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The One Big Key Takeaway From The Economic Survey

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The key theme of the Economic Survey was to make India a $5 trillion economy.

 

The Chief Economic Advisor, K Subramanian said that India needs to enable "shifting gears" to accelerate and sustain a real GDP growth rate of 8% and thereby achieve the vision of a $5 trillion economy.

The One Big Key Takeaway From The Economic Survey

It is not going to be an easy effort for the country to grow at 8 per cent, unless private investment picks-up, as government spending is expected to be constrained by the fiscal deficit.

One of the biggest hurdles to make India a $5 trillion economy is poor enforcement of contracts and dispute resolution. Steps to speed up legal process should be top priority would now be a priority.

In a tweet, CEA, K Subramanian said that Real people respond to context rather than narrow "rational" calculations. The Economic Survey argues that nudging behaviour change is simplest way to change gender equations, business culture, sanitation culture, health culture and so on.

Addressing liquidity and bank capitalization could help

A big push would be needed towards achieving that 5 trillion. Smaller things like bank capitalization and liquidity issues, facing the NBFC and housing finance sector would have to be addressed. There is hardly any liquidity in the system at the moment.

 

Need to increase FDI

The government would need to move also quickly to attract foreign capital, particularly the more sticky FDI. This has been flat over the last few years and considering the trade dispute with China, India could have the potential to attract more FDIs. What is critical at the moment to kick-start the economy would be government spending, but, that in turn depends on fiscal constraints.

All in all, it is not going to be an easy effort for the government to balance expenditure and the fiscal deficit number. One would have to look at various options to raise revenues.

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