The economic survey promises optimistic growth of around 8% of GDP in the next 12 months and expected later a double-digit growth. The survey shows the need for financial inclusion, for a greater focus on the manufacturing sector and improve the digital economy. Even more interesting was the government's commitment to increase investment in road and rail networks and to increase the logistical support to the manufacturing industry.
The Indian budget 2017 took the ideas contained in the economic survey, with the Government's commitment to increase support for the 40% of the road network with the intention to deliver additional 100,000 kilometers of paved roads and that for the railway infrastructure by 50%. Although no announcements were made egregious in the Indian Budget Plan 2016, has, however, the determined number of promising elements lay the foundations for a solid future.
The Government confirmed its commitment to fiscal discipline in order to reduce the deficit to 3% of GDP by 2018. However, the most significant announcements were qualitative. The budget shows a clear road map for regulation of business activity, given that companies in India have been until now obliged to ask for permission before starting the activities. A complex regulatory environment removes the current application process and obtaining approvals, and this improvement will make it much easier business activities in India.
There was a clear focus on financial inclusion, particularly in rural areas of India, with the addition of 125 million new bank accounts. In the long run, this will help lower-income families to avoid asking for help from loan sharks and facilitate direct cash transfers of social benefits, helping the fight against corruption and improving savings rates. In addition, it has been set the goal of giving a home to all by 2022, which will bring 70 million new homes.
It will be presented a comprehensive Bankruptcy Code and judicial structures will be improved. The recovery of non-performing loans has been very challenging in India, given that many defaulters fleeing intentionally. This new measure will cover the financial and banking sector and is a very positive factor for both the banks and for the efficiency of capital in an economy with limited availability of capital.
A clear plan to reduce corporate taxes by 5% over the next five years, in addition to a simplification of the existing tax code was set up. The GAAR was postponed for two years, and all of its provisions apply only in the future.
The annual budget has a solid foundation to support economic growth, with greater financial inclusion. India is in a great location and is beginning a new cycle of profits and is pursuing an expansionary monetary policy. The country is in a phase of political change, which will make it much easier to do business. I believe this, together with low fuel prices and the consequent improvement in the trade deficit, should lay the foundation for a multi-year bull market.