Economic On 31st January 2020, Union Minister for Finance & Corporate Affairs, Smt. Nirmala Sitharaman presented the Economic Survey 2019-20 in the Parliament predicting India’s GDP (Gross Domestic Product) to be 6-6.5% in 2020-2021. This economic survey influenced by Kautilya’s Arthashashtra, has presented the “Thalinomics”– an attempt to relate economics to the common person using something that he or she encounters every day – a plate of food i.e. a Thali. As per survey,the affordability of a vegetarian thali improved by 29% between 2006-07 and 2019-20 and that of a non-vegetarian thali by 18% over the 13-year period.
- The Overarching theme of Economic Survey 2019-20 is Wealth Creation. The survey documents ideas of wealth creation that are rooted in India’s tradition from Arthashashtra to Thiruvalluvar’s Thirukural.
- The aim of the survey is to make India USD 5 trillion economy by 2025.
Point to be noted: Arthashashtra, written by Kautilya is a treatise on economic policy, statecraft and military strategy. The treatise is estimated to have been completed around the 2nd century BCE (Before Common Era).
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Who has prepared the economic survey 2019-20?
The Economic Survey, which is a detailed report card on the Centre’s economic performance through the year and future projection on the country’s growth has been prepared by the Economic Division, Department of Economic Affairs, Ministry of Finance under the guidance of Chief Economic Adviser, Ministry of Finance, Krishnamurthy V. Subramanian in a period of 6 months. It is a collaborative effort of all Ministries and Departments of Government of India including researchers, consultants and think tanks both within and outside the government. The Economic Survey 2019-20 has also sourced certain data from Wikipedia, which is not considered a reliable source of information.
Now, let’s go through the very points of Economic Survey 2019-2020.
- Golden jubilee of bank nationalisation Survey observes 2019 as the golden jubilee year of bank nationalization.
- India has only one bank in the global top 100 i.e State Bank of India which is also on lowly 55th rank. Being the fifth largest economy, India should have at least six banks in the top 100 global list, and at least eight would be required for a country having a $5-trillion economy.
- India ranked third in number of new firms created, as per the World Bank:
- New firm creation in India increased dramatically since 2014
- 2 % cumulative annual growth rate of new firms in the formal sector during 2014-18, compared to 3.8 % during 2006-2014.
- About 1.24 lakh new firms created in 2018, an increase of about 80 % from about 70,000 in 2014.
- New firm formation is the lowest in eastern India with the lowest literacy rate (59.6 % as per 2011 Census).
- The survey suggests creating of job on Chinese model.’Assemble in India for the world’ strategy with Make in India. Apart from raising India’s share in world trade, it could give India 8 crore well-paying jobs by 2030
- A 10 percent increase in registration of new firms in a district yields a 1.8 % increase in Gross Domestic District Product (GDDP).
i.Fiscal Deficit: In 2019-20, Centre’s fiscal deficit was budgeted at Rs. 7.04 lakh crore (3.3% of GDP), as compared to Rs. 6.49 lakh crore (3.4% of GDP) in 2018-19.
ii.CAD: Current Account Deficit (CAD) narrowed to 1.5 % of GDP in H1 of 2019-20 from 2.1 % in 2018-19
iii.Infrastructure Investment: To achieve GDP of USD 5 trillion by 2024 – 2025, India needs to spend about USD 1.4 trillion (Rs.100 lakh crore) over these years on infrastructure so that lack of infrastructure does not become a constraint to the growth of Indian economy. In this regard Infrastructure Investment of Rs.102 Lakh Crore is budgeted for FY 2020-2025.
iv.India’s GDP growth moderated to 4.8% in H1 (First Half) of 2019-20. The survey showed 5 % GDP growth for 2019-20 based on CSO’s (Central Statistics Office) first Advance Estimates.
v.The industrial growth for the current year has been listed as 2.9% while the agricultural growth is 2.8%.
vi.India’s forex reserves reach a historic level of $450 billion dollars.
vii.India has become 2nd Largest Emerging Green Bond Market after China. The State Bank of India(SBI) entered the market with an US$650 million Certified Climate Bond. India also joined the International Platform on Sustainable Finance (IPSF) in 2019 to scale up the environmentally sustainable investments.
viii.The bollywood movie Band Baaja Baaraat was given reference to show Indian entrepreneurship.
ix.Decline in inflation: Declining inflation from 3.2% in April 2019 to 2.6% in December 2019, reflecting weakening demand pressure in the economy.
