The Economic Survey 2017-18 was tabled in Parliament this afternoon. The report card of the Indian economy for financial year 2017-18 pegged the growth rate for India’s economy in 2018-19 between 7 and 7.5 per cent. The survey has been authored by Chief Economic Adviser Arvind Subramanian. Here are the ten new facts about the Indian economy as highlighted in the economic survey.
Increase in taxpayers
The survey said that after the preliminary analysis of Goods and Services Tax data, there has been a 50 per cent jump in the number of indirect taxpayers and a huge increase in voluntary registrations, particularly by small enterprises. The number of individual income tax filers increased by over 18 lakh since November 2016 — the same month when demonetisation was implemented.
Formal non-agricultural payroll larger
The survey observed that the formal sector, particularly formal non-farm payroll, was significantly larger than the size perceived till now. It said that when the formality was defined in terms of social security provisions like employees’ state insurance and provident fund, the formal sector payroll was 31 per cent (7.5 crore employees) of the entire non-agricultural workforce. Similarly, when it was defined in terms of share in GST net, the same formal sector payroll was calculated to be around 53 per cent (12.7 crore employees).
States with international and interstate trade richer
The survey, for the first time ever in India’s history, tackled international exports of states. It said that the data indicated a correlation between a state’s export performance and the standard of living of its citizens. It found that the states which exported internationally and carried out interstate trade were richer. It found the correlation to be stronger when considering prosperity and international trade.
Top one per cent of firms hold only 38 pc share in exports
The report analysed India’s exports and found them “unusual” as the largest firms held a much smaller share of exports when compared to other comparable countries and economies. It said that India’s top one per cent of firms held only 38 per cent share in exports which was a stark contrast from countries like Brazil, Germany, Mexico and USA where the share of largest 1 per cent firms was 72, 68, 67 and 55 per cent, respectively. It said that a similar tendency was found to be true for the top five or ten per cent Indian companies as well.
The survey said that the clothing incentive package — rebate of state levies (ROSL) — ramped up the exports in ready-made garments (man-made fibers) by nearly 16 per cent. This was not the case with others, the survey found.
Skewed sex ratio
The survey also touched upon the skewed sex ratio in the country. It pointed out that the Indian society is facing the problem wherein a large number of parents continued to have children till they get the desired number of sons.
“The skewed sex ratio in favour of males led to the identification of “missing” women. But there may be a meta-preference manifesting itself in fertility stopping rules contingent on the sex of the last child, which notionally creates “unwanted” girls, estimated at about 21 million. Consigning these odious categories to history soon should be society’s objective. The government’s Beti Bachao, Beti Padhao and Sukanya Samridhi Yojana schemes, and mandatory maternity leave rules are all steps in the right direction”
Avoidable tax litigation
The Economic Survey highlighted the fact that tax departments “have gone in for contesting against
several tax disputes but also with a low success rate which is below 30 per cent.” It said that as much as 66 per cent of pending cases only accounted for 1.8 per cent of the value at stake while 0.2 per cent dealt with 55 per cent value at stake. It held that government action could significantly reduce avoidable tax litigations in India.
Growth due to investment, not savings
After extrapolating data, the survey found that increase in growth was achieved from an increase in investment and not savings. “India’s unprecedented climb to historic high levels of investment and saving rates in the mid 2000s has been followed by a pronounced, albeit gradual, decline. This current episode of investment and saving slowdown is still ongoing.”
The survey, analysing investment patterns, saving slowdown and recoveries, observed the slowdown in investments had an impact on growth but “not necessarily saving,” adding, “The policy conclusion is urgent prioritization of investment revival to arrest more lasting growth impacts, as the government has done with plans for resolution of bad debts and recapitalization of public sector banks.”
Direct tax collection by Indian states
The report found that the collection of direct tax by empowered states and local government was much less when compared to counterparts in federal countries. The survey compared ratios of direct tax and total revenue between India, Brazil and Germany.
It said: “Long-run institutional development co-evolves with fiscal accountability involving, perhaps requiring, a low and declining dependence on devolved resources and a high and rising share of direct taxes in total taxes. India’s second and third tiers of government tend to under-perform relative to these standards, adding “One key finding is that these tiers under-collect direct taxes even relative to the powers that they have. Whether this could lead to a low equilibrium trap of weak direct tax collection leading to inadequate service delivery provision, back to weak collection and accountability, needs to be actively discussed.”
Agriculture and a good crop output are crucial to India’s economic growth. In that respect, climate change assumes great significance as it has a direct bearing on agricultural performance. The survey, capturing the footprint of climate change across the country, said: “Extreme temperature increases and deficiency in rainfall have been captured on the Indian map and the graphical changes in agricultural yields are brought out from such data. The impact was found to be twice as large in un-irrigated areas as in irrigated ones.”