Eco Survey Expects Revival of Growth to 11% Plus
[MoF
Press Release/29.01.2021]
Union Minister for Finance and Corporate Affairs,
Smt. Nirmala Sitharaman presented the Economic Survey
2020-21 in the Parliament today. The key highlights of Economic Survey 2020-21,
which is dedicated to the COVID Warriors, are as follows:
Saving Lives and Livelihoods amidst a Once-in-a-Century Crisis
• India focused on saving lives and livelihoods by its willingness to
take short-term pain for long-term gain, at the onset of the COVID-19 pandemic
• Response stemmed from the humane principle that:
o Human lives lost cannot be brought back
O GDP growth will recover from
the temporary shock caused by the pandemic
• An early, intense lockdown provided a win-win strategy to save
lives, and preserve livelihoods via economic recovery in the medium to long-term
• Strategy also motivated by the Nobel-Prize winning research by Hansen
& Sargent (2001): a policy focused on minimizing losses in a worst-case scenario
when uncertainty is very high
• India’s strategy flattened the curve, pushed the peak
to September, 2020
• After the September peak, India has been unique in experiencing declining
daily cases despite increasing mobility
• V-shaped recovery, as seen in 7.5% decline in GDP in Q2 and
recovery across all key economic indicators vis-à-vis the 23.9% GDP contraction
in Q1
• COVID pandemic affected both demand and supply:
o India was the only country to announce structural reforms
to expand supply in the medium-long term and avoid long-term damage to productive
capacities
o Calibrated demand side policies to ensure that the accelerator is slowly pushed down only when the
brakes on economic activities are being removed
O A public investment programme centered around the National
Infrastructure Pipeline to accelerate the demand push and further the recovery
• Upturn in the economy, avoiding a second wave of infections
- a sui generis case in strategic policymaking amidst a once-in-a-century pandemic
State of the Economy in 2020-21:
A Macro View
• COVID-19 pandemic ensued global economic downturn, the most
severe one since the Global Financial Crisis
• The lockdowns and social distancing norms brought the already slowing
global economy to a standstill
• Global economic output estimated to fall by 3.5% in 2020 (IMF January
2021 estimates)
• Governments and central banks across the globe deployed various policy
tools to support their economies such as lowering policy rates, quantitative easing
measures, etc.
• India adopted a four-pillar strategy of containment, fiscal,
financial, and long-term structural reforms:
O Calibrated fiscal and
monetary support was provided, cushioning the vulnerable during the lockdown
and boosting consumption and investment while unlocking
O A favourable
monetary policy ensured abundant liquidity and immediate relief to debtors while
unclogging monetary policy transmission
• As per the advance estimates by NSO, India’s GDP is estimated to grow
by (-) 7.7% in FY21 - a robust sequential growth of 23.9% in H2: FY21 over
H1: FY21
• India’s real GDP to record a 11.0%
growth in FY2021-22 and nominal GDP to grow by 15.4% – the highest
since independence:
o Rebound to be led by low base and continued normalization in economic
activities as the rollout of COVID-19 vaccines gathers traction
• Government consumption and net exports cushioned the
growth from diving further down, whereas investment and private consumption pulled
it down
• The recovery in second half of FY2020-21 is expected to be powered
by government consumption, estimated to grow at 17% YoY
• Exports expected to decline by 5.8% and imports by 11.3% in the second
half of FY21
• India expected to have a Current Account Surplus of 2% of GDP
in FY21, a historic high after 17 years
• On supply side, Gross Value Added (GVA) growth pegged at -7.2% in FY21
as against 3.9% in FY20:
o Agriculture set to cushion
the shock of the COVID-19 pandemic on the Indian economy in FY21 with a growth of
3.4%
o Industry and services
estimated to contract by 9.6% and 8.8% respectively during FY21
• Agriculture remained the silver lining while contact-based services,
manufacturing, construction were hit hardest, and recovering steadily
• India remained a preferred investment destination in FY 2020-21
with FDI pouring in amidst global asset shifts towards equities and prospects of
quicker recovery in emerging economies:
o Net FPI inflows recorded
an all-time monthly high of US$ 9.8 billion in November 2020, as investors’
risk appetite returned
o India was the only country
among emerging markets to receive equity FII inflows in 2020
• Buoyant SENSEX and NIFTY resulted in India’s market-cap to GDP ratio
crossing 100% for the first time since October 2010
