10 New Facts About Indian Economy Based on Economic Survey 2017

Just like the Economic Survey 2016 which had 8 interesting facts, Economic Survey 2017 too has brought us new facts. The Economic Survey 2017-18 has relied upon analysis of the new data to highlight ten new economic facts, which is discussed below.

Fact 1: Large increase in registered indirect as well as direct taxpayers.

Goods and Services Tax (GST) has given a new perceptive of the Indian economy and new data has emerged. There has been a fifty percent increase in the number of indirect taxpayers. There has also been a large increase in voluntary registrations, especially by small enterprises that buy from large enterprises wanting to avail themselves of input tax credits.

The Survey also stated that fears of major producing states that the shift to the new system would undermine their tax collections have been allayed as the distribution of the GST base among the states got closely linked to the size of their economies.

Similarly, there has been an addition of about 18 lakh in individual income tax filers since November 2016.

Fact 2: Indian formal sector is substantially greater than what it is currently is believed to be

India’s formal sector, especially formal non-farm payroll, is substantially greater than what it currently is believed to be. It became evident that when “formality” was defined in terms of social security provisions like EPFO/ESIC the formal sector payroll was found to be about 31 percent of the non-agricultural workforce. When “formality” was defined in terms of being part of the GST net, such formal sector payroll share was found to be 53 percent.

Fact 3: States prosperity is positively correlated with international trade and inter-state trade

Data on the international exports of states indicates a strong correlation between export performance and states’ standard of living. States that export internationally and trade with other states were found to be richer. Such correlation is stronger between prosperity and international trade.

Fact 4: India’s export structure is more egalitarian than many large countries

India’s exports are unusual in that the largest firms account for a much smaller share of exports than in other comparable countries. Top one percent of Indian firms account only for 38% of exports unlike in other countries where they account for substantially greater share – (72, 68, 67 and 55 percent in Brazil, Germany, Mexico and USA respectively). Such tendencies were also found to be true for the top five or ten percent of the Indian companies.

Fact 5: Clothing incentive package boosted exports of ready-made garments

It was pointed out that the Rebate of State Levies (ROSL) has increased exports of ready-made garments (man-made fibres) by about 16 percent but not of others.

Fact 6: Indian parents continue to have children until they get the desired number of sons

The data highlighted another seemingly known fact that Indian society exhibits a strong desire for a male child. It pointed out that most parents continued to have children until they get a number of sons. The survey gave details of various scenarios leading to skewed sex ratios and also gave a comparison of sex ratio by birth between India and Indonesia.

Fact 7: Government action could decrease substantial litigation in the tax arena

The survey pointed out that 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 percent. About 66 percent of pending cases accounted for only 1.8 percent of value at stake. It further stated that 0.2 percent of cases accounted for 56 percent of the value at stake.

Fact 8: Growth in Saving ≠ Economic Growth; Growth in Investment = Economic Growth

Extrapolating the data the survey indicated that growth in savings did not bring economic growth but the growth in investment did.

Fact 9: Collection of direct taxes by Indian states and Local Self Governments are significantly lower than their counterparts

The survey mentions that collections of direct taxes by Indian states and other local governments, where they have powers to collect them is significantly lower than their counterparts in other federal countries. A comparison has been given between ratios of the direct tax to total revenues of local governments in India, Brazil and Germany.

Fact 10: Extreme weather adversely impacts agricultural yields

The survey captures the footprints of climate change on the Indian territory and consequent adverse impact on agricultural yields. Extreme temperature increases and deficiency in rainfall have been captured on the Indian map and the graphical changes in agricultural yields are brought out from such data. The impact was found to be twice as large in un-irrigated areas as in irrigated ones.

View the 10 New Facts on Indian Economy as a Graphical Presentation

[slideshare id=92036092&doc=10newfactsonindianeconomybasedones2017-180327090638]