India’s policy-makers needed to be watchful of the high global oil prices and elevated stock prices even as the temporary impact of demonetisation and implementation of the goods and services tax was fading and the economy was set for a robust and broad-based recovery, Arvind Subramanian, chief economic adviser, author of the economic survey, said. The economic survey pegged economic growth rate for the current financial year at 6.75% higher than 6.5% projected by the Central Statistics Office.
“GST launch a big transformational event of 2017-18…the promise of GST going forward looks very good. Economy is picking up as temporary impact of GST and demonetisation is dissipating, exports also picking up,” he said at the customary press conference after the presentation of the economic survey in Parliament.
However, he warned that high global oil prices might spoil the party and affect GDP growth while pushing inflation. “This year, oil prices went up significantly and affected consumption, government finances and held back real economic activity…If this continues, GDP growth will drop, and inflation will spike in the coming quarters,” he said.
The survey, which has a pink cover to express support to women empowerment, came in the two volumes. The previous year’s economic survey was presented in two parts, one was tabled on January 31 and the second on August 11.
He pointed out that not only did India improved its position in ease of doing business ranking but its sovereign rating too went up after 14 years. He, however, said that the agriculture sector must be further supported. Stabilising GST implementation and resolving the twin balance sheet problem relating to the banking as well as corporate sectors and privatising the ailing Air India must get priority, Subramanian added.
“Policy agenda for the year ahead would be to support agriculture, stabilise GST, complete TBS actions with reforms, privatise Air India and head-off macroeconomic pressures and possibility of a sudden stall from rising oil prices and sharp correction in stock prices,” he noted.