• Softening of CPI inflation recently reflects easing of supply
side constraints that affected food inflation
• Mild contraction of 0.8% in investment (as measured by Gross Fixed
Capital Formation) in 2nd half of FY21, as against 29% drop in 1st
half of FY21
• Reignited inter and intra state movement and record-high monthly
GST collections have marked the unlocking of industrial and commercial activity
• The external sector provided an effective cushion to growth
with India recording a Current Account Surplus of 3.1% of GDP in the first
half of FY21:
o Strong services exports
and weak demand leading to a sharper contraction in imports (merchandise imports
contracted by 39.7%) than exports (merchandise exports contracted by 21.2%)
o Forex reserves increased
to a level so as to cover 18 months worth of imports in
December 2020
o External debt as a
ratio to GDP increased to 21.6% at end-September 2020 from 20.6% at end-March 2020
o Ratio of forex reserves to
total and short-term debt improved because of the sizable accretion in reserves
• V-shaped recovery is underway, as demonstrated by a sustained
resurgence in high frequency indicators such as power demand, e-way bills, GST collection,
steel consumption, etc.
• India became the fastest country to roll-out 10 lakh vaccines
in 6 days and also emerged as a leading supplier of the vaccine to neighbouring countries and Brazil
• Economy’s homecoming to normalcy brought closer by the initiation
of a mega vaccination drive:
o Hopes of a robust recovery
in services sector, consumption, and investment have been rekindled
o Reforms must go on to enable
India realize its potential growth and erase the adverse impact of the pandemic
• India’s mature policy response to the ‘once-in-a-century’ crisis
provides important lessons for democracies to avoid myopic policy-making and demonstrates
benefits of focusing on long-term gains
Does Growth lead to Debt Sustainability? Yes, But Not Vice- Versa!
• Growth leads to debt sustainability in the Indian context but
not necessarily vice-versa:
o Debt sustainability depends on the ‘Interest Rate Growth Rate Differential’
(IRGD), i.e., the difference between the interest rate and the growth rate
o In India, interest rate
on debt is less than growth rate - by norm, not by exception
• Negative IRGD in India – not due to lower interest rates but
much higher growth rates – prompts a debate on fiscal policy, especially during
growth slowdowns and economic crises
• Growth causes debt to become sustainable in countries with higher growth
rates; such clarity about the causal direction is not witnessed in countries with
lower growth rates
• Fiscal multipliers are disproportionately higher during economic crises
than during economic booms
• Active fiscal policy can ensure that the full benefit of reforms
is reaped by limiting potential damage to productive capacity
• Fiscal policy that provides an impetus to growth will lead to lower
debt-to-GDP ratio
• Given India’s growth potential, debt sustainability is unlikely
to be a problem even in the worst scenarios
• Desirable to use counter-cyclical fiscal policy to enable growth
during economic downturns
• Active, counter-cyclical fiscal policy - not a call for fiscal irresponsibility,
but to break the intellectual anchoring that has created an asymmetric bias against
fiscal policy
Does India’s Sovereign Credit
Rating Reflect Its Fundamentals? No!
• The fifth largest economy in the world has never been rated
as the lowest rung of the investment grade (BBB-/Baa3) in sovereign credit ratings:
o Reflecting the economic size and thereby the ability to repay debt,
the fifth largest economy has been predominantly rated AAA
o China and India are the only
exceptions to this rule – China was rated A-/A2 in 2005 and now India is rated BBB-/Baa3
• India’s sovereign credit ratings do not reflect its fundamentals:
o A clear outlier amongst countries rated between A+/A1 and BBB-/Baa3
for S&P/ Moody’s, on several parameters
o Rated significantly lower
than mandated by the effect on the sovereign rating of the parameter
• Credit ratings map the probability of default and therefore
reflect the willingness and ability of borrower to meet its obligations:
o India’s willingness to pay is unquestionably demonstrated
through its zero sovereign default history
o India’s ability to pay
can be gauged by low foreign currency denominated debt and forex reserves
• Sovereign credit rating changes for India have no or weak correlation
with macroeconomic indicators
• India’s fiscal policy should reflect Gurudev
Rabindranath Tagore’s sentiment of ‘a mind without fear’
• Sovereign credit ratings methodology should be made more transparent,
less subjective and better attuned to reflect economies’ fundamentals
Inequality and Growth: Conflict
or Convergence?
