India continues to remain the fastest growing major economy in the world in 2018-19, despite a slight moderation in its GDP growth from 7.2 per cent in 2017-18 to 6.8 per cent in 2018-19.
India’s growth of real GDP has been high with average growth of 7.5 per cent in the last 5 years (2014-15 onwards). The Indian economy grew at 6.8 per cent in 2018-19. The moderation in growth momentum is mainly on account of lower growth in ‘Agriculture & allied’, ‘Trade, hotel, transport, storage, communication and services related to broadcasting’ and ‘Public administration & defence’ sectors.
On the external front, current account deficit (CAD) increased from 1.9 per cent of GDP in 2017-18 to 2.6 per cent in April-December 2018 . The widening of the CAD was largely on account of a higher trade deficit driven by rise in international crude oil prices (Indian basket).
Rupee depreciated by 7.8 per cent vis-à-vis UD dollar, 7.7 per cent against Yen, and 6.8 per cent against Euro and Pound Sterling in 2018-19.
Non-Performing Assets as percentage of Gross Advances reduced to 10.1 per cent at end December 2018 from 11.5 per cent at end March 2018.
Inflation contained at 3.4 per cent in 2018-19.
Investment growth recovering since 2017-18: Growth in fixed investment picked up from 8.3 per cent in 2016-17 to 9.3 per cent next year and further to 10.0 per cent in 2018-19.
Current account deficit manageable at 2.1 percent of GDP.
Fiscal deficit of Central Government declined from 3.5 percent of GDP in 2017-18 to 3.4 percent in 2018-19.
Shifting gears: Private Investment as the Key Driver of Growth, Jobs, Exports and Demand
- Survey states that pathways for trickle-down opened up during the last five years; and benefits of growth and macroeconomic stability reached the bottom of the pyramid.
- Sustained real GDP growth rate of 8% needed for a $5 trillion economy by 2024-25.
- "Virtuous Cycle" of savings, investment and exports catalyzed and supported by a favorable demographic phase required for sustainable growth.
- Private investment- key driverfor demand, capacity, labor productivity, new technology, creative destruction and job creation.
- Survey departs from traditional Anglo-Saxon thinking by viewing the economy as being either in a virtuous or a vicious cycle, and thus never in equilibrium.
- Key ingredients for a self-sustaining virtuous cycle:
- Presenting data as a public good.
- Emphasizing legal reforms.
- Ensuring policy consistency.
- Encouraging behavior change using principles of behavioral economics.
- Nourishing MSMEs to create more jobs and become more productive.
- Reducing the cost of capital.
- Rationalizing the risk-return trade-off for investments.
Agriculture sector in India typically goes through cyclical movement in terms of its growth.
- Gross Value Added (GVA) in agriculture improved from a negative 0.2 per cent in 2014-15 to 6.3 per cent in 2016-17 but decelerated to 2.9 per cent in 2018-19.
- Gross Capital Formation (GCF) in agriculture as percentage of GVA marginally declined to 15.2 per cent in 2017-18 as compared to 15.6 per cent in 2016-17. The public sector GCF in agriculture as a percentage of GVA increased to 2.7 per cent in 2016-17 from 2.1 per cent in 2013-14.
- Women’s participation in agriculture increased to 13.9 per cent in 2015-16 from 11.7 per cent in 2005-06 and their concentration is highest (28 per cent) among small and marginal farmers.
- A shift is seen in the number of operational land holdings and area operated by operational land holdings towards small and marginal farmers.
- 89% of groundwater extracted is used for irrigation. Hence, focus should shift from land productivity to ‘irrigation water productivity’. Thrust should be on micro-irrigation to improve water use efficiency.
- Fertilizer response ratio has been declining over time. Organic and natural farming techniques including Zero Budget Natural Farming (ZBNF) can improve both water use efficiency and soil fertility.
- Adopting appropriate technologies through Custom Hiring Centers and implementation of ICT are critical to improve resource-use efficiency among small and marginal farmers.
- Diversification of livelihoods is critical for inclusive and sustainable development in agriculture and allied sectors. Policies should focus on
- Dairying as India is the largest producer of milk.
- Livestock rearing particularly of small ruminants.
- Fisheries sector, as India is the second largest producer.
- Government expenditure (Centre plus States) as a percentage of GDP on Health increased to 1.5 per cent in 2018-19 from 1.2 per cent in 2014-15.
