Economic Survey pegs growth at 7-7.5 percent for 2016-17

New Delhi: The Economic Survey for 2015-16 tabled in parliament on Friday pegged India's growth for the next fiscal at 7-7.5 percent.

For the current fiscal, the survey estimated the GDP growth at 7.6 percent.

Authored by Chief Economic Advisor in the Finance Ministry Arvind Subramanian, the survey said: "India's long run potential GDP growth is substantial, about 8-10 percent."

Government will be able to achieve the fiscal deficit target of 3.9 per cent in the current fiscal, but containing it in 2016-17 will be a challenge on account of additional outgo towards 7th Pay Commission and a slowing global economy.

The government has pegged the fiscal deficit at 3.5 per cent of GDP for the next fiscal.

"The coming year is expected to be a challenging one from the fiscal point of view. The chances of India's growth rate in 2016-17 increasing significantly beyond 2015-16 levels are not very high due to the likelihood of persistence of global slowdown," said the Economic Survey for 2015-16 tabled in Parliament by Finance Minister Arun Jaitley Friday.

As per the Survey, the economy is expected to see a growth of 7-7.75 per cent in 2016-17 while the government estimates GDP to expand by 7.6 per cent in the current fiscal.

"Further, the implementation of the Pay Commission recommendations and the One Rank One Pay (OROP) scheme will put an additional burden on expenditure. Improving tax compliance through better tax administration, tapping new resources etc could help raise more revenue and keep the fiscal deficit at levels projected in the revised fiscal road map," it said.

Improving the quality of expenditure has been indicated as important for achieving sustained fiscal consolidation, it said.

For the current fiscal, it added that the fiscal deficit target of 3.9 per cent seems achievable.

"This assessment is based on pattern of revenue and expenditure in the first 9 months of the current financial year in spite of the challenges posed by a lower than projected nominal GDP growth," it said.

A significant increase in revenue receipts, led by buoyant indirect tax collection, higher level of capital expenditure on the plan side, lower level of subsidies and enhanced untied resources transferred to states following the acceptance of recommendations of the 14th Finance Commission are some of the salient developments of the fiscal performance in 2015-16 so far, the Survey said.

The performance of indirect taxes in the first 9 months indicates that the budget estimates are likely to be achieved and possibly exceeded, partly on account of measures taken by the government to enhance revenue by raising excise duty on petroleum product, it said.

Besides, several major steps were also taken on both indirect and direct taxes in 2015-16, according to the report.

Following are the highlights of Economic Survey 2015-16:

* GDP growth next fiscal to be between 7-7.75%

* Growth this fiscal to be 7.6%, long-term potential at 8-10% if exports grow rapidly

* India haven of stability amidst gloomy global landscape

* Crude oil prices to be about USD 35 a barrel next fiscal, as against USD 45 this year

* Projects retail inflation at 4.5-5% for 2016-17

* Low inflation takes hold, price stability has increased

* Pay Commission implementation not to destabilise prices

* Proposes widening of tax net from 5.5% of earning individuals to more than 20%

* Challenging external environment to cast shadow on economic policies

* 3.9% fiscal deficit target achievable this year, coming year to be challenging

* Subsidy bill to be below 2% of GDP next fiscal

* Concerned over delay in GST Bill

* Balance sheets of corporate, banks remain stressed; need 4Rs: Recognition, Recapitalisation, Resolution and Reform

* PSU banks' capital need at Rs 1.8 lakh crore by FY19

* Current account deficit at 1-1.5%, forex reserves at USD 351.5 bn in mid-Feb.

* Services sector growth in 2015-16 seen at 9.2%

* Suggests revival of domestic demand as foreign capital outflow likely

* Sees good performance by industrial, infrastructure, corporate sectors due to recent reform

*More investment in health, education; focus on agriculture

* Government tax revenues to be higher than budgeted

* Exports slowdown to continue; pick up in next fiscal

* India should resist protectionist measures in trade

* Suggests reform package for fertiliser sector.