Eco Sur­vey Lists Growth Pains, Pre­scribes Pep Pills

Makes strong case for mon­e­tary eas­ing and fis­cal ad­just­ments, flags mul­ti­ple new risks and de­fla­tion­ary im­pulses

The Economic Times - - Front Page - Our Bu­reau

New Delhi: The Eco­nomic Sur­vey made a strong case for mon­e­tary eas­ing and fis­cal ad­just­ments, flag­ging mul­ti­ple new risks and de­fla­tion­ary im­pulses that could hin­der the coun­try achiev­ing the higher end of the pro­jected growth band of 6.75% to 7.5% for this fis­cal year. A struc­tural re­form push to growth will come from im­ple­men­ta­tion of the goods and ser­vices tax (GST), pri­vatis­ing na­tional car­rier Air In­dia and steps to ad­dress the twin bal­ance-sheet prob­lem.

“The bal­ance of prob­a­bil­i­ties has changed ac­cord­ingly, with out­comes closer to the up­per end hav­ing much less weight than pre­vi­ously,” said the sec­ond in­stal­ment of the Eco­nomic Sur­vey for FY17. The first part had fore­cast FY18 growth at 6.75-7.5%. The sec­ond in­stal­ment sticks with that but cited mul­ti­ple down­side risks in near term amid fun­da­men­tal op­ti­mism about the medium term.

Lead au­thored by chief eco­nomic ad­viser Arvind Subramanian, the sur­vey re­vives the dis­agree­ment be­tween him and the cen­tral bank over mon­e­tary pol­icy. The sur­vey piled pres­sure on the Re­serve Bank of In­dia to cut in­ter­est rates, say­ing the key pol­icy rate is still 25-75 ba­sis points more than neu­tral. It said there is con­sid­er­able scope for mon­e­tary eas­ing and the sooner it is done, the quicker the econ­omy can reach its full po­ten­tial.

The sur­vey also sug­gested that the gov­ern­ment should be more flex­i­ble and al­low fis­cal ad­just­ments dur­ing the year if re­quired.

The buyer was re­quired to keep the cer­tifi­cate of pur­chase for in­spec­tion by an an­i­mal in­spec­tor. “Why are you al­ways pre­sum­ing that an­i­mals are cows or bulls? It could be chicken,” Chief Jus­tice JS Khe­har said. “Why can’t a man take it home and eat it?” At an­other point in the hear­ing he said: “Slaugh­ter is not cru­elty.”

The new rule on live­stock trade, no­ti­fied on May 23, also dis­al­lowed slaugh­ter of an­i­mals in the name of re­li­gion, which was al­lowed un­der the Pre­ven­tion of Cru­elty Act. The gov­ern­ment, through Ad­di­tional So­lic­i­tor Gen­eral PS Narasimha, told the bench com­pris­ing CJI Khe­har and Jus­tice DY Chan­drachud, that the May 23 rule was al­ready un­der re­view, and as­sured the court that it would not be given ef­fect to in the in­terim.

“We are in the process of re­view­ing th­ese rules in con­sul­ta­tion with all stake-hold­ers and it’s no­body’s case that it would not be placed be­fore Par­lia­ment,” Narasimha said.

How­ever, the bench dis­agreed and said since the rule was al­ready no­ti­fied, the court was stay­ing it till such time a fi­nal ver­dict was passed.

“The rules have statu­tory force, you can’t say you won’t im­ple­ment,” the CJI ob­served.

Narasimha ar­gued that the rule was in­tended to pre­vent any cru­elty to an­i­mals and is­sued un­der the con­cur­rent list. He said an­i­mal mar­kets were purely for trade; those for slaugh­ter were to be picked up di­rectly from farms by ag­gre­ga­tors. Both would be gov­erned by dif­fer­ent regimes, he said. “The gov­ern­ment is con­cerned by the huge il­le­gal ex­ports of meat.”

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