Good fiscal performance by states should be incentivised to track overall performance

"Given the high elasticity of Indian real export growth to global GDP, exports could contribute to higher growth next year, by as much as 1 percentage point".

The pre-Budget document said the markets are factoring in a regime change in advanced countries, especially the USA macroeconomic policy, with high expectations of fiscal stimulus and unwavering exit from unconventional monetary policies.

".India's fiscal experience has underscored the fundamental validity of the fiscal policy principles enshrined in the Fiscal Responsibility and Budget Management Act (FRBM) Act 2003", said a government release on the Economic Survey. "Since this action has commanded support amongst the population, demonetisation shows that black money will no longer be tolerated by the wider public, either", it added. As a result, lending rate has come down by 90 basic points, said Subramanian.

Such sustenance is despite continuing global sluggishness, the survey said. It cautioned that "vigilance is essential to prevent other agricultural products becoming in 2017-18 what pulses was in 2015-16 in terms of supply deficiencies and consequential higher inflation". "The transaction has to be gradual".

The Survey has greatly benefitted from the comments and insights of Jaitley, who also authors a section, possibly the first such contribution by a Finance Minister, the acknowledgment section stated.

"This would reduce the GDP growth deceleration and cash hoarding", it said, adding that continued impetus to digitalisation while ensuring that this transition is gradual, inclusive, based on incentives rather than controls and appropriately balancing the costs and benefits of cash versus digitalisation would maximise long-term benefits and minimise short-term costs.

Invoking Mahatma Gandhi's vision of "wiping every tear from every eye", it made a pitch for implementing Universal Basic Income (UBI) to entitle the poor with at least some income and thus eliminate poverty.

The survey has finally warned the government that tax arbitrariness and harassment could attenuate credibility. It is an unusual experiment in the monetary history...

RBI's balance sheet remainted largely unchanged: return of currency reduced the central bank's cash liabilities but increased its deposit liabilities to commercial banks. It has reduced sharply, the supply of one type of money - cash - while increasing nearly to the same extent another type of money - demand deposits.

But it says that the government will reap a fiscal windfall from the invalid currency notes not returned to banks after demonetisation.

The new notes are being issued to replace high-value ones scrapped overnight on November 8. "The ability of shale oil production to respond quickly should contain the risks of a sharp increase, but even if prices rose merely to Dollars 60-65 per barrel the Indian economy would nonetheless be affected by way of reduced consumption; less room for public investment; and lower corporate margins, further denting private investment", it said.

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