The Indian Economy is poised for a growth between 8.1% and 8.5% during the next fiscal year, as per the Economic Survey 2014-15 of the Government of India released on Friday. The survey said that the country had attained a sweet spot which was rare in the history of nations, from where it can grow at a rate of double digit figure.
The survey mentioned the clear cut political mandate for economic reform and the favorable external environment as reasons for the bright prospect of the Indian economy. It called upon the central government to make full use of the economic situation prevailing in the country by taking decisive policy decisions in some sectors, and pursuing “creative incrementalism” in some others.
On the domestic front, low inflation rate facilitated scaling down of interest rates, while on external front, low oil prices helped keep within limits both the current account deficit and fiscal deficit. Both these phenomena contributed to the creation of the “sweet spot”. The survey suggested bold steps towards the economic reforms that would further augment the bright Indian economic situation. A majority of bold steps suggested included rationalization of subsidies, reformation of labor laws, and ensuring conversion of ordinances on land acquisition, insurance, and coal into acts. Rolling out GST was another bold step suggested which would ensure fiscal discipline. The political mandate, as referred in the survey, should be used effectively for far reaching reforms. The survey advocated pushing of direct transfer of cash through JAM Number Trinity Solution for the protection of the interests of the poor. On its successful implementation, India could achieve a lot in years to come on the economic front.
The survey’s tone appears to have convinced markets that India’s Finance Minister, Arun Jaitley, was likely to present a bold and pro-reform budget today on Saturday. We will come to know about whether these hopes are bellied or vindicated in a few hours from now.