Caution from a sobering Survey: 

Caution from a sobering Survey: 

Given the macroeconomic context, India should have recorded higher economic growth this year.

Context:

• Given the macroeconomic context, India should have recorded higher economic growth this year.

Indian Economic Survey, 2017 Part 2:

This was the year when oil prices and inflation were moderate, monsoon rains were abundant, inbound foreign direct investment was at record peak, the currency was stable and the fiscal deficit was under control. With such macroeconomic context, the year should have recorded at least one percentage point higher growth than the previous year. But the survey has a different story to say:

1.The latest June, 2017 data on the index of industrial production (IIP) shows negative growth, i.e. contraction of the index, which is the first in the last four years.

• The contraction is particularly widespread across manufacturing sectors, with 15 out of 23 industries showing negative growth.

2.Economic growth for fiscal year 2016-17 was 7.1%.

3.Corporate too are reeling under stretched balance sheets, burdened by excessive borrowing at high interest rates (from the past), excess capacity and not-so robust demand for their products.

• Their situation is made worse with the flood of imports, which take away their domestic market share.

On a positive note:

• The fiscal situation at the Centre is improving.
• Exports of the country are finally in positive territory.
• The four major reforms this year are: GST, a new insolvency and bankruptcy code to deal with NPAs, a new monetary policy framework, and Aadhaar linkage to government services.