Ten New Facts About The Indian Economy From The Economic Survey 2017-18

As a prelude to the annual union budget session, scheduled for 1 February, Chief Economic Advisor to the Indian government, Arvind Subramanian today (29 January) released the Economic Survey for 2017-18.

The survey predicts a 7-7.5 per cent growth for the Indian economy in 2018-19 (April-March) and also listed ten new observations important for the Indian economy, which are as follows:

1. 2017 saw a large increase in registered indirect and direct taxpayers, with 1.8 million new income tax filers and 50 per cent increase in the indirect taxpayers after the GST regime was introduced.

2. Formal non-agricultural payroll is much greater than believed, with a between 7.5 and 12.7 crore employees falling in the sector depending on the measure involved.

3. States’ prosperity is correlated with their international and inter-state trade. States that export more internationally, and trade more with other states, tend to be richer. But the correlation is stronger between prosperity and international trade, with Gujarat, Karnataka, Maharastra and Telangana leading the country.

4. India’s firm export structure is substantially more egalitarian than in other large countries which means that profits from exports are much more evenly spread in India as compared to other countries. Top 1 percent of Indian firms account for only 38 percent of total exports, compared to 72 and 68 per cent for Brazil and Germany respectively.

5. The clothing incentive package boosted exports of readymade garments by close to 16 per cent in 2017.

6. Indian parents continue to have children until they get the desired number of sons. This kind of fertility-stopping rule leads to skewed sex ratios but in different directions: skewed in favour of males if it is the last child, but in favour of females if it is not the last.

7. There is substantial avoidable litigation in the tax arena which government action could reduce. With low success rates (below 30 percent) in tax related cases, a lot of cases can be avoided through clear rules and policies.

8. Cross-country studies have shown that to re-ignite growth, raising investment is more important than raising saving.

9. Direct tax collections by Indian states and local governments are significantly lower than those of their counterparts in other federal countries like Brazil and Germany, where the local governments have a much higher direct taxes to their total revenue percentage.

10. The footprint of climate change is evident and extreme weather adversely impacts agricultural yields; with much greater effect on unirrigated areas as compared to irrigated lands.