Highlights of Economic Survey: Growth to pick up in coming fiscal year

NEW DELHI (Reuters) – India will regain its position as the world’s fastest-growing major economy in the next fiscal year beginning April 1, but it would do well to slow down the move toward lower fiscal deficits to fund that growth, a government report said on Monday.

The government’s economic survey, presented to parliament on Monday went on to say that though the plan has been to reduce the fiscal deficit from an estimated 3.2 percent this year to 3.0 percent in 2018/19, a pause in the move toward a lower deficit could be merited in order to give the economy momentum.

The survey was prepared by the finance ministry’s Chief Economic Adviser Arvind Subramanian, who estimates that gross domestic product will have grown 6.75 percent in the current fiscal year ending in March.

Here are the highlights of the report:

GROWTH
* 2018/19 Growth seen at 7 pct to 7.5 pct y/y

* 2017/18 GDP growth seen at 6.75 pct y/y

* 2017/18 industry growth seen at 4.4 pct

* 2017/18 farm sector growth seen at 2.1 pct

* Economic management will be challenging in the coming year

* Biggest source of upside to growth to be from exports

* Cyclical conditions may lead to lower tax and non-tax revenues in 2017/18

* Private investment poised to rebound

FISCAL DEFICIT
* Target for fiscal consolidation specially in a pre-election year can carry a high risk of credibility

* Marked efforts will be required to meet budgeted revenue and fiscal deficit targets for full year

* Current account deficit for 2017/18 expected to average 1.5-2 pct of GDP

* Pause in general govt fiscal consolidation cannot be ruled out in 2017/18

* Suggests modest (fiscal) consolidation that signals a return to the path of gradual but steady deficit reductions

* About 400 bln rupees worth of additional borrowing does not affect underlying deficit – economic adviser

INFLATION, POLICY RATES
* Persistently high oil prices remain a key risk, to affect inflation, current account, fiscal position and growth

* If inflation doesn’t deviate from current levels policy rates can be expected to remain stable

* Average CPI inflation seen at 3.7 pct in 2017/18

AGRICULTURE
* Warns climate change could trim agricultural incomes in India by 15 percent to 25 percent with unirrigated lands being harder hit by rising temperatures and declines in rainfall