Economic Survey 2017-18: Main points

Union Finance Minister Shri Arun Jaitley on January 29, 2018, presented the pink colour ‘Economic Survey 2017-18’ in Parliament. The Economic Survey is printed in pink colour to highlight the importance of gender issues to the economy. Here are the main points of Economic Survey-2017-18:

10 new facts of Indian Economy

1. Goods and Services Tax (GST) has given a new perceptive of the Indian economy and new data has emerged. There has been a fifty percent increase in the number of indirect taxpayers.

2. Goods and Services Tax (GST) has given a new perceptive of the Indian economy and new data has emerged. There has been a fifty percent 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.

3. For the first time in India’s history, data on the international exports of states has been dwelt in the Economic Survey. Such data indicates a strong correlation between export performance and states’ standard of living.

4. India’s exports are unusual in that the largest firms account for a much smaller share of exports than in other comparable countries. Top one percent of Indian firms account only for 38% of exports unlike in other countries where they account for substantially greater share – (72, 68, 67 and 55 percent in Brazil, Germany, Mexico and USA respectively).

5. The Rebate of State Levies (ROSL) has increased exports of ready-made garments (man-made fibers) by about 16 per cent but not of others.

6. 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 number of sons.

7. 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 per cent. About 66 per cent of pending cases accounted for only 1.8 per cent of value at stake.

8. The Growth in savings did not bring economic growth but the growth in investment did.

9. 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.

10. 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.

GDP Growth

  1. A series of major reforms undertaken over the past year will allow real GDP growth to reach 6.75 percent this fiscal and will rise to 7.0 to 7.5 percent in 2018-19, thereby re-instating India as the world’s fastest growing major economy.
  2. The Gross Value Added (GVA) at constant basic prices is expected to grow at the rate of 6.1 per cent in 2017-18 as compared to 6.6 per cent in 2016-17.
  3. Agriculture, industry and services sectors are expected to grow at the rate of 2.1 per cent, 4.4 per cent, and 8.3 per cent respectively in 2017-18.
  4. The survey adds that after remaining in negative territory for a couple of years, growth of exports rebounded into positive one during 2016-17 and expected to grow faster in 2017-18.
  5. It points out that the GDP growth has averaged 7.3 per cent for the period from 2014-15 to 2017-18, which is the highest among the major economies of the world. That this growth has been achieved in a milieu of lower inflation, improved current account balance and notable reduction in the fiscal deficit to GDP ratio makes it all the more creditable

Agriculture

  1. Recognizing the critical role of women in agriculture, the Ministry of Agriculture and Farmers Welfare has declared 15th October of every year as Women Farmer’s Day.
  2. According to the World Bank estimates, half of the Indian population would be urban by the year 2050.
  3. It is estimated that percentage of agricultural workers in total work force would drop to 25.7% by 2050 from 58.2% in 2001.
  4. Due to intensive involvement of labour in different farm operations, the cost of production of many crops is quite high. Human power availability in agriculture also increased from about 0.043KW/ ha in 1960-61 to about 0.077 KW/ ha in 2014-15.
  5. In 1960-61, about 93% farm power was coming from animate sources, which has reduced to about 10% in 2014-15. On the other hand, mechanical and electrical sources of power have increased from 7% to about 90% during the same period.
  6. Rs.20,339 crore has been approved by the Government in 2017-18 to meet various obligations arising from interest subvention being provided to the farmers on short term crop loans.
  7. The electronic National Agriculture Market (e-NAM) that was launched by Government on April, 2016 aims at integrating the dispersed APMCs through an electronic platform and enable price discovery in a competitive manner, to the advantage of the farmers.
  8. The Government is keen to double the income of the farmers by 2022, for which it has launched several new initiatives that encompass activities from seed to marketing.
  9. The Survey says that the actual expenditure of Department of Agricultural Research and Education/Indian Council of Agricultural Research has increased from Rs.5393 crore in 2010-11 to Rs.6800 (BE) crore during 2017-18.

