Economic Survey 2016

Economic Survey 2016

 

FISCAL DEFICIT

2015/16 fiscal deficit seen at 3.9 percent of GDP seems achievable

2016/17 expected to be challenging from fiscal point of view

 Credibility and optimality argue for adhering to 3.5% of GDP fiscal deficit target
 

INFLATION

* CPI inflation seen around 4.5 to 5% in 2016/17

* RBI to meet 5 percent inflation target by March 2017

* Prospect of lower oil prices over medium term likely to dampen inflationary expectations

* Low inflation has taken hold, confidence in price stability has improved

CURRENT ACCOUNT DEFICIT
 

2016/17 current account deficit seen around 1-1.5% of GDP

CURRENCY

Rupee's value must be fair, avoiding strengthening; fair value can be achieved through monetary relaxation
 Gradual depreciation in rupee can be allowed if capital inflows are weak

TAXES
 Proposes widening tax net from 5.5% of earning individuals to more than 20%
 Tax revenue expected to be higher than budgeted levels in FY15/16
 Easiest way to widen the tax base would be not to raise exemption thresholds
Favours review and phasing out of tax exemptions

BANKING & CORPORATE SECTOR

Estimated capital requirement for banks likely around Rs 1.8 trillion by 2018/19

Corporate, bank balance sheets remain stretched, affecting prospects for reviving private investments

 Underlying stressed assets in corporate sector must be sold or rehabilitated

Govt could sell off certain non-financial companies to infuse capital in state-run banks

Govt proposes to make available 700 bln rupees via budgetary allocations during current, succeeding years in banks