Economic Survey pegs India’s economic growth at 7% for FY2020

Riding on the back of an expected pickup in investment and consumption, the government has projected India’s GDP growth for 2019-20 at 7 percent, up from the five-year low of 6.8 percent.

As per the Economic Survey 2018-19, tabled by Finance Minister Nirmala Sitharaman in Parliament yesterday, India continues to remain the fastest-growing major economy in the world in 2018-19, despite a slight moderation in its gross domestic product (GDP) growth from 7.2 percent in 2017-18 to 6.8 percent in 2018-19, a PTI report said. 

"India's growth of real GDP has been high with average growth of 7.5 percent in the last five years (2014-15 onwards). The economy grew at 6.8 percent in 2018-19, thereby experiencing some moderation in growth when compared to the previous year," the Survey said.

This moderation in growth momentum is mainly on account of lower growth in agriculture, trade, transport communication and services related to broadcasting among others, it said.

During the last five years, India's economy has performed well, it said, adding that the government has ensured that the benefits of growth and macroeconomic stability reach the bottom of the pyramid by opening up several pathways for trickle-down.

"To achieve the objective of becoming a USD 5-trillion economy by 2024-25, as laid down by the Prime Minister, India needs to sustain a real GDP growth rate of 8 per cent," it said.

As per the survey, GDP growth for the year 2019-20 is projected at 7 percent, reflecting a recovery in the economy after a deceleration in the growth momentum throughout 2018-19.

"The growth in the economy is expected to pick up in 2019-20 as macroeconomic conditions continue to be stable while structural reforms initiated in the previous few years are continuing on course. However, both downside risks and upside prospects persist in 2019-20," it said.

Fiscal deficit at 3.4% of GDP
The survey, meanwhile, retained the fiscal deficit at 3.4 percent of the GDP for the current fiscal, the same as projected in the revised estimate of the interim Budget 2019-20.

However, general fiscal deficit – Centre and states combined – has been pegged at 5.8 percent in 2018-19, down from 6.4 per cent in the previous fiscal.

The current account deficit (CAD) in the economy increased from 1.9 percent of GDP in 2017-18 to 2.6 per cent in April-December 2018.

"The widening of the CAD was largely on account of a higher trade deficit driven by rise in international crude oil prices (Indian basket). The trade deficit increased from US$ 162.1 billion in 2017-18 to US$ 184 billion 2018-19," it said.

Finance Minister Nirmala Sitharaman will present the Union Budget today and a hopeful India Auto Inc, which has urged a GST cut from the existing 28 percent to 18 percent and also fast-tracking of the vehicle scrappage policy, will be keeping its fingers firmly crossed that the winds of growth blow in its direction.