x.GST Collections: GST collections grew by 4.1% for the centre during April-November 2019. Gross GST monthly collections have crossed the mark of Rs. 1 lakh crore for a total of five times during 2019-20.
xi.BoP (Balance of Payments)– India’s BoP’s position improved from US$ 412.9 bn of forex reserves at the end March, 2019 to US$ 433.7 bn at the end of September 2019.
xii.Foreign reserves stood at US$ 461.2 bn as on 10th January, 2020.
xiii.In sync with an estimated 2.9% growth in global output in 2019, global trade is estimated to grow at 1.0% after having peaked in 2017 at 5.7%. However, it is projected to recover to 2.9% in 2020 with recovery in global economic activity.
xiv.India’s merchandise trade balance improved from 2009-14 to 2014-19, although most of the improvement in the latter period was due to more than 50% decline in crude prices in 2016-17.
xv.India’s top five trading partners continue to be USA (United States of America), China, UAE (United Arab Emirates), Saudi Arabia and Hong Kong.
xvi.Exports– Top export items are Petroleum products, precious stones, drug formulations & biologicals, gold and other precious metals. Largest export destinations in 2019-20 (April-November): United States of America (USA), followed by United Arab Emirates (UAE), China and Hong Kong.
xvii.Imports-Top import items are Crude petroleum, gold, petroleum products, coal, coke & briquittes. India’s imports continue to be largest from China, followed by USA, UAE and Saudi Arabia.
xviii.Under trade facilitation, India improved its ranking from 143 in 2016 to 68 in 2019 under the indicator, “Trading across Borders”, monitored by World Bank in its Ease of Doing Business Report.
xix.Logistics industry of India: Currently estimated to be around US$ 160 billion it is expected to touch US$ 215 billion by 2020. According to World Bank’s Logistics Performance Index, India ranks 44th in 2018 globally, up from 54th rank in 2014.
xx.External debt: Remains low at 20.1% of GDP as at end September, 2019.
Other Important Highlights:
–Metro facility: The metro facility in India has been expanded to 18 cities. So far, 670 km Metro lines have been commissioned and work is on to expand it to 930 km.
–Medical colleges: This year, 75 new medical colleges have been approved in the country. This will increase the total number to 16,000 MBBS medical and over 4,000 PG seats
–PM-KISAN: Under Prime Minister Kisan Samman Nidhi, more than Rs 43,000 crore has been deposited in the bank account of over 8 crore farmer familie
–Agreement with Bodo Organizations: The Central and Assam Governments have recently signed a historic agreement with the Bodo Organizations to bring an end to the 5 decade-old Bodo dispute
–Increase in houses completion under PMAY-G: The two Schemes, Pradhan Mantri Awaas Yojana- Gramin (PMAY-G) and Pradhan Mantri Awaas Yojana- Urban (PMAY-U), seek to achieve the target of housing for all by 2022. Under PMAY-G, the number of houses completed in a year increased by more than four times, from 11.95 lakh in 2014-15 to 47.33 lakh in 2018-19,
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– Creation of jobs: 2.6 crore jobs created in Rural and Urban Areas Between 2011-12 and 2017-18
- The share of regular wage/salaried employees has increased by 5 percentage points from 18 per cent in 2011-12 to 23 per cent in 2017-18.
- In absolute terms, there was a significant jump of around 2.62 crore new jobs with 1.21 crore in rural areas and 1.39 crore in urban areas in this category.
- 8% increase in regular employment of women in 2017-18 over 2011-12.
–Open Defecation Free: All Urban areas of 35 States/UTs have become ODF and percentage of waste processing rose from around 18 percent to 60 percent.
–Services Sector: It accounted for about 55% of the economy and Gross Value Added (GVA) growth, two-thirds of total FDI inflows into India and about 38% of the total exports. The sector’s share now exceeds 50$ of the Gross State Value Added (GSVA) in 15 out of the 33 states and UT.
–Improvement in Space Sector: India’s space program has grown exponentially since its modest beginnings five decades ago, moving from simple mapping services to many more uses currently. Even though India’s spending is less compared to others, ISRO has launched around 5-7 satellites per year in recent years with almost no failures.
–Foreign Direct Investment (FDI): Net FDI inflows in 2019-20 attracting US$ 24.4 bn in the first eight months, higher than the corresponding period of 2018-19.
- Net Foreign Portfolio Investment (FPI) in the first eight months of 2019-20 stood at US$ 12.6 bn.
- Net remittances from Indians employed overseas increased to US$ 38.4 billion in H1 of 2019-20 which is more than 50% of the previous year level.
- Services Sector sees 33% Jump in Gross FDI