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The Economic Survey of India is the flagship annual document of the Ministry of Finance, Govt of India. It is prepared under the guidance of the Chief Economic Adviser of India. This document is presented to both Houses of Parliament during the Budget Session. The first Economic Survey of India was presented in 1950-51 as part of the Union Budget. After 1964 it was separated from the Budget and presented each year during the Budget Session before the presentation of the budget. The document is non-binding.
The Union Minister for Finance & Corporate Affairs, Smt. Nirmala Sitharaman presented the Economic Survey 2019-20 in the Parliament on January 31, 2020. Krishnamurthy V. Subramanian is the Chief Economic Adviser of Ministry of Finance, Government of India.
We will present Highlights of the Economic Survey in PART 1, 2 and 3:
Largest Proportion of Indian population depends directly or indirectly on agriculture for employment opportunities as compared to any other sector.
The share of agriculture and allied sectors in the total Gross Value Added (GVA) of the country has been continuously declining on account of relatively higher growth performance of non-agricultural sectors, a natural outcome of development process.
GVA at Basic Prices for 2019-20 from ‘Agriculture, Forestry and Fishing’ sector is estimated to grow by 2.8 %. · Agricultural productivity is also constrained by lower level of mechanization in agriculture which is about 40 % in India, much lower than China (59.5 %) and Brazil (75 %). · Skewed pattern of regional distribution of agricultural credit in India: o Low credit in Hilly, Eastern and North Eastern states (less than 1 % of total agricultural credit disbursement). · Livestock income has become an important secondary source of income for millions of rural families: o An important role in achieving the goal of doubling farmers’ income. o Livestock sector has been growing at a CAGR of 7.9 % during last five years. · During the last 6 years ending 2017-18, Food Processing Industries sector has been growing: o Average Annual Growth Rate (AAGR) of around 5.06 % o Constitutes as much as 8.83 % and 10.66 % of GVA in Manufacturing and Agriculture sector respectively in 2017-18 at 2011-12 prices. · While interests of the vulnerable sections of the population need to be safeguarded, Survey emphasizes on sustainability of food security operations by: o Addressing the burgeoning food subsidy bill. o Revisiting the rates and coverage under NFSA.
Industry and Infrastructure
The industrial sector as per Index of Industrial Production (IIP) registered a growth of 0.6 per cent in 2019-20 (April-November) as compared to 5.0 % during 2018-19 (April-November).
Fertilizer sector achieved a growth of 4.0 % during 2019-20 (April-November) as compared to (-) 1.3 per cent during 2018-19 (April-November).
Steel sector achieved a growth of 5.2 % during 2019-20 (April-November) as compared to 3.6 % during 2018-19 (April-November).
Total telephone connections in India touched 119.43 crore as on September 30, 2019.
The installed capacity of power generation has increased to 3, 64,960 MW as on October 31, 2019 from 3, 56,100 MW as on March 31, 2019.
Report of the Task Force on National Infrastructure Pipeline released on 31.12.2019 has projected total infrastructure investment of Rs. 102 lakh crore during the period FY 2020 to 2025 in India.
Services Sector
Increasing significance of services sector in the Indian economy:
About 55 % of the total size of the economy and GVA growth.
Two-thirds of total FDI inflows into India.
About 38 per cent of total exports.
More than 50 % of GVA in 15 out of the 33 states and UTs.
Gross Value Added growth of the services sector moderated in 2019-20 as suggested by various high-frequency indicators and sectoral data such as air passenger traffic, port and shipping freight traffic, bank credit etc.
On the bright side, FDI into services sector has witnessed a recovery in early 2019-20.
Social Infrastructure, Employment and Human Development
The expenditure on social services (health, education and others) by the Centre and States as a proportion of GDP increased from 6.2 % in 2014-15 to 7.7 % in 2019-20 (BE).
India’s ranking in Human Development Index improved to 129 in 2018 from 130 in 2017: o With 1.34 % average annual HDI growth, India is among the fastest improving countries
Gross Enrolment Ratio at secondary, higher secondary and higher education level needs to be improved.
The share of regular wage/salaried employees has increased by 5 percentage points from 18 % in 2011-12 to 23 % in 2017-18.
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.
Total formal employment in the economy increased from 8 % in 2011-12 to 9.98 % in 2017-18.
