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Economic Survey: FY15 GDP growth will be 5.4-5.9%

Wednesday, 9 July 2014
PTI

  New Delhi: Indian economy is likely to grow in the range of 5.4 to 5.9 per cent in 2014-15 overcoming the sub-5 per cent GDP growth of past two years, even as poor monsoon and disturbed external environment remain a cause for concern, says the Economic Survey.

"The growth slowdown in the last two years was broad based, affecting in particular the industry sector. Inflation too declined during this period, but continued to be above the comfort zone, owing primarily to the elevated level of food inflation", said the Survey for 2013-14 tabled by Finance Minister Arun Jaitley in Parliament today.

The Survey, released a day ahead of the budget for 2014-15, expects that moderation in inflation will ease the monetary policy stance and revive the confidence of investors.

"...with the global economy expected to recover moderately, particularly on account of performance in some advanced economies, the economy can look forward to better growth prospects in 2014-15 and beyond," it said.

As regards the downside risks, the Survey lists factors like poor monsoon, the external environment and th poor investment climate. They can have a bearing on the growth recovery, it added.

After recovering in 2009-10 and 2010-11, GDP growth slowed down to decade's low of 4.5 per cent in 2012-13. It picked up marginally to 4.7 per cent in 2013-14.

The Survey further said the measures taken by the government to improve investment climate and improve governance could push up growth to 7-8 per cent in the coming years.

Here are the key highlights:

Estimates FY 15 GDP growth at 5.4-5.9 %

Need new FRBM act with "Teeth"

Inflation limits scope for RBI to cut rates

Subsidy reforms essential to fiscal consolidation

Need common market for market agricultural commodities

Need to expand decentralized procurements for PDS

Moderation in inflation to help ease monetary policy

Inflation has eased, but still above comfort level

Economy can look forward to better growth prospect in FY 15

There are concerns over El Nino emergence this year

Cap controls not supporting globalisation of economy

FY 15 GDP likely to be on lower side of projection

See improvement in manufacturing, balance of payment in FY 15

Subsidy reforms essential to fiscal consolidation

Need to review nutrient-based fertiliser subsidy

Need to go for cash transfer of subsidy

Raising tax GDP ratio key to fiscal consolidation

Need formal monetary policy frame for targeting CPI inflation

Need to improve market price of fuel products

MNREGA has created labour shortage and hiked wages

Need to move to market prices of fuel products

Subsidy reforms essential to fiscal consolidation

Economic growth has slowed down on domestic, external factors

Monetary policy essential for long run inflation control

High food inflation on structural, seasonal factors

Downside risk to eco due to geopolitical tensions

Downside risk to eco from poor monsoon, investment climate

Fiscal consolidation remains imperative for economy

Industrial growth likely to revive in next 2 yrs

Economic Survey only shows gravity of eco situation

Fiscal deficit needs to move downwards in next 2 yrs

Need to bring down inflation in a caliberated manner

Expect industrial recovery seen in April to continue

Need to bring down inflation

WPI inflation likely to moderate by 2014 end

Central GST could be first step towards full gst

Agricultural allied sector registered 4.7% growth in FY 14

Inflation seen easing in FY 15 on softer global prices

Must re-examine laws allowing government interference in market

Improved twin deficit may lead to gradual growth

Fiscal Consolidation, supply side steps to aid monetary management

Expect room for monetary easing later this fiscal

See global recovery improving in FY15

Long term debt accounts for 78.2 percent of total external debt

See RBI taking accommodative stance as inflation eases

India's service sector CAGR at 9 percent in 2011-12

Need mechanism to cope with capital fight

FY 15 current account deficit may be limited to 2.1 percent of GDP

Improvement in current account and fiscal deficits to spur higher growth in 2014-15

Improvement in manufacturing, Balance of Payments (BoP) expected in 2014-15

DTC required as clean and modern replacement for Income Tax laws

Sharp fall in trade deficit, closes in by 27.8percent to $ 137.5 billion

FY 2014-15 first quarter trade deficit declined by another 42.4percent

Exports grew by 4.1percent over negative growth of 1.8percent in 2012-13

Exports log double digit growth in May, 2014 after a gap of 6 months

Imports drop by 8.3percent, after steep slowdown during the previous FY 2012-13

Trend continues in April-May, 2014 as imports fell by 13.2percent

Following government intervention, gold and silver imports fell by 40.1 percent to $33.4 billion in 2013-14.


      

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