New Delhi: The Economic Survey presented by Union Finance Minister Arun Jaitley in Parliament on Monday has relied upon analysis of the new data to highlight 10 new economic facts. We start by testing the assertion about inequality in the country by the likes of Oxfam.
India’s exports are unusual in that the largest firms account for a much smaller share of exports than in other comparable countries. Top 1% of Indian firms accounts only for 38% of exports unlike in other countries where they account for substantially greater share: Brazil 72%, Germany 68%, Mexico 67% and the United States 55%. Such tendencies were also found to be true for the top 5% or 10% of the Indian companies. Inequality is clearly not that visible in India.
Goods and Services Tax (GST) has given a new perceptive of the Indian economy and new data has emerged. There has been a 50% 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.
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 and/or ESIC the formal sector payroll was found to be about 31% of the non-agricultural workforce. When it was defined in terms of being part of the GST net, such formal sector payroll share was found to be 53%.
For the first time in India’s history, the Economic Survey dwelt upon the data on the international exports of States. Such information indicates a strong correlation between export performance and the States’ standard of living. States that export internationally and have good trade relations with other States of the country were found to be richer. Such correlation is stronger between prosperity and international trade.
It was pointed out that the Rebate of State Levies (ROSL) has increased exports of ready-made garments (man-made fibres) by about 16% but not of others.
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 on sex ratio by birth between India and Indonesia.
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%. About 66% of pending cases accounted for only 1.8% of the value at stake. It further stated that 0.2% of cases accounted for 56% of the value at stake.
Extrapolating the data the survey indicated that growth in savings did not bring economic growth but the growth in investment did.
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. There is a comparison in the form of ratios of direct taxes to total revenues of local governments in India, Brazil and Germany.
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.