• The relationship between inequality and socio-economic outcomes vis-à-vis
economic growth and socio-economic outcomes, is different in India from that in
advanced economies.
• Both inequality and per-capita income (growth) have similar relationships
with socio-economic indicators in India, unlike in advanced economies
• Economic growth has a greater impact on poverty alleviation than
inequality
• India must continue to focus on economic growth to lift the poor
out of poverty
• Expanding the overall pie - redistribution in a developing
economy is feasible only if the size of the economic pie grows
Healthcare takes centre stage, finally!
• COVID-19 pandemic emphasized the importance of healthcare sector and
its inter-linkages with other sectors - showcased how a health crisis transformed
into an economic and social crisis
• India’s health infrastructure must be agile so as to respond to pandemics - healthcare policy must not become
beholden to ‘saliency bias’
• National Health Mission (NHM) played a critical role in mitigating
inequity as the access of the poorest to pre-natal/post-natal care and institutional
deliveries increased significantly
• Emphasis on NHM in conjunction with Ayushman
Bharat should continue
• An increase in public healthcare spending from 1% to 2.5-3% of GDP
can decrease the out-of-pocket expenditure from 65% to 35% of overall healthcare
spending
• A regulator for the healthcare sector must be considered given
the market failures stemming from information asymmetry
o Mitigation of information asymmetry will help lower insurance
premiums, enable the offering of better products and increase insurance penetration
O Information utilities that
help mitigate the information asymmetry in healthcare sector will be useful in enhancing
overall welfare
• Telemedicine needs to be harnessed to the fullest by investing
in internet connectivity and health infrastructure
Process Reforms
• India over-regulates the economy resulting in regulations being ineffective
even with relatively good compliance with process
• The root cause of the problem of overregulation is an approach that
attempts to account for every possible outcome
• Increase in complexity of regulations, intended to reduce discretion,
results in even more non-transparent discretion
• The solution is to simplify regulations and invest in greater
supervision which, by definition, implies greater discretion
• Discretion, however, needs to be balanced with transparency,
systems of ex-ante accountability and ex-post resolution mechanisms
• The above intellectual framework has already informed reforms ranging
from labour codes to removal of onerous regulations on
the BPO sector
Regulatory Forbearance an
emergency medicine, not staple diet!
• During the Global Financial Crisis, regulatory forbearance helped
borrowers tide over temporary hardship
• Forbearance continued long after the economic recovery, resulting in
unintended consequences for the economy
• Banks exploited the forbearance window for window-dressing their books
and misallocated credit, thereby damaging the quality of investment in the economy
• Forbearance represents emergency medicine that should be discontinued
at the first opportunity when the economy exhibits recovery, not a staple diet that
gets continued for years
• To promote judgement amidst uncertainty, ex-post inquests must recognize
the role of hindsight bias and not equate unfavourable
outcomes to bad judgement or
malafide intent
• An Asset Quality Review exercise must be conducted immediately
after the forbearance is withdrawn
• The legal infrastructure for the recovery of loans needs to
be strengthened de facto
Innovation: Trending Up but
Needs Thrust, Especially from the Private Sector
• India entered the top-50 innovating countries for the first time
in 2020 since the inception of the Global Innovation Index in 2007, ranking
first in Central and South Asia, and third amongst lower middle-income group
economies
• India’s gross domestic expenditure on R&D (GERD) is lowest amongst
top ten economies
• India’s aspiration must be to compete on innovation with the top
ten economies
• The government sector contributes a disproportionately large share
in total GERD at three times the average of top ten economies
• The business sector’s contribution to GERD, total R&D personnel
and researchers is amongst the lowest when compared to top ten economies
• This situation has prevailed despite higher tax incentives for innovation
and access to equity capital
• India’s business sector needs to significantly ramp up investments
in R&D
• Indian resident’s share in total patents filed in the country must
rise from the current 36% which is much below the average of 62% in top ten economies
• For achieving higher improvement in innovation output, India must focus
on improving its performance on institutions and business sophistication innovation
inputs
JAY Ho! PM‘JAY’ Adoption and
Health outcomes
• Pradhan Mantri Jan Arogya Yojana (PM-JAY) – the ambitious
program launched by Government of India in 2018 to provide healthcare access to
the most vulnerable sections demonstrates strong positive effects on healthcare
outcomes in a short time
• PM-JAY is being used significantly for high frequency, low cost care
such as dialysis and continued during the Covid pandemic
and the lockdown.
