Economic Survey 2016-17 LIVE: GDP growth rate placed at 7.1 % as per the Advance Estimates by the CSO
Pointing out the risk and challenges to outlook, CEA said:
1. Domestic front, any lingering uncertatinity from demonetisation
2. External front are higher oil prices, escalating trade tension and resurgence of protectionism
3. Upside potential: Revival of exports with spillover to investment.
Economic Survey 2016-17 elaborates that as the fiscal challenges mount for the states because of the Pay Commission recommendations, and mounting payments from the UDAY bonds, there is a need to review how fiscal performance can be kept on track.
Greater reliance will need to be placed on incentivizing good fiscal performance, not least because states are gradually repaying their obligations to the Centre, removing its ability to impose a hard budget constraint on them says the Economic Survey. Above all, however, incentivizing good performance by the States will require the Centre to be an exemplar of sound fiscal management itself.
The deficit reduction owes much to favorable exogenous factors:
· An acceleration of nominal GDP growth (of 6 percentage points on average after 2005) helped boost States’ revenues by about 1 percent of GSDP;
· Increased transfers from the centre of about 1 percent of GSDP both because of the 13th Finance Commission recommendations and the surge in central government revenues;
· Reduced interest payments of about 0.9 percent of GSDP on account of the debt restructuring package offered by the Centre; and
· Reduced need for spending by the States—estimated at about 1.2 percent of GDP--as the Centre took on a number of major social sector expenditures under the Centrally Sponsored Schemes (CSS).