The Economic Survey for the financial year 2017-18 presented by India’s Finance Minister Shri Arun Jaitley in Parliament on January 29th has pulled up several new economic facts. The latest developments come as India’s economy, one of the fastest growing in the world, gain renewed momentum following a slowdown in the aftermath of certain national policy enactments and global market weaknesses. On the back of the new economic trends, the Indian Economy is forecasted to grow by 7-7.5 per cent in the coming fiscal year, compared with estimated growth of as much as 6.75 per cent in the current fiscal. The newest economic facts revealed by the survey are:
- The Goods and Services Tax (GST), a comprehensive indirect tax introduced on July 1st, has helped increase the number of indirect taxpayers in India by around 50 per cent. The revamped tax structure, which covers sales of goods and services and replaces many separate indirect taxes, has also led to a large increase in voluntary registrations, especially by small enterprises that buy from large enterprises wanting to avail themselves of input tax credits. There has been an addition of about 1.8 million in individual income tax filers since November 2016.
- The new economic data has revealed that India’s formal sector, especially formal non-farm payroll, is substantially greater than what it currently is believed to be. It became evident when “formality” was defined in terms of social security provisions such as employees’ provident fund and employees’ state insurance (EPFO/ESIC). As a result, the formal sector payroll was found to be about 31 per cent of the non-agricultural workforce. When “formality” was defined in terms of being part of the GST net, such formal sector payroll share was found to be 53 per cent.
- For the first time in India’s history, data on the international exports of individual states has been dwelt in the Economic Survey. Such data indicates a strong correlation between export performance and states’ standard of living. States that export internationally and trade with other states were found to be richer. Such correlation is stronger between prosperity and international trade. This is also an indication of the growing partnership between international entities and various Indian Governments, Central and State alike.
- India’s export sector has revealed an unusual trend in which the largest firms account for a much smaller share of exports than in other comparable countries. Top 1 per cent of Indian firms account only for 38 per cent of exports unlike in other countries where they account for substantially greater share – 72, 68, 67 and 55 per cent in Brazil, Germany, Mexico and USA, respectively. Such tendencies were also found to be true for the top 5-10 per cent of the Indian companies. This indicates towards a diverse and spread-out export base.
- The survey mentions that collections of direct taxes by Indian states and other local governments, where they have powers to collect them is significantly lower than their counterparts in other federal countries. The survey also pointed out that tax departments in India have gone in for contesting in several tax disputes but with success rate of below 30 per cent. About 66 per cent of pending cases accounted for only 1.8 per cent of value at stake. It further stated that 0.2 per cent of cases accounted for 56 per cent of the value at stake.
- Extrapolating the economic survey data has indicated that growth in savings did not bring economic growth but the growth in investment did. Moreover, the survey has captured the footprints of climate change on the Indian territory and consequent adverse impact on agricultural yields. Extreme temperature increases and deficiency in rainfall have been captured on the Indian map and the graphical changes in agricultural yields are brought out from such data. The impact was found to be twice as large in un-irrigated areas as in irrigated ones.