Balance of Payment

  1. India’s Current Account Deficit (CAD) stood at US$7.2 billion (1.2 percent of GDP) in Q2 of 2017-18, narrowing sharply from US$ 15.0 billion (2.5 percent of GDP) in the preceding quarter.
  2. India’s trade deficit (on custom basis) which had registered continuous decline since 2014-15, widened to US$ 74.5 billion in HI of 2017-18 from US$ 43.4 billion in HI of 2016-17. India’s trade deficit was US$ 108.5 billion in 2016-17.

Inflation

  1. Inflation in the country continued to moderate during 2017-18. Consumer Price Index(CPI) based headline inflation averaged 3.3 per cent during the period which is the lowest in the last six financial years.

FDI

  1. Total Foreign Direct Investment inflow grew by 8 per cent i.e. USD 60.08 billion in 2016-17 in comparison to USD 55.56 billion of the previous year. In 2017-18 (April – September), the inflow of total FDI was to the quantum of USD 33.75 billion.

Infrastructure

  1. As in September, 2017, total length of National Highways (NHs) /Express Ways in India was 1,15,530 km which accounted for 2.06 per cent of the total road length. On the other hand, the length of State Highways was 1,76,166 km as on 2015-16.
  2. In 2017-18 (till 31.12.2017), cargo traffic handled at Major Ports has been 499.41 million tonnes compared to 481.87 million tonnes handled during the corresponding period of 2016-17.
  3. Under Sagarmala Programme which is to promote port-led development along Indian coast line, 289 Projects. worth Rs. 2.17 Lakh Crore are under various stages of implementation and development.
  4. As on end of September 2017, the total telephone subscribers stood at 1207.04 million, out of which 501.99 million connections were in the rural areas and 705.05 million in the urban areas.
  5. The Government is taking initiatives like liberalization of air services, airport development and regional connectivity through scheme like UDAN.
  6. All-India installed power generation capacity has reached 3,30,860.6 MW as on 30thNovember, 2017 and electrification in 15,183 villages has been completed.
  7. A new scheme, Saubhagya (Pradhan Mantri Sahaj BijliHarGhar Yojana), was launched in September 2017 to ensure electrification of all remaining willing households in the country in rural and urban areas with an outlay of Rs. 16,320 crore.
  8. The Indian logistics industry worth around US$ 160 Billion has grown at a compound annual growth rate (CAGR) of 7.8 per cent during last five years.
  9. Logistics sector provides employment to more than 22 million people. The Global Ranking of the World Bank’s 2016 Logistics Performance Index shows that India jumped to 35th rank in 2016 from 54th rank in 2014 in terms of overall logistics performance.

NPA of Banks

  1. The Gross Non-Performing Advances (GNPA) ratio of Scheduled Commercial Banks (SCBs) increased from 9.6 per cent to 10.2 percent between March 2017 and September 2017.
  2. The NBFC sector, as a whole, accounted for 17 per cent of bank assets and 0.26 per cent of bank deposits as on September 30, 2017.

Climate change and Sustainable Development

  1. India’s urban population is projected to grow to about 600 million by 2031.
  2. As on 30th November 2017, the share of renewable energy sources was 18 percent in the total installed capacity of electricity in the country and that the increasing share of renewables has trebled in the last 10 years.
  3. The Survey mentions establishment of 8 Global Technology Watch Groups, extending Climate Change Action Programme launched in 2014 for the period 2017-18 to 2019-20 with a budget outlay of Rs. 132.4 crore and continuation of National Adaption Fund on Climate Change till 31st March 2020 with financial implication of Rs. 364 crore.

