Economic Survey 2016-17 Current Affairs

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Economic Survey backs Universal Basic Income

The Economic Survey 2016-17 tabled in Parliament has advocated for the concept of Universal Basic Income (UBI) as an alternative to the various social welfare schemes in an effort to reduce poverty.

It suggests that a more efficient way to help the poor will be to provide them resources directly, through a UBI. It will be an efficient substitute for a plethora of existing welfare schemes and subsidies.

What is Universal Basic Income (UBI)?

A basic income is a form of social security in which all citizens of a country regularly receive an unconditional sum of money, either from a government in addition to any income received from elsewhere. It is based on the principles of universality and unconditionality. However, it forfeits other government aided benefits. Recently, government of Finland announced the introduction of a trial for UBI involving 2,000 unemployed people. In June 2016, Swiss voters in referendum had overwhelmingly rejected proposal to introduce basic income for all.

Survey’s justification for introduction of UBI
  • Promoting social justice, reducing poverty, unconditional cash transfer that lets the beneficiary decide how she uses the money, employment generation by promoting labour flexibility.
  • It will bring in administrative efficiency as a direct cash transfer through JAM (Jan Dhan-Aadhar-Mobile) platform.
  • It will be more efficient as compared to the “existing welfare schemes which are riddled with misallocation, leakages and exclusion of the poor.
  • It can help to achieve considerable gains in terms of bureaucratic costs and time by replacing many of these with a UBI.

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Labour migration rose to 90 lakh over last 5 years: Economic Survey

According to Economic Survey 2016-17, the inter-state migration of workers in India has increased substantially to 90 lakh annually between 2011-16 period compared to the previous years.

The estimate of labour migration in India was based analysis of census data of 2011 and railway passenger traffic in the unreserved category and new methodologies including the Cohort-based Migration Metric (CMM).

Key Facts
  • It is first-ever estimate of internal work-related migration using railways. The inter-state labour mobility average was between 50–65 lakh people in the 2001-2011 period.
  • Migration for work and education is accelerating. The acceleration of migration was particularly high for women and increased at nearly twice the rate of male migration in the 2000s
  • The patterns of migration observed conform that less affluent states and districts evince higher out-migration and rich metropolises attract large inward flows of labour.
  • The largest recipient of migrant workers was the Delhi region, which accounted for more than half of migration in 2015-16, while Uttar Pradesh and Bihar together accounted for half of total out-migrants.
  • Over time, there has been a shift towards the southern states, reflecting the opening up of new migration corridors in recent years.
  • Policy actions to sustain and maximize the benefits of migration include ensuring portability of food security benefits, healthcare and basic social security framework through an inter-state self-registration process.

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Highlights of Economic Survey 2016-17

Union finance Minister Arun Jaitley tabled the Economic Survey 2016-17 in Parliament budget session. The survey prepared by chief economic adviser in the finance ministry Arvind Subramanian.

The survey projects the economy to grow in the range of 6.75% to 7.25% in fiscal year 2017-18 in the post-demonetisation year. It says that the adverse impact of demonetisation on GDP growth will be transitional.

Major highlights from the Economic Survey 2016-17
  • Growth Forecast: Gross domestic product (GDP) growth in 2016-17 pegged at 6.5%, down from 7.6% in last fiscal 2015-16.
  • Economic growth to rebound to 6.75 to 7.5% in 2017-18.
  • Farm sector to grow at 4.1% in 2016-17, up from 1.2% in 2015-16.
  • Growth rate of industrial sector estimated to moderate to 5.2% in 2016-17 from 7.4% in 2015-16.
  • Service sector is estimated to grow at 8.9% in 2016-17
  • GST, other structural reforms should take the growth rate trend  to 8-10%.
  • Taxation: Prescribes cut in individual Income Tax rates, real estate stamp duties.
  • IT net could be widened gradually by encompassing all high income earners.
  • Time table for cutting corporate tax should be accelerated.
  • Tax administration could be improved to reduce discretion and improve accountability.
  • Goods and Services Tax (GST): Fiscal gains from GST will take time to realise.
  • Fiscal Deficit: Implementation of muted tax receipts, wage hike to put pressure on fiscal deficit in 2017-18.
  • For fiscal health of the economy fiscal prudence for both centre and states is needed.
  • Fiscal windfall from low oil prices to disappear in 2017-18.
  • Inflation: The average consumer price index (CPI) inflation rate declined to 4.9% in 2015-16 from 5.9% in 2014-15. CPI-based core inflation remained sticky around 5% in the 2016-17.
  • Oil prices, seen rising by one-sixth in 2017-18 over the previous fiscal 2016-17 prices which could dampen India’s economic growth.
  • Monetary Policy: monetary easing headroom may be capped due to sharp rise in prices in 2017-18.
  • Market interest rates seen lower in 2017-18 due to demonetisation.
  • Government Debt to GDP ratio: It was 68.5% in 2016, down from 69.1% in 2015.
  • Banking: Suggests setting up public sector asset rehabilitation agency (PSARA) to take charge of large bad loans in banks. With government backing, PSAR can overcome coordination and political issues on bad loans.
  • Demonetisation: The adverse impact of demonetisation on GDP growth will be transitional. It will affect growth rate by 0.25-0.5%, but to have long-term benefits
  • It may affect supplies of certain agricultural products like sugar, milk, potatoes and onions.
  • Remonetisation will ensure that the cash squeeze is eliminated by April 2017.
  • Universal Basic Income (UBI): Advocates the concept of UBI as an alternative to the various social welfare schemes in an effort to reduce poverty.
  • It will be alternative to plethora of state subsidies for poverty alleviation. UBI would cost between 4 and 5% of GDP

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