Economic Survey: 10 interesting facts about Indian economy

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New Delhi: The Indian society has a strong desire for a male child that makes parents continue to have children until they get the desired number of male children, the Economic Survey 2017-18 tabled in Parliament on Monday pointed out, among key insights into the socio-economic patterns in Asia’s third largest economy.

Based on analysis of data, the Survey made some startling revelations as well as pleasant surprises about the trends in the economy, some of which warrant urgent action by the executive.

■ Among them, are the need for raising investments in the economy and cutting down avoidable tax litigation. The Survey said that to re-ignite economic growth, raising investments is more important than raising savings.

■ The Survey has sent a strong reminder to tax officials on the need for being more choosy about picking cases to fight.

“Tax departments in India have gone in for contesting against in several tax disputes but also with a low success rate which is below 30%. About 66% of pending cases accounted for only 1.8% (of value at stake)” said a statement from the finance ministry, quoting the Survey. Only 0.2% of cases accounted for 56% of the value at stake, said the survey, suggesting that there is scope for cutting down avoidable litigation significantly.

■ The Survey indicated that growth in savings did not bring economic growth but the growth in investments did.

■ India’s discontinuation of old high-value currency notes in November 2016 has helped in widening the tax net. According to the Survey, 1.8 million new individual tax payers have been added since demonetisation. Indirect tax base too has increased after the rollout of the goods and service tax (GST), it noted.

■ One key feature of states with high standard of living is their strong exports, both internationally as well as to other Indian states, the Survey found out.

■ Among exporting companies, the share of large firms is much smaller than that of their counterparts in other countries. Top 1% of Indian firms account for only 38% of exports, unlike in Brazil where it accounts for 72% and in Germany where it is 68%.

■ One surprising insight from the Survey is that the size of the formal part of the economy is bigger than earlier believed.

“When social security provisions like Employees’ Provident Fund Organisation/Employees’ State Insurance Corp. are taken into account, the formal sector payroll was found to be about 31% of non-agricultural work force,” the survey noted. If the formal sector of the economy is defined in terms of being part of GST net, such formal sector payroll share is 53%, the Survey said.

■ The Survey also pointed out that rebate of state levies has helped in boosting exports of ready made garments.

■ States and local bodies in India collect less direct taxes than in other countries. This is significant considering that for improving standard of living as well as for making the smart city programme a success, financial health of states and local bodies is important.

■The impact of extreme temperature rise and rain fall deficiency has been twice as large in un-irrigated areas as in irrigated ones, the data analysed in the Survey showed.livemint