Every IAS aspirant must know the fiscal developments took place in the last few years in the Indian economy. In order to understand the socio-economic condition of the country, the IAS aspirant should study the Economic Survey, which provides the complete analysis of various aspects of the Indian Economy. The Economic Survey of the respective year is simultaneously important for IAS Prelims as well as for the IAS Mains exam. By studying Economic Survey, an aspirant can attempt various papers of the IAS Mains exam in a better way.
Economic Survey is very complex and difficult to understand this is why for the convenience of IAS aspirants, we are continuously providing the chapter-wise crux of the chapter given in the Economic Survey 2016-17. Here, we have provided an analysis of fiscal developments took place in the last few years in order to make the favourable fiscal position in the economy.
Despite the huge demonetisation drive in November 2016 on a large scale, the Indian economy showing positive signs and encouraging data related to growth and development. Indian economy has registered 7 per cent GDP growth in the third quarter of the financial year 2016-17. The majority of states have shown their interest and rightly implemented the Central Government’s Fiscal Responsibility Legislation (FRL), one of the factors behind the impressive fiscal performance of the Indian economy.
- The Union Budget 2016-17 reiterated the Government’s commitment to continue with fiscal consolidation and projected fiscal deficit at 3.5 per cent of GDP for the year, down from 3.9 per cent in 2015-16.
- The fiscal consolidation was required to be attained through 11.9 per cent increase in the gross tax revenue (over 2015-16 PA) and significant strides in non-tax revenue and non-debt capital receipts, despite upside compulsions on the expenditure side necessitated primarily by higher payouts on account of the implementation of the recommendations of the Seventh Pay Commission.
- The growth in non-debt receipts at 25.8 per cent during April-November 2016 outshined the budgeted growth rate of 16.4 per cent for the full year (over 2015-16 PA).
- On the whole, tax collections, especially the union excise duties and the service tax have been buoyant in the current year until November 2016.
- Despite the probable short-term spill-over effects of the cessation of the legal tender of higher denomination notes, indirect taxes grew by 36.4 per cent during the month of November 2016.
- An average of about 34.5 per cent of the gross tax collections was comprehended during the fourth quarter during the five-year period, 2011-12 to 2015-16 which give a clear indication that the achievement of the budget estimates of tax collections in the current year will depend significantly on the dynamics of economic activity and tax collections during the last quarter.
- There is speculation that in the last quarter of the financial year 2016-17, the momentum of the economic activity can be affected by the demonetisation of the high domination currency and the response to the gradual re-monetisation.
- The comprehension of the gross tax revenue during April-November 2016 as a ratio of the budget estimates for the year 2016-17 was much higher than the corresponding figure in the previous year.
- The total outstanding liabilities of the Central Government are composed of internal debt, other internal liabilities like provident funds, small savings, etc., and external debt.
- The net wherewithal transferred to the states, including non-plan grants, tax devolution and Central assistance during April-November 2016 was 58 per cent of the budget estimates for the full year and a notch below the corresponding accomplishments in the previous year.
- The increase in the total outstanding liabilities of the Central Government remained closely alike during 2014-15 and 2015-16, at 10.1 per cent and 10.4 per cent respectively. Yet, there was an increase in the ratio of internal debt of the Central Government to GDP in 2015-16.
- The growth in the total outstanding liabilities was accounted to come down sharply to 7.9 per cent in 2016-17 from 10.4 per cent in the previous year.