• Causal impact of PM-JAY on health outcomes by undertaking a Difference-in-Difference
analysis based on National Family Health Survey (NFHS)-4 (2015-16) and NFHS-5 (2019-20)
is following:
o Enhanced health insurance coverage: The proportion of households
that had health insurance increased in Bihar, Assam and Sikkim from 2015-16 to 2019-20
by 89% while it decreased by 12% over the same period in West Bengal
o Decline in Infant Mortality
rate: from 2015-16 to 2019-20, infant mortality rates declined by 20% for West Bengal
and by 28% for the three neighbouring states
o Decline in under-5 mortality rate: Bengal saw a fall of 20% while,
the neighbours witnessed a 27% reduction
o Modern methods of contraception, female sterilization and pill usage
went up by 36%, 22% and 28% respectively in the three neighbouring
states while the respective changes for West Bengal were negligible
o While West Bengal did not witness any significant decline in unmet
need for spacing between consecutive kids, the neighbouring
three states recorded a 37% fall
o Various metrics for mother and child care improved more in the three
neighbouring states than in West Bengal.
• Each of these health effects manifested similarly when we compare all
states that implemented PM-JAY versus the states that did not
• Overall, the comparison reflects significant improvements in several
health outcomes in states that implemented PM-JAY versus those that did not
Bare Necessities
• Access to the ‘bare necessities’ has improved across all States
in the country in 2018 as compared to 2012
o It is highest in States such
as Kerala, Punjab, Haryana and Gujarat while lowest in Odisha, Jharkhand, West Bengal
and Tripura
o Improvement in each of
the five dimensions viz., access to water, housing, sanitation, micro-environment
and other facilities
o Inter-State disparities declined
across rural and urban areas as the laggard states have gained relatively more between
2012 and 2018
o Improved disproportionately
more for the poorest households when compared to the richest households across rural
and urban areas
• Improved access to the ‘bare necessities’ has led to improvements
in health indicators such as infant mortality and under-5 mortality rate and
also correlates with future improvements in education indicators
• Thrust should be given to reduce variation in the access to bare necessities
across states, between rural and urban and between income groups
• The schemes such as Jal Jeevan Mission,
SBM-G, PMAY-G, etc. may design appropriate strategy to reduce these gaps
• A Bare Necessities Index (BNI) based on the large annual household
survey data can be constructed using suitable indicators and methodology at district
level for all/targeted districts to assess the progress on access to bare necessities.
