New Delhi: India expects its economy to grow 7-7.5 percent in the fiscal year to March 2017, the Economic Survey said on Friday, ahead of the presentation of the annual budget by Finance Minister Arun Jaitley on Monday.


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The economic survey, the basis for Jaitley`s budget for the fiscal year starting April 1, projected India to grow 8 percent in the next couple of years.


 


The survey was prepared by the finance ministry`s chief economic adviser Arvind Subramanian.


Following are the highlights of the report:


FISCAL DEFICIT


* 2015/16 fiscal deficit seen at 3.9 percent of GDP seems achievable


* 2016/17 expected to be challenging from fiscal point of view


* Credibility and optimality argue for adhering to 3.5 percent of GDP fiscal deficit target


* Time is right for a review of medium-term fiscal framework


INFLATION


* CPI inflation seen around 4.5 to 5 percent in 2016/17


* Low inflation has taken hold, confidence in price stability has improved


* Expect RBI to meet 5 percent inflation target by March 2017


* Prospect of lower oil prices over medium term likely to dampen inflationary expectations


* Low inflation has taken hold, confidence in price stability has improved


CURRENT ACCOUNT DEFICIT


* 2016-17 current account deficit seen around 1-1.5 percent of GDP


CURRENCY


* Rupee`s value must be fair, avoiding strengthening; fair value can be achieved through monetary relaxation


* India needs to prepare itself for a major currency readjustment in Asia in wake of a similar adjustment in China


* Gradual depreciation in rupee can be allowed if capital inflows are weak


TAXES


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


* Tax revenue expected to be higher than budgeted levels in FY15/16


* Easiest way to widen the tax base would be not to raise exemption thresholds


* Favours review and phasing out of tax exemptions


BANKING & CORPORATE SECTOR


* Estimated capital requirement for banks likely around 1.8 trln rupees by 2018/19


* Corporate, bank balance sheets remain stretched, affecting prospects for reviving private investments


* Underlying stressed assets in corporate sector must be sold or rehabilitated


* Govt could sell off certain non financial companies to infuse capital in state-run banks


* Govt proposes to make available 700 bn rupees via budgetary allocations during current, succeeding years in banks