Eco Survey has right vibes; will Budget reflect same thinking, asks D-Street

India is facing its worst economic slowdown in a decade. Growth fell to 4.5% in the July-September quarter. Consequently, the Budget deficit may need to exceed this year’s target, 3.3% of gross domestic product, the government said in an economic survey released on Friday.

“Going forward, considering the urgent priority of the government to revive growth in the economy, the fiscal deficit target may have to be relaxed for the current year,” Krishnamurthy Subramanian, Chief Economic Adviser to the Finance Ministry, said in the report.

Here is what economists and analyst read into the fine prints of the survey;-

Dr VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services

As the lavender colour of the Economic Survey indicates, the survey is a mix of old and new. The emphasis on wealth creation and it’s beneficial effects on the economy is laudable. The argument in favour of pro- business policies, the need for aggressive divestment of CPSEs, concerns on the injurious effects of freebies and debt waivers are all pro- market views that are to be welcomed. The survey leaves little room for doubt about economic thinking. The big question is whether the budget too will reflect the same thinking.

Deepthi Mary Mathew, Economist, Geojit Financial Services

The Survey highlights the difficult fiscal situation ,and possible crowding out of private investors due to the increased market borrowing by the government. However, the survey also stresses the need for relaxation of fiscal deficit target for the current year to stimulate growth in the economy. In this background, it is expected that the fiscal deficit target for FY21 would also settle at a higher range. It is welcoming that the survey emphasizes the need for improving the business climate that would aid the economy to achieve the target of $5trillion.”

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Ranjan Chakravarty, Economist and Product Strategist, MSE

This Economic Survey is absolutely one of the best ever. The analysis is scrupulously fair, the detailed diagnosis, the cataloging of the systemic issues and the prognosis are all on point and exactly correct. We applaud Dr. Subramanian for a fantastic job and endorse the short term 5% and medium-term 6.5% growth forecasts. We have ourselves forecast that recovery is coming in 2H 2020 and this Economic Survey independently verifies it.



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