Fiscal Developments
• India adopted a calibrated approach best suited for a resilient
recovery of its economy from COVID-19 pandemic impact, in contrast with a front-loaded
large stimulus package adopted by many countries
• Expenditure policy in 2020-21 initially aimed at supporting
the vulnerable sections but was re-oriented to boost overall demand and capital
spending, once the lockdown was unwound
• Monthly GST collections have crossed the Rs. 1 lakh crore mark consecutively for the last
3 months, reaching its highest levels in December 2020 ever since the introduction
of GST
• Reforms in tax administration have begun a process of transparency
and accountability and have incentivized tax compliance by enhancing honest tax-payers’
experience
• Central Government has also taken consistent steps to impart support
to the States in the challenging times of the pandemic
External Sector
• COVID-19 pandemic led to a sharp decline in global trade, lower commodity
prices and tighter external financing conditions with implications for current account
balances and currencies of different countries
• India’s forex reserves at an all-time high of US$ 586.1 billion
as on January 08, 2021, covering about 18 months worth
of imports
• India experiencing a Current Account Surplus along with robust capital
inflows leading to a BoP surplus since Q4 of
FY2019-20
• Balance on the capital account is buttressed by robust FDI and FPI
inflows:
o Net FDI inflows of US$ 27.5
billion during April-October, 2020: 14.8% higher as compared to first seven months
of FY2019-20
o Net FPI inflows of US$ 28.5
billion during April-December, 2020 as against US$ 12.3 billion in corresponding
period of last year
• In H1: FY21, steep contraction in merchandise imports and lower outgo
for travel services led to:
o Sharper fall in current payments
(by 30.8%) than current receipts (15.1%)
o Current Account Surplus of
US$ 34.7 billion (3.1% of GDP)
• India to end with an Annual Current Account Surplus after a period
of 17 years
• India’s merchandise trade deficit was lower at US$ 57.5
billion in April-December, 2020 as compared to US$ 125.9 billion in the corresponding
period last year
• In April-December, 2020, merchandise exports contracted by 15.7%
to US$ 200.8 billion from US$ 238.3 billion in April-December, 2019:
o Petroleum, Oil and Lubricants
(POL) exports have contributed negatively to export performance during the period
under review
o Non-POL exports turned positive
and helped in improving export performance in Q3 of 2020-21
o Within Non-POL exports, agriculture
& allied products, drugs & pharmaceutical and ores & minerals recorded
expansion
• Total merchandise imports declined by (-) 29.1% to US$ 258.3
billion during April-December, 2020 from US$ 364.2 billion during the same period
last year:
o Sharp decline in POL imports
pulled down the overall import growth
o Imports contracted sharply
in Q1 of 2020-21; the pace of contraction eased in subsequent quarters, due to the
accelerated positive growth in Gold and Silver imports and narrowing contraction
in non-POL, non-Gold & non-Silver imports
o Fertilizers, vegetable oil,
drugs & pharmaceuticals and computer hardware & peripherals have contributed
positively to the growth of non-POL, non-Gold & non-Silver imports
• Trade balance with China and the US improved as imports slowed
• Net services receipts amounting to US$ 41.7 billion remained
stable in April-September 2020 as compared with US$ 40.5 billion in corresponding
period a year ago.
• Resilience of the services sector was primarily driven by software
services, which accounted for 49% of total services exports
• Net private transfer receipts, mainly representing remittances
by Indians employed overseas, totaling US$ 35.8 billion in H1: FY21 declined by
6.7% over the corresponding period of previous year
• At end-September 2020, India’s external debt placed at US$ 556.2
billion - a decrease of US$ 2.0 billion (0.4%) as compared to end-March 2020.
• Improvement in debt vulnerability indicators:
o Ratio of forex reserves to
total and short-term debt (original and residual)
o Ratio of short-term debt
(original maturity) to the total stock of external debt.
o Debt service ratio (principal
repayment plus interest payment) increased to 9.7% as at end-September 2020, compared
to 6.5% as at end-March 2020
• Rupee appreciation/depreciation:
o In terms of 6-currency nominal effective exchange rate (NEER) (trade-based
weights), Rupee depreciated by 4.1% in December 2020 over March 2020; appreciated
by 2.9% in terms of real effective exchange rate (REER)
o In terms of 36-currency NEER
(trade-based weights), Rupee depreciated by 2.9% in December 2020 over March 2020;
appreciated by 2.2% in terms of REER
• RBI’s interventions in forex markets ensured financial stability
and orderly conditions, controlling the volatility and one-sided appreciation of
the Rupee
• Initiatives undertaken to promote exports:
o Production Linked Incentive
(PLI) Scheme
o Remission of Duties and Taxes
on Exported Products (RoDTEP)
o Improvement in logistics
infrastructure and digital initiatives
Money Management and Financial
Intermediation
• Accommodative monetary policy during 2020: repo rate cut
by 115 bps since March 2020
• Systemic liquidity in FY2020-21 has remained in surplus so far.
