The government’s Economic Survey 2020 pegged the gross domestic product (GDP) growth at 5 per cent in the current financial year, which it said would pick up to 6-6.5 per cent in financial year ending March 2021. That marked a sharp downward revision from the estimate of 7 per cent growth for the current financial year in last year’s Economic Survey. Prepared by Chief Economic Advisor Krishnamurthy Subramanian and his team, the Economic Survey 2019-20 comes a day ahead of the presentation of the first full-year Union Budget of the Modi 2.0 administration. The government may need to relax its fiscal deficit target for the current financial year to revive growth as the financial year starting in April is expected to pose challenges on the fiscal front, according to the annual report card on the economy, which was tabled in Parliament by Finance Minister Nirmala Sitharaman earlier today.The government is widely expected to relax its fiscal deficit target in the Union Budget, as the economic slowdown lowered revenue collections and the government provided a tax stimulus to spur investments. The fiscal deficit – which is the shortfall in revenue viz-a-viz expenditure – is seen slipping to 3.8 per cent of GDP in 2019-20 against a budgeted 3.3 per cent.Private investment may get crowded on higher spending on infrastructure by the government, stated the Economic Survey 2019-20.The Economic Survey, prepared by a team headed by the government’s Chief Economic Advisor Krishnamurthy Subramanian also said there is room for rationalising subsidies, especially that on food.The government distributes food grains at below market prices to keep the costs low. Last year, it had budgeted Rs 1.84 lakh crore for food subsidies in 2019-20, making up more than half of its Rs 3 lakh crore subsidy bill.Real estate companies must cut home prices to clear their unsold inventories, according to the Economic Survey, which also said that greater home sales can clear the balance sheets of banks as well as non-banking financial companies.On the trade front, the Economic Survey stated that continued global trade tensions could hit India’s exports.India faces its worst economic slowdown in a decade. Growth slipped to 4.5 per cent in the July-September quarter, imperilling job prospects for millions of young people entering the workforce each year.The first phase of Parliament Budget session 2020 has started today and will be held through February 11.Earlier, the government had estimated GDP expansion at 5 per cent for fiscal year 2019-20 – the slowest pace recorded since the global financial crisis of 2008-09.
