Economic Survey of India 2015-16: Highlights

India can increase investments without borrowing more, a key government report said on Friday, in an indication that Finance Minister Arun Jaitley will stick to debt targets in his maiden full-year budget on Saturday.

The economic survey, the basis for Jaitley's budget for the fiscal year starting April 1, forecast the economy would grow by 8.1-8.5 percent under a new calculation method that makes India the world's top-growing big economy.

The survey was prepared by the finance ministry's chief economic adviser Arvind Subramanian.

Following are the highlights of the survey:

FISCAL DEFICIT

·         India must meet its medium-term fiscal deficit target of 3 percent of GDP

·         Government will adhere to fiscal deficit target of 4.1 percent of GDP in 2014/15

·         Govt. should ensure expenditure control to reduce fiscal deficit

·         Expenditure control and expenditure switching to investment key

GROWTH

·         2015/16 GDP growth seen at over 8 pct y/y

·         Double digit economic growth trajectory now a possibility

·         Economic growth at market prices seen between 8.1 - 8.5 percent in 2015/16 on new GDP calculation formula

·         Total stalled projects seen at about 7 percent of GDP, mostly in private sector

REFORMS

·         There is scope for big bang reforms now

·         India can increase public investments and still hit its borrowing targets

INFLATION

·         Inflation shows declining trend in 2014/15

·         Inflation likely to be below central bank target by 0.5 - 1 percentage point

·         Lower inflation opens up space for more monetary policy easing

·         Govt and central bank need to conclude monetary framework pact to consolidate gains in inflation control

·         Consumer inflation in 2015/16 likely to range between 5-5.5 percent

FISCAL CONSOLIDATION

·         Govt remains committed to fiscal consolidation

·         India can balance short-term imperative of boosting public investment to revitalize growth with fiscal discipline

·         Outlook for external financing is correspondingly favourable

CURRENT ACCOUNT DEFICIT

·         Estimated at about 1.3 percent of GDP in 2014/15 and less than 1.0 percent of GDP in 2015/16

SUBSIDIES

·         Overhauling of subsidy regime would pave the way for expenditure rationalisation

LIQUIDITY

·         Liquidity conditions expected to remain comfortable in 2015/16