion-dollar economy in the next five years.
The survey “also depicts the gains from advancement in the social sector, adoption of technology and energy security,” Modi said on Twitter.
India is currently a 2.8-trillion-dollar economy. It is likely to overtake Britain this year to become the fifth largest economy in the world, according to Indian officials.
Subramanian told reporters that India will need to average 8-per cent-growth every year to almost double the economy and meetModi’s target.
Despite the recent slowdown, Subramanian said that sustaining a growth rate of 8 per cent was possible through a “virtuous cycle of savings, investment, exports and jobs.”
Yet India could face a challenge on the budget front in the coming months, as the recent slowdown is expected to impact tax revenue at a time of rising state spending on the farm sector, broadcaster NDTV reported, citing the survey.
Other challenges will include rising oil prices due to sanctions on Iran, from where India imports a lot of its oil, as well as below-target revenue from a composite goods and services tax that was meant to raise funds for major spending schemes. — dpa
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