Ten New Facts on the Indian Economy
The economic survey 2017-18 has identified 10 new facts on the new economy as follows:
1. The tax base in both direct and indirect taxes is increasing
Since November, 2016, there has been a significant rise in tax base in the form of both registered direct and indirect tax payers. A 50% increase in unique indirect tax-payers post-GST and an additional 1.8 million individual tax filers since November, 2016 are two new facts on Indian Economy.
Note: Voluntary registrations under GST have been on rise in recent past mainly because the small businesses which by from large enterprises are able to avail input tax credit.
2. The extent of Formal Non-farm Jobs is much wider than believed
The two words “formal” and “payroll” will be debated in next few days in media. Survey says that India’s formal non-farm employment is more than 30% if we take EPFO/ESIC enrolment as criteria for formal jobs. If we take GST registration as criteria, then formal non-farm payroll is more than 50%.
3. There is a strong correlation between exports of states and their prosperity
The survey says that the states that export more internationally, and trade more with other states, tend to be richer. There is a stronger correlation between prosperity and international trade.
4. Largest firms account for small share in exports
The survey points out that top 1% of Indian firms account for 38% of the exports, which is much lower in comparison to other countries. This implies that the largest firms account for smaller share in exports.
5. The 2016 package boosted exports of readymade garments
The package called Relief from Embedded State Taxes (ROSL) announced in 2016 boosted exports of ready-made garments by about 16 percent. This effect was not seen on other textile exports.
6. Indian society has strong desire for male child
This is an old fact, studied by survey this time that Indian parents keep having children until they get desired number of sons. This fertility-stopping rule has skewed the sex ratio two way – if the son is last child, the ratio would favour girl children; while if the son is first child, then ratio go against the daughters.
7. Tax litigation in India is avoidable and can be reduced
Government litigation is a key problem and litigation by tax department is one of the largest. However, substantial part of this litigation could be avoided and should be avoided for, there is very low success rate in such litigations.
8. Investment, not savings, will bring more growth
The survey points that raising investment is more important than raising saving. Growth slowdowns are preceded by investment slowdowns but not necessarily by savings slowdowns may not.
9. In case of direct tax collections, Indian states fare much below than their global counterparts
In India, the direct tax collection by states and local bodies are much lower.
10. Climate Change is real and affecting Indian agriculture
The footprint of climate change is evident and extreme weather adversely impacts agricultural yields. The impact of weather is felt only with extreme temperature increases and rainfall deficiencies. This impact is twice as large in unirrigated areas as in irrigated ones.