GDP growth pegged at 6-6.5%

New Delhi: The Economic Survey on Friday projected revival of economic growth to 6-6.5 per cent in the next fiscal beginning April 1 but suggested the government to relax the Budget deficit target to boost growth from a decade low.

The Survey, released a day before Finance Minister Nirmala Sitharaman presents the Union Budget for 2020-21, called for cutting food subsidy while at the same time looking at businessmen with respect as they create wealth and jobs.

Facing the worst economic slowdown since the global financial crisis of 2008-09, the Survey called for boosting manufacturing with "assemble in India for the world" concept so as to boost job creation. For the current fiscal, it projected a GDP growth of 5 per cent, the lowest in 11 years, and worsening job prospects.

"The deceleration in GDP growth can be understood within the framework of a slowing cycle of growth with the financial sector acting as a drag on the real sector," it said. "The government must use its strong mandate to deliver expeditiously on reforms, which will enable the economy to strongly rebound in 2020-21."

Survey-author Krishnamurthy Subramanian, Chief Economic Adviser to the Finance Ministry, rejected his predecessor Arvind Subramanian's analysis of India's GDP growth rate being overestimated by 2.7 per cent post-2011, saying the allegation was "unfounded" and "unsubstantiated by the data".

As has been argued earlier, the government has to prioritise growth, the Survey for 2019-20, which was tabled by Sitharaman in Parliament, said CEA.

And for this, relaxing the fiscal deficit target could be considered, said the Survey — an annual report card on the economy.

Sitharaman had projected the fiscal deficit at 3.3 per cent of the gross domestic product in her budget for 2019-20 but it is widely seen slipping to 3.8 per cent as the slowdown lowered revenue collections and the government provided a tax stimulus to spur investments.

This will be the third straight year when the government will miss its fiscal deficit target.

Once the momentum picks up, the government can take action to consolidate its expenses. Several economies have done this in the past. Cutting some of the Rs 1.84 lakh crore food subsidy Bill can create the fiscal space, the Survey said.

It emphasised on raising capital expenditure (and reducing revenue expenditure) that leads to asset creation.

This means economic growth, which primarily is driven by consumer spending, has to now come from greater investments. The Survey emphasized on investment-led growth by focusing on reviving the MSME sector.

To further make it easier to do business, it suggested removing the red tape at ports to promote exports as well as measures to make it easier to start a business, register property, pay taxes and enforcing contracts.

Printed in lavender colour — the same as the colour of the new 100 rupee currency note, the oldest currency note in circulation in the country, the theme of this year's economic survey is wealth creation.