Finance minister Arun Jaitley will kick-off preparations for the Union Budget 2016-17 by holding consultation with leading economists from within and outside the government on Monday at the National Institution for Transforming India (NITI) Aayog meeting.
The meeting with the economists comes at the time when the economy is showing signs of revival, but the food inflation continues to be high and the appraisal of the 12th five-year plan (2012-17) showed that the government will not meet its social economic targets for the plan period.
India’s gross domestic product (GDP) in the last quarter had grown by 7% — similar to that of China —indicating that the economy was recovering after three years of tepid growth. The foreign invest flow is also increasing and investment in the infrastructure sector had streamlines, a review by NITI Aayog showed.
A NITI Aayog functionary expected the economy to get a boost in the Winter Session of Parliament when the Goods and Services Tax (GST) Bill would be introduced. He also anticipated that the bottlenecks on land acquisition will be removed by the state governments by adopting their own version of the Land Acquisition Bill in the next few months.
“We have taken many steps that have resulted in ending of bureaucratic paralysis and have improved ease of doing business. A large number of small steps has improved business sentiment, but a lot needs to be done,” the functionary, who was not willing to be quoted before the meeting said.
On the other hand, although the overall inflation was down, the increase in food inflation, especially pulses and onions, have been a reason of concern for the government.
Price of tur dal has risen by about Rs 110 to Rs 180 per kilogram in over a year while onions are selling at over Rs 40 per kilogram since July this year. Normally, the prices of onions moderate after arrival of new crop in October, but it has not happened this year because of poor harvest in Maharashtra.
NITI Aayog member in-charge of agriculture, Ramesh Chand, in his blog on Friday expressed concern on high onion prices for a long period this year despite its production increasing by over 13% on annual basis since 2000-01.
“It looks strange that increased availability is associated with increase in price volatility rather than providing flexibility to absorb small shocks in supply,” he said.
Chand, who was also member of agriculture task force, had recommended that onion cultivation should be promoted in kharif period and in new state like Uttar Pradesh. He also wanted that state-level agencies should be involved in stock holding of onion for price stabilisation during volatility period.
Sources in NITI Aayog also said that another issue of discussion could be the initial indications from the mid-term appraisal of the 12th plan. The appraisal does not present a rosy picture on job growth, improving health and education parameters and bridging inequality.
However, the appraisal shows that India was on track to meet the target of reducing poverty at a rate of two percentage points every year. The appraisal is expected to be completed by end of this year.