Service Sector

  1. India remained the eighth largest exporter in commercial services in the world in 2016 with share of 3.4 per cent. This is double the share of India’s merchandise exports in the world at 1.7 percent.
  2. India’s services sector registered an export growth of 5.7 per cent in 2016-17.
  3. The Services sector, with a share of 55.2 per cent in India’s Gross Value Added (GVA), continued to be the key driver of India’s economic growth contributing almost 72.5 per cent of GVA growth in 2017-18.
  4. Tamil Nadu, Uttar Pradesh, Andhra Pradesh, Madhya Pradesh and Karnataka were the Top 5 tourist Destination States in 2016.
  5. India’s Information Technology – Business Process Management (IT-BPM) industry grew by 8.1 per cent in 2016-17 to US$ 139.9 billion (excluding e-commerce and hardware) from US$129.4 billion in 2015-16, as per NASSCOM data. IT-BPM exports grew by 7.6 per cent to US$ 116.1 billion from US$ 107.8 billion during the same period. E-commerce market is estimated at US$ 33 billion, with a 19.1 per cent growth in 2016-17.
  6. India’s gross expenditure on R&D has been at around 1 per cent of GDP. India ranks 60th out of 127 on the Global Innovation Index (GII) 2017, improving from 66th rank in 2016.
  7. In the case of Satellite Launching, as on March 2017, PSLV successfully launched 254 satellites. Foreign exchange earnings of India from export of satellite launch services increased noticeably in 2015-16 and 2016-17 to Rs 394 crore and Rs 275 crore from Rs. 149 crore in 2014-15.
  8. India’s share in global satellite launch services revenue has also increased to 1.1 per cent in 2015-16 from 0.3 per cent in 2014-15.

Saving and Investment

  1. The ratio of domestic saving to GDP reached 29.2 per cent in 2013 to a peak of 38.3 per cent in 2007, before falling back to 29 per cent in 2016.
  2. The cumulative fall over 2007 and 2016 has been milder for investment than saving, but investment has fallen to a lower level.
  3. Based on the break-up of investment and saving, that is available up to 2015-16, private investment accounts for 5 percentage points out of the 6.3 percentage point overall investment decline over 2007-08 and 2015-16.

Social Sector

  1. The expenditure on social services by the Centre and States as a proportion of GDP had remained in the range of 6 per cent during 2012-13 to 2014-15. Expenditure on Social services stands at 6.6 per cent in 2017-18 (BE).

Performance on Gender Outcomes

  1. 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).
  2. Over the last 10-15 years, India’s performance improved on 14 out of 17 indicators of women’s agency, attitudes, and outcomes.
  3. 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.
  4. 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.

GST Collection

  1. A preliminary analysis of the Goods and Services Tax (GST) data reveals that there has been a 50% increase in the number of indirect taxpayers.
  2. As on December 2017, there were 9.8 million unique GST registrants slightly more than the total Indirect Tax registrants under the old system.
  3. Maharashtra, UP, Tamil Nadu and Gujarat are the States with the greatest number of GST registrants. UP and West Bengal have been large increases in the number of tax registrants compared to the old tax regime.
  4. It also underlines that the distribution of the GST base among the States is closely linked to the size of their economies, allaying fears of major producing States that the shift to the new system would undermine their tax collections.
  5. Five States-Maharashtra, Gujarat, Karnataka, Tamil Nadu and Telangana account for 70% of India’s exports. New data on the international exports of States suggests a strong correlation between export performance and States’ standard of living.

Ease of Doing Business

  1. The Economic Survey notes that India jumped 30 places to break into the top 100 for the first time in the World Bank’s Ease of Doing Business Report (EODB), 2018. The rankings reflect the government’s reform measures on a wide range of indicators.
  2. The Survey emphasizes that the Government has taken a number of actions to improve the contract enforcement regime. Some of the steps briefly are as follows:- • Scrapping of over 1,000 redundant legislations. • Amending the Arbitration and Conciliation Act, 2015. • Passing the Commercial Courts Commercial Divisions and Commercial Appellate Division of High Courts Act, 2015. • Expanding the Lok Adalat Programme . • The Judiciary has at the same time expanded the National Judicial Data Grid (NJDG) and is near to ensuring that every High Court is digitized.

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