SURVEY: RETURN TO REALISM
The Economic Survey for 201617, released on Tuesday, provided a refreshingly realistic assessment of the many challenges facing the Indian economy in the coming years. It outlined these challenges, including possible global economic turbulence and the after-effects of demonetisation, before discussing policies that could revive investment and restore growth. Launching India to a high-growth trajectory would take “shifts in the underlying vision”, the Survey said.
The estimates of growth in gross domestic product (GDP) were sobering. The Survey noted that first-half growth in the current financial year, at 7.2 per cent, was “on the weaker side” of last year’s Economic Survey estimates; and that full year-growth would likely dip below seven per cent due to economic activity being adversely affected by demonetisation. The Survey projected a dip of “between 1/4 and 1/2 percentage points relative to the baseline of about seven per cent”, suggesting likely growth between 6.5 per cent and 6.75 per cent in 2016-17. For 2017-18, the Survey projected growth of 6.75-7.5 per cent.
The Survey went on to claim that growth could reach 8-10 per cent in the medium run through the implementation of reforms, including follow-ups on demonetisation and the Goods and Services Tax (GST).
The follow-up actions on demonetisation it recommended included a swift end to currency rationing. The Survey pointed out that the demand for cash must come from consumers, and not be managed by the state. “Digitalisation is not a panacea, nor is cash all bad,” the Survey said, adding that the transition to the digital economy must be gradual and inclusive, and the costs borne by the government and not the private sector. To reap the full benefits of demonetisation, the Survey insisted that GST be more broad-based, by including land-related taxation. It also said that tax administration would now have to become more accountable and less discretionary — and argued for a reduction in taxes across the board. However, elsewhere the Survey warned against further fiscal activism, noting India “stands out for the size of the deficits it has run over the past decade”. India’s experience “has reaffirmed the need for rules to contain fiscal deficits”, the Survey added, insisting the basic tenets of the Fiscal Responsibility and Budget Management Act of 2003 remain valid. Problems are brewing in particular at the state level, where the consolidated deficit rose from 2.5 per cent of GDP to 3.6 per cent in just one year. The Survey argued that market-based discipline should be introduced to state finances. More controversially, it suggested that India should consider returning to a system where states received resources partly on the basis of their own fiscal performance — the fiscal framework preferred by the Thirteenth Finance Commission, but overturned by the Fourteenth. >
devaluation by other countries had increased drugmakers’ outsourcing their production and called on the companies to make more of their products in the United States. He added that foreign countries must pay fair share for drug development costs. “We’re going to end global freeloading,” Trump said.
Novartis CEO Joe Jimenez, who is chairman-elect of the industry lobbying group, said last week that he wanted to talk to Trump about efforts to develop pricing models that would pay for clinical results rather than a flat price per pill, as well as plans to replace the Affordable Care Act, which is popularly known as “Obamacare.”
Trump spooked investors in the pharmaceuticals and biotech sectors by saying on Jan. 11, before his inauguration, that drug companies were “getting away with murder” on what they charged the government for medicine and that he would do something about it. That prompted the pharmaceutical lobbying group to unveil a new TV marketing campaign last week to improve its image by focusing attention on strides in research.
Company executives, meanwhile, have tried to tread a careful line in defending their industry while expressing optimism that the United States would continue to reward scientific advances.