India Budget 2018: Socio-economic Reforms and Fiscal Prudence

By Sharada Prahladrao

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ARC Report Abstract

Overview

The Economic Survey 2017–18 in India, the government’s report card on economic performance in the past year, was a precursor to the annual Union Budget; i.e., the India Budget 2018. The latter is a highly awaited event in India, with diverse expectations from business, industry, and the general public. Hence, a fine balancing act had to be arrived at to meet the expectations, while maintaining fiscal prudence.

Economic Survey 2017–18 Sets Stage for India Budget 2018

The Economic Survey, prepared by the Chief Economic Adviser, Arvind Subramanian, set the scene for Finance Minister Arun Jaitley's fifth annual India Budget 2018 india2018budget.JPGBudget on February 1, 2018. Interestingly, the Survey was pink in color (hard copy, web links, icons, etc.) – denoting support to women empowerment and gender equality. According to the Survey, India’s economy is likely to grow between 7 and 7.5 percent in the 2018-19 fiscal year that starts on April 1 (India’s financial year runs from April 1 to March 31 of the following year). Mr. Subramanian stressed that it is “more important to reignite investment than it is to raise savings.”

In the last three to four years, the government introduced various measures, such as demonetization, income declaration scheme, measures to promote digitalization to weed out black money etc.; and these seem to have given the desired results. However, persistently high oil prices re-main a key risk; this would affect inflation, the current account, the fiscal position and growth, and force macroeconomic policies to be tightened. The government’s petroleum subsidy allocation may fall short as crude oil prices are expected to rise. Brent Crude (the Asian benchmark) for oil prices have risen approximately 30 percent in six months.

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Keywords: India Economic Survey, Budget, Agriculture, Rural-centric, Tax, Infra-structure, Power, Pharmaceutical, Health Care, Digital Economy, ARC Advisory Group.

 

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