Budget session of Parliament Began today on 31 January with President Ram Nath Kovind’s address to the joint sitting of Lok Sabha and Rajya Sabha at 11 am. Finance Minister Nirmala Sitharaman later tabled the Economic Survey for 2019-2020 at the session.
The annual Economic survey is usually presented a day before the Finance Minister tables the Union Budget in the parliament. Prepared by the Economic Affairs, it serves as the official report of the economy for the last year. Economic Survey document comprises VolumeI, VolumeII, and the Statistical Appendix. Tabled in both Houses of the Parliament, it reviews the developments that took place in the Indian economy over the past financial year.
The economic survey gives an economic growth forecast, giving out detailed reasons for how the economy will expand faster or declare. It is expected that this year’s Economic Survey has commentary on GDP growth, job growth, and GST collection. However, the government is not bound to follow these recommendations. Authored by Chief Economic Adviser Krishnamurthy Subramanian and his team, the survey serves as the official report of the economy and as a policy guide. Yet, on many occasions, policy changes recommended in the document have not found a place in Budget proposal.
Mr. Subramanian is a staunch believer of China’s growth model driven by investments and exports, a fact that can easily be gleaned from the last year’s Economic Survey. Last year’s Survey talked about the road map to the $5 trillion GDP goal by 2025-25 based on China’s example to drive home the importance of focusing on investment-driven growth. This year’s survey comes at a time when the economy is in the throes of a downturn with real growth slipping to a decadal low and the nominal one to a 42-year low.
All eyes are on the Economic Survey and what ways the CEA suggests to the finance minister to stop India’s economy from slipping further. Moreover, 2019 was a difficult year for the global economy with estimated growth as low as 2.9% since the global financial crisis of 2009. The economic survey pointed out the Indian economy slowed down to 4.8% GDP growth in H1 of 2019-20 from 6.2% in H2 of 2018-19, amidst a weak environment for global manufacturing, trade, and demand.
Health care spending, as a percentage of total expenditure, has remained flat at 5.3% in the last two consecutive financial years. In terms of GDP, the government spending on health care is 1.6% in FY20 budget estimate, a small rise from 1.5% in FY19. Out of pocket expenditure on health is one of the biggest reasons for people falling into poverty in India.
The survey revealed that inflation rose from 3.3% in H1 of 2019-20 to 7.3% in December 2019-20 on the back of a temporary increase in food inflation, which is expected to decline by the year-end.
However, the Economic Survey is more optimistic about India’s GDP growth rate believing 2020 will see the nation’s economy bouncing back to a faster growth trajectory.