The Economic Survey 2015-16, tabled today in the Parliament by Union Finance Minister Shri Arun Jaitley, projects a 7-7.5 per cent GDP growth rate in the next fiscal and forecasts that it accelerate to 8 per cent in the next couple of years. An annual report by the Government, the Survey presents a macro-economic perspective on the country’s growth and development, summarising the performance of major development programmes and highlighting policy initiatives of the government in the short to medium term. While highlighting the global environment as challenging, this year’s Survey remains optimistic of the Indian economy stating “India stands as a haven of stability and an outpost of opportunity”. The survey cautions that the Indian economy must be fortified against possible spillovers of the international volatility and the government should recalibrate expectations. It also highlights the need for Goods and Services Tax (GST) as a reforms measure, which, according to estimates, will affect between 2 to 2.5 million Excise and Service Tax payers. The Survey also proposes widening the tax net from 5.5 per cent of earning individuals to more than 20 per cent by reasonable taxation of the better-off individuals with income from real estate and agriculture and phasing out of the tax exemption Raj. The Economic Survey 2015-16, tabled today in the Parliament by Union Finance Minister Shri Arun Jaitley, projects a 7-7.5 per cent GDP growth rate in the next fiscal and forecasts that it accelerate to 8 per cent in the next couple of years. An annual report by the Government, the Survey presents a macro-economic perspective on the country’s growth and development, summarising the performance of major development programmes and highlighting policy initiatives of the government in the short to medium term. While highlighting the global environment as challenging, this year’s Survey remains optimistic of the Indian economy stating “India stands as a haven of stability and an outpost of opportunity”. The survey cautions that the Indian economy must be fortified against possible spillovers of the international volatility and the government should recalibrate expectations. It also highlights the need for Goods and Services Tax (GST) as a reforms measure, which, according to estimates, will affect between 2 to 2.5 million Excise and Service Tax payers. The Survey also proposes widening the tax net from 5.5 per cent of earning individuals to more than 20 per cent by reasonable taxation of the better-off individuals with income from real estate and agriculture and phasing out of the tax exemption Raj. The attached note captures key highlights of the Economic Survey 2015-16. Please reach out to us, should you wish to understand more about the Survey and its implications on business.