RBI undertook various conventional and unconventional measures like:
o Open Market Operations
o Long Term Repo Operations
o Targeted Long Term Repo Operations
• Gross Non-Performing Assets ratio of Scheduled Commercial Banks
decreased from 8.21% at end-March, 2020 to 7.49% at end-September, 2020
• The monetary transmission of lower policy rates to deposit and lending
rates improved during FY2020-21
• NIFTY-50 and BSE SENSEX reached record high closing
of 14,644.7 and 49,792.12 respectively on January 20, 2021
• The recovery rate for the Scheduled Commercial Banks
through IBC (since its inception) has been over 45%
Prices and Inflation
• Headline CPI inflation:
o Averaged 6.6% during April-December,
2020 and stood at 4.6% in December, 2020, mainly driven by rise in food inflation
(from 6.7% in 2019-20 to 9.1% during April-December, 2020, owing to build up in
vegetable prices)
o CPI headline and its sub
groups witnessed inflation during April-October 2020, driven by substantial increase
in price momentum - due to the initial disruptions caused by COVID-19 lockdown
o Moderated price momentum
by November 2020 for most sub groups, coupled with positive base effect helped ease
inflation
• Rural-urban difference in CPI inflation saw a decline in 2020:
o Since November 2019, CPI-Urban inflation has closed the gap with
CPI-Rural inflation
o Food inflation has almost converged now
o Divergence in rural-urban inflation observed in other components
of CPI like fuel and light, clothing and footwear, miscellaneous etc.
• During April-December, 2019 as well as April-December, 2020-21, the
major driver of CPI-C inflation was the food and beverages group:
o Contribution increased to 59% during April-December, 2020, compared
to 53.7% during April-December, 2019
• Thali cost increased between June 2020 and November 2020,
however a sharp fall in the month of December reflecting the fall in the prices
of many essential food commodities
• State-wise trend:
o CPI-C inflation increased in most of the states in the current year
o Regional variation persists
o Inflation ranged from 3.2% to 11% across States/UTs during June-December
2020 compared to (-) 0.3% to 7.6% during the same period last year.
• Food inflation driving overall CPI-C inflation due to the relatively
more weight of food items in the index.
• Steps taken to stabilize prices of food items:
o Banning of export of onions
o Imposition of stock limit on onions
o Easing of restriction on imports of pulses
• Gold prices:
o Sharp spike as investors turned to gold as a safe haven investment
amid COVID-19 induced economic uncertainties
o Compared to other assets, gold had considerably higher returns during
FY2020-21
• Consistency in import policy warrants attention:
o Increased dependence on imports of edible oils poses risk of fluctuations
in import prices
o Imports impacting production and prices of domestic edible oil market,
coupled with frequent changes in import policy of pulses and edible oils, add to
confusion among farmers/producers and delay imports
Sustainable Development and
Climate Change
• India has taken several proactive steps to mainstream the SDGs
into the policies, schemes and programmes
• Voluntary National Review (VNR) presented to the United Nations
High-Level Political Forum (HLPF) on Sustainable Development
• Localisation of SDGs is crucial
to any strategy aimed at achieving the goals under the 2030 Agenda
o Several States/UTs have created institutional structures for implementation
of SDGs and also nodal mechanisms within every department and at the district levels
for better coordination and convergence
• Sustainable development remains core to the development strategy despite
the unprecedented COVID-19 pandemic crisis
• Eight National Missions under National Action Plan on Climate Change
(NAPCC) focussed on the objectives of adaptation,
mitigation and preparedness on climate risks
• India’s Nationally Determined Contributions (NDC) states that
finance is a critical enabler of climate change action
• The financing considerations will therefore remain critical especially
as the country steps up the targets substantially
• The goal of jointly mobilizing US$ 100 billion a year by 2020 for climate
financing by the developed countries has remained elusive
• The postponement of COP26 to 2021 also gives less time for negotiations
and other evidence-based work to inform the post-2025 goal
• Despite overall growth in the global bond markets, green bond issuance
