The Economic Survey has targeted elimination of the revenue deficit and laid out fiscal discipline norms, wherein borrowings would be done for capital investments only, noted Jaijit Bhattacharya, Partner, Infrastructure and Government Services, KPMG in India.
Bhattacharya said it was heartening to note that the Economic Survey believed that the worst was over for the economy and that the economy was on the upswing.
The Survey has pointed out that the current account deficit would fall below 1 per cent in the coming year, and that the fiscal deficit target of 4.1 per cent was achievable.
``These are very welcome developments. The goal of 8 per cent growth in the coming year appears audacious, but achievable, especially with the new statistical basis for measuring GDP,'' Bhattacharya said in a statement.
Ranen Banerjee, Partner, Public Finance and Urban Development, PwC India, said the Economic Survey indicated that much larger fiscal headroom was becoming available to the Government on account of expected growth in the economy, lower oil prices, and better targeting of subsidies.
He added that the Finance Minister would be able to reverse the decline in gross capital formation and also give a further push to local consumption by leaving more money in the hands of the taxable population in his first full-year Budget.
However, KPMG's Bhattacharya noted that muted export growth was an area of concern, and “unless India becomes more competitive, it would be difficult to grow exports in a world that is slowing down overall. The Railways would have a key role to play in improving the competitiveness of the economy,'' Bhattacharya said in a statement, adding that rapid modernisation of the Indian Railways was a key imperative.
As for IT and ITeS, he said even though they were slowing down, the sector continued to be one of the largest employers in India. India also needs to grow in other industries, which could be job generators.
The Survey recommends growing India’s forex reserves to $1 trillion over a period of time. The KPMG official said it would be more prudent to put the target for forex reserves in terms of months of forex exposure that India would have, including imports and repayments.