InvestorQ : What are the major highlights of the Economic Survey that was presented a day ahead of the Union Budget?
Khushi Patel made post

What are the major highlights of the Economic Survey that was presented a day ahead of the Union Budget?

Anjana Aiyar answered.
3 years ago

The Economic Survey was tabled in Parliament by Nirmala Sitharaman a day ahead of the Union Budget presentation. The Economic Survey is basically how the economy has done and what are the broad expectations for the current fiscal year 2019-20. Here are the key highlights of the Economy Survey 2019-20.

a) The Survey projects the real GDP growth for the full fiscal year 2019-20 at 7%, the lowest estimate in the last 5 years. Economic Survey has also projected the fiscal deficit at 3.4% of GDP in the current year.

b) Survey focuses on enabling MSMEs to grow with the right ecosystem for achieving greater profits, job creation and enhanced productivity.

c) Focus on greater continuity and certainty of economic policies so that they become government agnostic in the long run since uncertainty dampens investment growth.

d) Major focus on creation of jobs as the working age population to grow by roughly 9.7 million per year during 2021-31 and 4.2 million per year during 2031-41 period.

e) Focus on alternative energy to increase per capital energy consumption. India needs 2.5 times increase in per capita energy consumption needed to increase per capita GDP by $5000 at 2010 prices. This will position India in the upper-middle income group.

f) India currently stands at 4th in wind power, 5th in solar power and 5th in renewable power installed capacity. The share of renewable (excluding hydro above 25 MW) in total electricity generation increased from 6% in 2014-15 to 10% in 2018-19.

g) Big push for Electric cars needed in India because market share of electric cars only 0.06% in India as against 2% in China and 39% in Norway. Access to fast battery charging facilities was the main hurdle to EVs and that needs to be incentivized.

h) Economic Survey focuses on redesigning India’s Minimum Wage System (MWS) for Inclusive Growth. A well crafted MWS could be a potent tool for protecting workers and alleviating poverty as 1 in 3 persons are not protected by minimum wage laws.

i) Improvement in bank balance sheets with NPAs down from 11.5% of GDP in March 2018 to 10.1% in December 2018.

j) Greenshoots of investment recovery in 2018-19 with fixed investments picking up from 8.3% to 10.1% over the last 2 years. CAD and Fiscal deficit under control. Survey sets target of fiscal deficit at 3% by FY 2020-21 and government debt down to 40%.

k) IBC and asset recovery has been a success with the CIRP yielding resolution of 94 cases involving claims worth Rs.1,73,359 crore. Banks recovered Rs.50,000 crore last year.

l) The survey also acknowledged that liquidity conditions during the year remained systematically tight since September 2018 impacting yields on government bonds. Cost of funds had also risen in the aftermath of the NBFC crisis.

m) Capital mobilized through public equity issuance fell by 81 per cent in 2018-19 even as the credit growth of NBFCs fell sharply from 30% to 9% in March 2019.

n) While overall inflation remained well under 4%, the core inflation had also started to decline during the year.

o) World trade growth slowed down to 3 per cent in 2018 from 4.6 per cent in 2017 due to the impact of trade war and weak output globally.

p) The total liabilities-to-GDP ratio, inclusive of both debt and non-debt components, has declined from 43 per cent in 2015 to about 38 per cent at end of 2018 and FDI share of foreign flows had increased in the last 3 years.

q) India’s main trading partners continue to be the US, China, Hong Kong, the UAE and Saudi Arabia. Exports to these countries stood at $1212 billion while imports from these countries stood at $267 billion.

r) There was good news on the agricultural front with the Gross Value Added (GVA) in agriculture improving from (-0.2%) in 2014-15 to +6.3 per cent in 2016-17 but later fell to 2.9% in 2018-19.

s) 89% of groundwater extracted is used for irrigation so focus must shift from land productivity to ‘irrigation water productivity’. Thrust should be on micro-irrigation.

t) Overall Index of Eight Core Industries registered a growth rate of 4.3 percent in 2018-19 even as India’s ranking improved by 23rd to 77th position in 2018 among 190 countries in Ease of Doing Business (DB) Report, 2019.

u) Road construction grew at the rate of 30 km per day in 2018-19 compared to 12 km per day in 2014-15, a vast improvement.

v) The service sector (largest contribution in GDP) growth declined marginally to 7.5 per cent in 2018-19 from 8.1 per cent in 2017-18. There was positive growth in financial services, real estate and professional services but negative growth in hotels, transport, communication and broadcasting services.

w) Government expenditure on health (Centre plus States) as a share of GDP increased to 1.5% in 2018-19 from 1.2% in 2014-15 while the outlay on education increased from 2.8% to 3% during the same period.

x) There was good news on the jobs front with net employment generation in the formal sector higher at 8.15 lakh in March 2019 as compared to just 4.87 lakh in February 2018 as per data put out by the EPFO.

y) Nearly 1,90,000 km of rural roads constructed under Pradhan Mantri Gram Sadak Yojana (PMGSY) since 2014 and nearly 1.54 crore houses completed under Pradhan Mantri Awas Yojana (PMAY).

Easily accessible, affordable and quality healthcare is being provided through National Health Mission and Ayushman Bharat scheme. Similarly, the AYUSH Mission launched to provide cost effective and equitable AYUSH healthcare throughout India.