The economy is expected to grow by 8.1-8.5% next year, says the Economic Survey tabled in Parliament by finance minister Arun Jaitley. The report card says that the growth should now rise further, saying a double digit expansion was possible.
Inflation has seen a fall of over 6% since 2013, even as exports and inflow of foreign funds were returning to strength. Industrial growth has also picked up now. Foodgrain production for 2014-15 is estimated at 257.07 million tones, which is up by 8.5 million tones since last year. It also calls for a rationalisation of subsidies, saying that such doles did not transform the living standards of the poor. On the fiscal side, it said the government was committed to consolidation with revenue generation a priority.
The forecasts signal an acceleration from the 7.4 % growth in the ongoing fiscal year, giving Prime Minister Narendra Modi a chance to commit more funds to investment without resorting to deficit financing. The survey reiterates that the government would not overshoot its deficit target of 4.1 % of GDP in the current fiscal year, and it is committed to its a medium-term target of cutting it to 3 % of GDP.
The survey also pushes for liberalizing FDI in retail, saying that it would help plug the investment and infrastructure deficits and improve supply chain management. The survey further says that India is an attractive destination for long-term retail investment despite many past challenges.
It highlights the fact that 58.3 % of the Indian population is below 30 years and around one –thirds of this population living in urban areas with rising disposable income makes it a key positive feature for the future of the retail sector. In view of the difficulties in attracting domestic capital for marketing infrastructure like warehousing, cold storages and laboratories, a liberalization of FDI in retail could eliminate investment and infrastructure deficit which results in supply-chain inefficiencies. India needs billions of dollars for logistics development as every year, huge amount of vegetables, fruits and foodgrain go waste due to poor storage facilities.
Currently, the policy allows 51 % FDI in multi-brand segment and 100 % in single brand retail trading. Both the decisions were taken by the earlier UPA government. Although, the UPA government had allowed FDI in multi--brand retail, only one investment proposal of UK’s Tesco was cleared during its regime.