in the first half of 2020 slowed down from 2019, possibly as a result of the on-going
COVID-19 pandemic
• International Solar Alliance (ISA) launched two new initiatives
– ‘World Solar Bank’ and ‘One Sun One World One Grid Initiative’ -
poised to bring about solar energy revolution globally
Agriculture and Food Management
• India’s Agricultural (and Allied Activities) sector has shown
its resilience amid the adversities of COVID-19 induced lockdowns with a growth
of 3.4% at constant prices during 2020-21 (first advance estimate)
• The share of Agriculture and Allied Sectors in Gross Value Added (GVA)
of the country at current prices is 17.8% for the year 2019-20 (CSO-Provisional
Estimates of National Income, 29th May, 2020)
• Gross Capital Formation (GCF) relative to GVA showing a fluctuating
trend from 17.7 % in 2013-14 to 16.4 % in 2018-19, with a dip to 14.7 % in 2015-16
• Total food grain production in the country in the agriculture
year 2019-20 (as per Fourth Advance Estimates), is 11.44 million tonnes more than than during 2018-19
• The actual agricultural credit flow was ₹13,92,469.81 crores against the target of ₹13,50,000
crores in 2019-20. The target for 2020-21 was ₹15,00,000
crores and a sum of ₹ 9,73,517.80 crores was disbursed till 30th November,
2020:
·
o
1.5 crore dairy farmers of milk cooperatives and milk producer companies’ were targeted
to provide Kisan Credit Cards (KCC) as part of Prime Minister’s
AatmaNirbhar Bharat Package after the budget announcement
of February 2020
o
As of mid
January 2021, a total of 44,673 Kisan Credit
Cards (KCCs) have been issued to fishers and fish farmers and an additional
4.04 lakh applications from fishers and fish farmers are with the banks at various
stages of issuance
• The Pradhan Mantri Fasal Bima Yojana
covers over 5.5 crore farmer applications year on year
·
o
Claims worth Rs. 90,000 crore paid, as on 12th January,
2021
o
Speedy claim settlement directly
into the farmer accounts through Aadhar linkage
o
70 lakh farmers benefitted and claims worth Rs. 8741.30
crores were transferred during COVID-19 lock down period
• An amount of Rs. 18000 crore
have been deposited directly in the bank accounts of 9 crore farmer families
of the country in December, 2020 in the 7th installment of financial
benefit under the PM-KISAN scheme
• Fish production reached an all-time high of 14.16 million metric
tons during 2019-20:
·
o GVA by the Fisheries sector to the national economy stood at ₹2,12,915
crores constituting 1.24% of the total national GVA and 7.28 % of the agricultural
GVA
• Food Processing Industries (FPI) sector growing at an Average
Annual Growth Rate (AAGR) of around 9.99 % as compared to around 3.12 % in Agriculture
and 8.25 % in Manufacturing at 2011-12 prices during the last 5 years ending 2018-19
• Pradhan Mantri
Garib Kalyan Anna Yojana:
·
o
80.96 crore
beneficiaries were provided foodgrains above NFSA mandated
requirement free of cost till November, 2020.
o
Over 200 LMT of foodgrains were provided amounting to a fiscal outgo of over
Rs. 75000 Crores
• AatmaNirbhar Bharat Package: 5 kg per person per month for
four months (May to August) to approximately 8 crores migrants (excluded under NFSA
or state ration card) entailing subsidy of Rs. 3109 crores
approximately
Industry and Infrastructure
• A strong V-shaped recovery of economic activity further confirmed
by IIP data
• The IIP & eight-core index further inched up to pre-COVID
levels
• The broad-based recovery in the IIP resulted in a growth of (-) 1.9
% in Nov-2020 as compared to a growth of 2.1 % in Nov-2019 and a nadir of (-) 57.3
% in Apr-2020
• Further improvement and firming up in industrial activities are foreseen
with the Government enhancing capital expenditure, the vaccination drive and the
resolute push forward on long pending reform measures
• AatmaNirbhar Bharat Abhiyan with a stimulus package worth 15 % of India’s
GDP announced
• India’s rank in the Ease of Doing Business (EoDB) Index for 2019 has moved upwards to the 63rd
position in 2020 from 77th in 2018 as per the Doing Business Report
(DBR):
·
o India has improved its position in 7 out of 10 indicators
o Acknowledges India as one of the top 10 improvers, the third time
in a row, with an improvement of 67 ranks in three years
o It is also the highest jump by any large country since 2011
• FDI equity inflows were US$49.98 billion in FY20 as compared
to US$44.37 billion during FY19:
·
o It is US$30.0 billion for FY21 (up to September-2020)
o The bulk of FDI equity flow is in the non-manufacturing sector