1. ECONOMIC SURVEY
OF INDIA
2015-16

2. The Economic Survey 2015-16, tabled today in the Parliament by Union Finance Minister Shri Arun
Jaitley, highlights the turbulent external environment against which it has been presented. There are
significant risks of weaker global acKvity, markets faltering and extreme events rising. Yet as the
Survey states, “India is a refuge of stability and an outpost of opportunity”. The Indian economy has
seen a reducKon in macro-vulnerability and has moved towards notable growth. It is likely to be the
fastest growing major economy in the world in 2016 owing to reforms in key areas, pursuit of fiscal
prudence and focus on price stability. The report pegs growth rate in the range of 7 to 7.5 per cent in
2016-17. With controlled inflaKon and comfortable level of external current account in the country,
it is likely that growth rates of 8 per cent or higher may be achievable in the next couple of years.
Considering that global growth averaged 3.1 per cent in 2015, with advanced economies improving
modestly since 2013 and the emerging economies’ consistently declining trend in growth rate since
2010, the Indian growth story appears parKcularly bright. India’s contribuKon in the global economy
has become much more valuable today with China’s rebalancing economy. The Survey says that the
growth revival in India acould be ascribed to its predominantly consumpKon driven economy.
The Survey says that although agriculture is likely to register low growth for the second year in a row
on account of weak monsoons, it has performed beXer than last year. Industry has shown significant
improvement primarily on account of the acceleraKon in manufacturing (9.5 per cent vis-à-vis 5.5
per cent in 2014-15). Meanwhile, the growth in services sector has moderated slightly.
On the fiscal front, the economy appears to be registering three successes: ongoing fiscal
consolidaKon, improved indirect tax collecKon efficiency, and an improvement in the quality of
spending at all levels of government. The report further states that despite challenges and decline in
nominal GDP growth relaKve to the Budget assumpKon (11.5 per cent in Budget 2015-16 vis-à-vis
8.6 per cent in the Advance EsKmates), the central government is likely to meet its fiscal deficit
target of 3.9 per cent of GDP.
For most of the fiscal year 2015-16, inflaKon remained moderate hovering within the RBI’s target
range of 4-6 per cent. The Survey suggests that the substanKal decline in crude oil prices partly
contributed to the decline in general inflaKon for the second successive year. Food inflaKon in terms
of the Consumer Food Price Index (CFPI) declined to 4.8 per cent during April 2015 - January 2016 as
compared to 6.4 per cent in FY2014- 15. Wholesale Price Index (WPI) inflaKon declined following the
global trend of declining commodity and producers’ prices. The WPI inflaKon in fuel and power
group declined significantly and was (-) 12.3 per cent in 2015-16 (April-January) down from (-) 0.9
per cent in FY2014-15.
Economic Survey 2015-16: Indian economy to stand
resilient amidst global turbulence
1.1% agricultural growth
9.5% Manufacturing
growth
10.3% financial services &
real estate growth
US$ 349.6 bn
Forex reserves grew by
2% from 2014-15
US$ 17.2 bn
Gold reserves decreased
by 11% from 2014-15
3.9%
Fiscal deficit down
from 4% in 2014-15
1.4%
CAD against 1.3% in the
previous year
Key achievements of the government in implementing reforms, as per the Economic Survey
2016-2017
Liberalisation of foreign direct investment (FDI), including the long-awaited insurance bill
Increased focus on easing the cost of doing business towards making India more competitive on
international rankings
Supporting the expansion of the startup and e-commerce sector
Restoration of stability and predictability in tax decisions, especially with respect to Minimum
Alternate Tax (MAT) imposed on foreign companies
Implementation of major public investment programs in infrastructure, in lieu of deficient
private investment
Instituting a major crop insurance program to cushion farmers against adversity
Limiting farm interventions that had a first-order effect in moderating overall inflation
Elevation of financial inclusion agenda to, “Mission,” status via Jan Dhan Yojana
Advancement of the Jan Dhan Aadhaar Mobile (JAM) agenda, and establishing infrastructure
for scalability
GDP growth projected at 7-7.5% for 2016-17

3. CPI
WPI
1.2%
Net export against down from 2.9%
of GDP in 2014-15
US$ 16.6 bn
Net FDI in H1 FY 15-16 against US
$ 16.2 bn in HY1 FY 14-15
Key trade drivers
• Petrol imports reduced by 42% between 2014-15
and 2015-16
• Fertiliser imports increased by 24%
• Cereals and oil meals drove 20% reduction in
India's agriculture exports
• Crude and petrol exports reduced by 53%
6%
2%
-2.8%
9.5%
5.9%
4.9%
The Survey champions the idea of start-ups and removing barriers to the entry of firms, talent, and
technology into the Indian economy. While highlighKng the ease of doing business, the Survey points
out India’s ‘exit problem’. The Survey says, barriers in the exit of failed ventures “has substanKal fiscal,
economic, and poliKcal costs”. This issue pervades not just the public sector and manufacturing but the
private sector and agriculture. The Survey suggests five soluKons to facilitate exit which includes
government’s iniKaKves like the new bankruptcy law, rehabilitaKon of stalled projects, proposed
changes to the PrevenKon of CorrupKon Act as well as the broader JAM agenda. These, it suggests, will
provide a significant boost to long-term efficiency and growth.
The survey cauKons that the Indian economy must be forKfied against possible spillovers of the
internaKonal volaKlity and the government should recalibrate expectaKons. It also highlights the need
for Goods and Services Tax (GST) as a reforms measure, which, according to esKmates, will affect
between 2 to 2.5 million excise and service tax payers. The Survey also proposes widening the tax net
from 5.5 per cent of earning individuals to more than 20 per cent by reasonable taxaKon of the beXer-
off individuals with income from real-estate and agriculture, and phasing out of the tax exempKon Raj.
In the social sector, the Survey suggests that InvesKng in maternal health could become a top policy
priority of the government. According to the survey, making investments in maternal nutriKon and
sanitaKon and changing social norms to enhance their effecKveness can help exploit India’s
demographic dividend.
Currency Exchange Rate (INR/US$)
2013-14 2014-15 2015-16
60.51
61.14
65.03

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