India world’s fastest-growing economy in 2018-19, says Finance Minister

NEW DELHI – In his  Economic Survey for 2017-18, India’s Minister for Finance and Corporate Affairs,  Arun Jaitley, said a series of major reforms undertaken over the past year will allow real GDP growth to reach 6.75% this fiscal year, and it is expected to rise to 7.0-7.5% in 2018-19, re-instating India as the world ‘s fastest-growing major economy.    

He said retail inflation averaged 3.3% in 2017-18, the lowest in last six fiscal years.

The survey said that due to the launch of Goods and Services Tax (GST) reform on July 1, 2017, resolution of the Twin Balance Sheet (TBS) problem by sending major stressed companies for resolution under the new Indian Bankruptcy Code, implementation of a major recapitalisation package to strengthen public-sector banks, liberalisation of FDI and export uplift from the global recovery, the economy began to accelerate in the second half of 2017 and could clock 6.75% growth 2018.

The survey said the average growth of India during the past three years was around 4% higher than global growth and nearly 3% higher than that of Emerging Market and Developing Economies.     

GDP growth had averaged 7.3% for the period from 2014-15 to 2017-18 This was the highest among major economies of the world.          

The Survey said the Goods and Services Tax (GST) had given a new perception of the Indian economy. New data highlighted the fact that there had been a 50% increase in the number of indirect taxpayers. Growth in direct tax collections by the central Government had kept pace with the previous year and was expected to meet targets, with growth of 13.7%, while indirect taxes grew by 18.3% from April-November 2017.

For the first time, data on the international exports of Indian states was included in the Economic Survey. This indicated a strong correlation between export performance and states' standard of living, showing that States' prosperity was positively correlated with their international and inter-state trade.       

After remaining in negative territory for a couple of years, export growth had returned during 2016-17 and exports were expected to grow faster in 2017-18. The survey notes that a clothing incentive package had boosted exports of readymade garments, while a rebate of state levies (ROSL) had increased exports of readymade garments (man-made fibres) by about 16%. 

The Survey stressed that to re-ignite growth, increasing investment was more important than raising savings. Growth in savings did not bring economic growth but growth in investment did.  (ATI).