A day before Budget 2020, the government released the Economic Survey 2020 document in the Parliament on January 31. The survey said there could be challenges on the fiscal front in the financial year 2020-21.
"We may need to relax fiscal deficit target for FY20 to revive growth and need counter-cyclical fiscal steps to boost demand," the government said in the survey.
According to the survey, the greater home sales can clean up bank and NBFC balance sheets. "Realty companies must cut home prices to clear unsold inventory and private investments may get crowded on higher government infra spends," it said.
The government expects economy to grow in the range of 6-6.5 percent in FY21 and 5 percent in FY20.
Here are other key takeaways from Economic Survey, the government says:
Banks may remain risk averse unless Insolvency and Bankruptcy Code (IBC) process speeds up
Low tax/GDP ratio constrained government infrastructure spends
Improvement in tax mop-up hinged on GST revenue buoyancy
Growth resurgence is expected to begin starting second half of FY20
Length of Indian business cycle appeared to be 13 quarters
See strong rebound in growth in FY21 on low base
Cut in capex by government may adversely hurt growth
See FY20 tax collections to be lower against estimates
High non-tax revenue growth is not sustainable year after year
GST buoyancy is key to Centre, State revenue position
Pace of GDP growth recovery will impact revenue collection
See room to further rationalise subsidies, especially food
Seeing progress, albeit slow, in implementation of IBC
Improving composition, the quality of government spending is crucial
Continued global trade tensions could hit India exports
Industrial activity has been rebounding, showing signs of pick up
Rise in core inflation in December suggests demand pressure is building
Rationalisation of subsidies could be important to expand fiscal headroom
US-Iran tensions may weaken FDI inflows, depreciate rupee
Global sentiment continues to be in favour of India
See case for aggressive disinvestment of central PSUs
Concerns of misestimated Indian GDP unsubstantiated by data, thus unfounded
Fiscal deficit of states within targets set out by FRBM Act
Suggest Employee Stock Ownership Plan for state-run bank employees
Government intervention to boost wealth can undermine marketsNeed to address burgeoning food subsidy