The Economic Survey of India for 2017-19 summarizes the country's economic performance over the past year and provides projections for the coming year. It highlights India's temporary economic slowdown due to demonetization and GST implementation but expects growth to recover. The Survey also notes challenges like increasing investment and savings rates to achieve 8-10% growth, addressing income inequality, improving public services, and supporting the agricultural sector. Overall, the Survey presents an analysis of India's economy in the past year and a positive but cautious outlook for the coming year.

1. India’s Economic Survey 2017-19
Big Data playing a Big role in gaining a new prospective to the economy
PRESENTED BY:
DHRUV GUPTA
PGDM
BIRLA INSTITUTE OF
MANAGEMENT TECHNOLOGY

2. Economic Survey vs Budget
• The Finance Ministry presents the Economic survey in the
parliament every year, just before the Union Budget
• It is the ministry’s view on the actual economic development of
the country and reviews the development of past 12 months.
• Union Budget is analysis of the past year which reflect the future
prospective/Decisions for the country.
Economic Survey summarizes the performance on:
1. Major Development
2. Policy Initiative of the government
3. Prospect of the economy in short to medium term

3. India’s Temporary “Decoupling”
• Until early 2016, India’s growth had been accelerating when
growth in other countries were decelerating
• The world economy embarked on a recovery, but India’s GDP
growth- and indeed a number of other indicators such as industrial
production, credit and Investment- Decelerated
Five reasons could be given for this phenomenon-
• India’s monetary conditions decoupled from rest of the world
• Demonetization
• GST
• Twin Balance Sheet challenge
• Oil Prices

4. • Launch of GST on July 1 in the mid night hour
• Decisive tackling of twin balance sheet challenge by taking reforms
• Sovereign ratings upgrade and 30 spot jump on ease of doing
business
• Last couple of Quarters trend is moving up after the slow down
from Demonetisation as the exports decelerated and imports
increased, interest rate went up sharply as it affected demand of
money, as rest of the world economy accelerated
• Direction of the trade in revival but still below the potential trade
and GDP.
• Fiscal deficits, current account and inflation were all higher than
expected
Major Achievement

5. 2017-18
Real GDP- 6.75% and Nominal-10.5%
Projected for 2018-19
Real GDP-7-7.5% similar to world bank and other reports
Upside Potential:
• Export growth could
be higher than
Potential
• Private Investment
boost up
Downside Potential:
• Oil Prices major factor as every 10
dollar increase in price decreases GDP
by 0.2-0.3% that increase deficit and
inflation
• Sharp correction to elevated stock
prices
• Stock prices at record level, GDP profit
driver, interest rate increases
Growth Projections

6. • Increase in income tax payers by 1.7% as large increase in indirect and
direct tax payers
• GST tax payers increase to 50% from last Quarter 2017 and Overall GST
revenue growth at 12%
• Substantial avoidable litigation due to one nation tax i.e GST
• Formal non-agricultural payroll is much greater than believed
• Clothing incentive packaged boosted exports of key manmade garments by
about 15%
• Markets are misinterpreting borrowing by central and state government as
40,000 crores borrowing are not reflected by current deficit
News Evidence

7. GST Council and Cooperative Federalism
India has created one of the most effective institutional mechanism for
cooperative Federalism, the GST council
The “cooperative federalism technology” of the GST council could be used
for:
• To create a common agricultural market,
• Integrate fragmented and inefficient electricity markets
• Solve interstate water disputes
• Implement direct benefit transfers(DBT)
• Make access to social benefits portable across states
• Combat air pollution

8. Since end-December 2015, the S&P index has surged 45 percent, while
the Sensex has surged 46 percent in rupee terms and 52 percent in
dollar terms
Three critical reason between US and Indian economy-
• Indian stock market surge has coincided with a deceleration in
economic growth, whereas US growth has accelerated in that period
• India’s current corporate earnings/GDP ratio has been sliding, falling to
just 3½%, while profits in the US have remained a healthy 9% of GDP.
• Critically, real interest rates have diverged substantially. Rates in the US
have persisted at negative levels, while those in India have risen to
historically high levels.
• Over the period of the boom, US real rates have averaged -1.0 percent,
compared to India’s 2.2 percent, a difference of 3.2 percentage points
India vs US Stock Market Boom?

9. Stock Market Boom: Is India Different?
Indian stock market surge is different due to:
• Growth momentum
• level and share of profits
• Critically the level of real interest rates
• Low levels of the latter have been invoked to justify the high valuations in
advanced economies.
India’s valuations should be much lower as it appears to be driving are a fall
in the ERP reflected in a massive portfolio re-allocation by savers towards
equity in the wake of policy-induced reductions in the return on other assets.
Sustaining these valuations will require future growth in the
economy and earnings in line with current expectations, and require
the portfolio re-allocation to be semi-permanent.
ERP- Equity Risk Premium

10. Investment is directly correlated with growth and
Savings have negative impact on the growth
• Ratio of Fixed Capital formation to GDP declined to 26.4% in 2017 from
35.6% in 2007
• Ratio of Domestic Savings to GDP falling back to 29% in 2016 from 38.3%
in 2003
• The cumulative fall over 2007 and 2016 has been milder for investment
than saving, but investment has fallen to a lower level.
Can we achieve growth of 8-10%?

11. Executing “Exit” for Business
• Over the last 50 years India had gone from socialism with limited entry to
marketism without exit
• The IBC resolution process could prove a valuable technology for
tackling this long-standing problem in the Indian corporate sector
• The recently proposed Financial Resolution and Deposit
Insurance(FRDI) bill would do the same for financial firms
IBC- Insolvency and Bankruptcy Code

12. Three meta-challenges in Indian Economy
• Addressing inefficient redistribution- Income not equally distributed as
more poverty among major majority
• Accelerating the limited progress in delivery of essential public
services, specially health and education
• Correcting the ambivalence towards property rights, the private sector, and
Price incentives
Two new challenges added this year:
• Agriculture income
• Employment at all time low

13. • Support Agriculture
• Stabilise GST
• Complete twin balance sheet actions with the reforms
• Privatise Air India
• Macro economic Stability
Policy Agenda for Future