Making India a $5-trillion economy is at the core of Economic Survey 2019. India needs to grow at 8% per year to be a $5 trillion economy by FY25, the survey said.
Subramanian expects FY20 GDP growth at 7%. This higher growth will come in the wake of the stable macros, he said. He sees the general fiscal deficit seen at 5.8% in FY19 vs 6.4% in FY18.
Investment rate seems to have bottomed out and the green shoots in investment activity seem to be taking hold, the survey said. It added that the investment rate would likely be higher in FY20.
“Structural reforms are on course,” the survey said, holding out hopes of better economic performance going ahead.
The survey attribues the January-March slowdown mainly to oil-related uncertainty. It said the NBFC stress was also a siginficant reason for the FY19 slowdown.
Subramanian sees oil prices seen declining in FY20. He said the huge political mandate to Modi augurs well for growth going forward. “Political stability should boost animal spirits going forward,” says the survey.
According to the Economic Survey, the government stood by the path of fiscal consolidation in FY 19. It said the decline in NPAs should help push capex cycle from here.
The survey also says that accommocative MPC policy should help cut real interest rates.
The survey said rural wages growth started increasing since mid-2018. It also said that Indian farmers may have produced less in FY19 because of the fall in food prices.
The share of share of informal sector in manufacturing has fallen since last year, the survey revealed.