- Traceable health benefits brought about by Swachh Bharat Mission (SBM).
- 93.1% of the households have access to toilets. 96.5% of those with access to toilets are using them in rural India.
- 100% Individual Households Latrine (IHHL) Coverage in 30 states and UTs.
- Financial savings from a household toilet exceed the financial costs to the household by 1.7 times on average and 2.4 times for poorest households.
- Environmental and water management issues need to be incorporated in SBM for sustainable improvements in the long-term.
- Accessible, affordable and quality healthcare being provided through National Health Mission and Ayushman Bharat scheme for a healthy India.
- Alternative healthcare, National AYUSH Mission launched to provide cost effective and equitable AYUSH healthcare throughout the country to address the issue of affordability, by improving access to these services.
- Sharp slowdown in population growth expected in next 2 decades. Most of India to enjoy demographic dividend while some states will transition to ageing societies by 2030s.
- National Total Fertility Rate expected to be below replacement rate by 2021.
- Working age population to grow by roughly 9.7mn per year during 2021-31 and 4.2mn per year during 2031-41.
- Policy makers need to prepare for ageing by investing in health care and by increasing the retirement age in a phased manner.
- Government expenditure (Centre plus States) as a percentage of GDP on Education increased from 2.8 per cent to 3 per cent during this period.
- Substantial progress in both quantitative and qualitative indicators of education is reflected in the improvements in Gross Enrolment Ratios, Gender Parity Indices and learning outcomes at primary school levels.
- Significant decline to be witnessed in elementary school-going children (5-14 age group) over next two decades. States need to consolidate/merge schools to make them viable rather than build new ones.
- Net employment generation in the formal sector was higher at 8.15 lakh in March, 2019 as against 4.87 lakh in February, 2018 as per EPFO.
- Around 1, 90, 000 km of rural roads constructed under Pradhan Mantri Gram Sadak Yojana (PMGSY) since 2014.
- About 1.54 crore houses completed under Pradhan Mantri Awas Yojana (PMAY) as against a target of 1 crore pucca houses with basic amenities by 31st March, 2019.
- Vulnerable sections of the society viz. women, SC and ST workforce increased under MGNREGS during economic distress.
- Encouraging Skill Development by:
- Introduction of the skill vouchers as a financing instrument to enable youth obtain training from any accredited training institutes.
- Involving industry in setting up of training institutes in PPP mode; in curriculum development; provision of equipment; training of trainers etc.
- Personnel of Railways and para-military could be roped in for imparting training in difficult terrains.
- Create a database of Instructors, skill mapping of rural youth by involving local bodies to assess the demand-supply gaps are some of the other initiatives proposed.
- Society’s optimal consumption of data is higher than ever given technological advances in gathering and storage of data.
- As data of societal interest is generated by the people, data can be created as a public good within the legal framework of data privacy.
- Government must intervene in creating data as a public good, especially of the poor and in social sectors.
- Merging the distinct datasets held by the Government already would generate multiple benefits.
Environment and Climate Change
- India’s SDG Index Score ranges between 42 and 69 for States and between 57 and 68 for UTs: Kerala and Himachal Pradesh are the front runners with a score of 69 amongst states. Chandigarh and Puducherry are the front runners with a score of 68 and 65 respectively among the UTs.
- Namami Gange Mission launched as a key policy priority towards achieving the SDG 6, with a budget outlay of INR. 20,000 crore for the period 2015-2020.
- For mainstreaming Resource Efficiency approach in the development pathway for achieving SDGs, a national policy on Resource Efficiency should be devised.
- A comprehensive NCAP launched in 2019 as a pan India time bound strategy for: Prevention, control and abatement of air pollution Augmenting the air quality monitoring network across the country.
- Achievements in CoP 24 in Katowice, Poland in 2018:
- Recognition of different starting points for developed and developing countries.
- Flexibilities for developing countries.
- Consideration of principles including equity and Common but Differentiated Responsibilities and Respective Capabilities.
- Paris Agreement also emphasizes the role of climate finance without which the proposed NDCs would not fructify.
- Though the international community witnessed various claims by developed countries about climate finance flows, the actual amount of flows is far from these claims.
- Scale and size of investments required to implement India’s NDC requires mobilizing international public finance and private sector resources along with domestic public budgets.