o Within the manufacturing sector, industries like automobile, telecommunication,
metallurgical, non-conventional energy, chemical (other than fertilizers), food
processing, petroleum & natural gas got the bulk of FDI
• Government has announced a Production-Linked Incentive (PLI) Scheme
in the 10 key sectors under the aegis of AatmaNirbhar
Bharat for enhancing India’s manufacturing capabilities and exports:
·
o
To be implemented by the concerned
ministries with an overall expenditure estimated at Rs.1.46 lakh crores and with
sector specific financial limits
Services Sector
• India’s services sector contracted by nearly 16 % during H1: FY2020-21,
during the COVID-19 pandemic mandated lockdown, owing to its contact-intensive
nature
• Key indicators such as Services Purchasing Managers’ Index,
rail freight traffic, and port traffic, are all displaying a V-shaped recovery after
a sharp decline during the lockdown
• Despite the disruptions being witnessed globally, FDI inflows
into India’s services sector grew robustly by 34% Y-o-Y during April-September 2020
to reach US$ 23.6 billion
• The services sector accounts for over 54 % of India’s GVA and
nearly four-fifths of total FDI inflow into India
• The sector’s share in GVA exceeds 50% in 15 out of 33 States and UTs,
and is particularly more pronounced (greater than 85%) in Delhi and Chandigarh
• Services sector accounts for 48% of total exports, outperforming
goods exports in the recent years
• The shipping turnaround time at ports has almost halved from
4.67 days in 2010-11 to 2.62 days in 2019-20
• The Indian start-up ecosystem has been progressing well amidst
the COVID-19 pandemic, being home to 38 unicorns - adding a record number
of 12 start-ups to the unicorn list last year
• India’s space sector has grown exponentially in the past six
decades:
·
o Spent about US$ 1.8 billion on space programmes
in 2019-20
o Space ecosystem is undergoing several policy reforms to engage private
players and attract innovation and investment
Social Infrastructure, Employment
and Human Development
• The combined (Centre and States) social sector expenditure as
% of GDP has increased in 2020-21 compared to last year.
• India’s rank in HDI 2019 was recorded at 131, out of a total 189 countries:
·
o
India's GNI per capita
(2017 PPP $) has increased from US$ 6,427 in 2018 to US$ 6,681 in 2019
·
o
Life expectancy at birth improved from 69.4 years in 2018 to 69.7 years in 2019
• The access to data network, electronic devices such as computer, laptop,
smart phone etc. gained importance due to online learning and remote working
during the pandemic
• Major proportion of workforce engaged as regular wage/salaried in the
urban sector during the period of January 2019-March 2020 (quarterly survey of PLFS)
•
Government’s incentive to
boost employment through AatmaNirbhar Bharat
Rozgar Yojana and rationalization
and simplification of existing labour codes into 4 codes
• Low level of female LFPR in India:
·
o
Females spending disproportionately
more time on unpaid domestic and care giving services to household members as compared
to their male counterparts (Time Use Survey, 2019)
o
Need to promote non-discriminatory
practices at the workplace like pay and career progression, improve work incentives,
including other medical and social security benefits for female workers
•
Under PMGKP announced
in March, 2020, cash transfers of upto Rs.1000
to existing old aged, widowed and disabled beneficiaries under the National Social
Assistance Programme (NSAP)
•
An amount of Rs. 500 each was transferred for three months digitally into
bank accounts of the women beneficiaries under PM Jan Dhan
Yojana, totalling about
Rs. 20.64 crores
•
Free distribution of gas cylinders to about 8 crore families for three months
•
Limit of collateral free lending
increased from Rs. 10 lakhs to Rs.
20 lakhs for 63 lakh women SHGs which would support 6.85 crore households
• Wages under Mahatma Gandhi NREGA increased by Rs.20 from Rs.182
to Rs.202 w.e.f. 1st April, 2020
India’s fight against COVID-19:
·
o Initial measures of lockdown, social distancing, travel advisories,
practicing hand wash, wearing masks reduced the spread of the disease
o Country also acquired self-reliance in essential medicines,
hand sanitizers, protective equipment including masks, PPE Kits, ventilators, COVID-19
testing and treatment facilities
o World’s largest COVID-19 vaccination drive commenced on 16th January, 2021 using two indigenously
manufactured vaccines