- 2.5 times increase in per capita energy consumption needed for India to increase its real per capita GDP by $5000 at 2010 prices, and enter the upper-middle income group.
- 4 times increase in per capita energy consumption needed for India to achieve 0.8 Human Development Index score.
- India now stands at 4th in wind power, 5th in solar power and 5th in renewable power installed capacity.
- Rs 50,000 crore saved and 108.28 million tonnes of CO2 emissions reduced by energy efficiency programmes in India.
- Share of renewable (excluding hydro above 25 MW) in total electricity generation increased from 6% in 2014-15 to 10% in 2018-19.
- Thermal power still plays a dominant role at 60% share.
- Market share of electric cars only 0.06% in India while it is 2% in China and 39% in Norway.
- Access to fast battery charging facilities needed to increase the market share of electric vehicles.
- Survey focuses on enabling MSMEs to grow for achieving greater profits, job creation and enhanced productivity.
- Dwarfs (firms with less than 100 workers) despite being more than 10 years old, account for more than 50% of all organized firms in manufacturing by number. Contribution of dwarfs to employment is only 14% and to productivity is a mere 8%.
- Large firms (more than 100 employees) account for 75% employment and close to 90% of productivity despite accounting for about 15% by number.
- Unshackling MSMEs and enabling them to grow by way of:
- A sunset clause of less than 10 years, with necessary grand-fathering, for all size-based incentives.
- Deregulating labor law restrictions to create significantly more jobs, as evident from Rajasthan.
- Re-calibrating Priority Sector Lending (PSL) guidelines for direct credit flow to young firms in high employment elastic sectors.
- Survey also focuses on service sectors such as tourism, with high spillover effects on other sectors such as hotel & catering, transport, real estate, entertainment etc., for job creation.
To read the complete Economic Survey 2018-19, click here.
Source : PIB
Pink-Color Economic Survey 2017-18
The Pink-color Economic Survey 2017-18 lays special emphasis on Gender and Son meta-preference, while providing an assessment of India’s performance on gender outcomes relative to other economies.
The Survey takes into account that Gender equality is an inherently multi-dimensional issue. Accordingly, assessments have been made based on three specific dimensions of gender, ie Agency (relates to women’s ability to make decisions on reproduction, spending on themselves, spending on their households and their own mobility and health), Attitudes (relate to attitudes about violence against women/wives, and the ideal number of daughters preferred relative to the ideal number of sons) and Outcomes (relate to ‘son preference’ measured by sex ratio of last child, female employment, choice of contraception, education level, age at marriage, age at first birth and physical or sexual violence experienced by women) which aim to reflect the status, role and empowerment of women in the society.
The key findings of the assessment made in the Survey include: Over the last 10-15 years, India’s performance improved on 14 out of 17 indicators of women’s agency, attitudes, and outcomes. On seven of them, the improvement has been such that India’s situation is comparable to that of a cohort of countries after accounting for levels of development.
The Survey encouragingly notes that gender outcomes exhibit a convergence pattern, improving with wealth to a greater extent in India than in similar countries so that even where it is lagging, it can expect to catch up over time. The Survey, however, cautions that on several other indicators, notably employment, use of reversible contraception, and son preference, India has some distance to traverse because development has not proved to be an antidote.
Economic Survey 2017-18 states that within India, there is significant heterogeneity, with the North-Eastern states (a model for the rest of the country) consistently out-performing others and not because they are richer; hinterland states are lagging behind but the surprise is that some southern states do less well than their development levels would suggest.
The Economic Survey 2017-18 notes the challenge of gender is long-standing, probably going back millennia, so all stakeholders are collectively responsible for its resolution.
The Survey thus recommends that India must confront the societal preference, even meta-preference for a son, which appears inoculated to development. The skewed sex ratio in favor of males led to the identification of “missing” women. But there may be a meta-preference manifesting itself in fertility stopping rules contingent on the sex of the last child, which notionally creates “unwanted” girls, estimated at about 21 million, adds the Survey. Consigning these odious categories to history soon should be society’s objective, opines the Survey.
The survey acknowledges that government’s Beti Bachao, Beti Padhao and Sukanya Samridhi Yojanaschemes, and mandatory maternity leave rules are all steps in the right direction. The Survey states that just as India has committed to moving up the ranks in Ease of Doing Business indicators, a similar commitment should be endeavored on the gender front.