Gender disparity in India’s labour market widened due to decline in female labour force participation especially in rural areas: o Around 60 % of productive age (15-59) group engaged in full time domestic duties.
Access to health services inter-alia through Ayushman Bharat and Mission Indradhanush across the country has improved.
Mission Indradhanush has vaccinated 3.39 crore children and 87.18 lakh pregnant women of 680 districts across the country.
About 76.7 % of the households in the rural and about 96 % in the urban areas had houses of pucca structure.
A 10 Year Rural Sanitation Strategy (2019-2029) launched to focus on sustaining the sanitation behavior change and increasing access to solid and liquid waste management.
Sustainable Development and Climate Change
India moving forward on the path of SDG implementation through well-designed initiatives
SDG India Index: o Himachal Pradesh, Kerala, Tamil Nadu, Chandigarh are front runners. o Assam, Bihar and Uttar Pradesh come under the category of Aspirants.
India hosted COP-14 to UNCCD which adopted the Delhi Declaration: Investing in Land and Unlocking Opportunities.
COP-25 of UNFCCC at Mandrid: o India reiterated its commitment to implement Paris Agreement. o COP-25 decisions include efforts for climate change mitigation, adaptation and means of implementation from developed country parties to developing country parties.
Forest and tree cover: o Increasing and has reached 80.73 million hectare. o 24.56 % of the geographical area of the country.
Burning of agricultural residues, leading to rise in pollutant levels and deterioration of air quality, is still a major concern though the total number of burning events recorded reduced due to various efforts taken.
International Solar Alliance (ISA) o ‘Enabler’ by institutionalizing 30 Fellowships from the Member countries. o ‘Facilitator’ by getting the lines of credit worth US$ 2 Billion from EXIM Bank of India and 1.5 Billion from AfD, France. o ‘Incubator’ by nurturing initiatives like the Solar Risk Mitigation Initiative. o ‘Accelerator’ by developing tools to aggregate demand for 1000 MW solar and 2.7 lakh solar water pumps.
The Economic Survey of India is the flagship annual document of the Ministry of Finance, Govt of India. It is prepared under the guidance of the Chief Economic Adviser of India. This document is presented to both Houses of Parliament during the Budget Session. The first Economic Survey of India was presented in 1950-51 as part of the Union Budget. After 1964 it was separated from the Budget and presented each year during the Budget Session before the presentation of the budget. The document is non-binding.
The Union Minister for Finance & Corporate Affairs, Smt. Nirmala Sitharaman presented the Economic Survey 2019-20 in the Parliament on January 31, 2020. Krishnamurthy V. Subramanian is the Chief Economic Adviser of Ministry of Finance, Government of India.
We will present Highlights of the Economic Survey in PART 1, 2 and 3:
GDP growth is a critical variable for decision-making by investors and policymakers. Therefore, the recent debate about accuracy of India’s GDP estimation following the revised estimation methodology in 2011 is extremely significant.
As countries differ in several observed and unobserved ways, cross-country comparisons have to be undertaken by separating the effect of other confounding factors and isolating effect of methodology revision alone on GDP growth estimates.
Models that incorrectly over-estimate GDP growth by 2.7 % for India post-2011 also misestimate GDP growth over the same period for 51 out of 95 countries in the sample.
Several advanced economies such as UK, Germany and Singapore have their GDPs misestimated with incompletely specified econometric model.
Correctly specified models that account for all unobserved differences and differential trends in GDP growth across countries fail to find any misestimating of growth in India or other countries.
Concerns of a misestimated Indian GDP are unsubstantiated by the data and are thus unfounded.
Thalinomics: The Economics of a Plate of Food in India
An attempt to quantify what a common person pays for a Thali across India.
A shift in the dynamics of Thali prices since 2015-16.
Absolute prices of a vegetarian Thali have decreased significantly since 2015-16 across India and the four regions; though the price has increased during 2019-20.
Post 2015-16: Average household gained close to Rs. 11, 000 on average per year from the moderation in prices in the case of vegetarian Thali. Average household that consumes two non-vegetarian Thalis gained close to Rs. 12, 000 on average per year during the same period.
From 2006-07 to 2019-20: Affordability of vegetarian Thalis improved 29 %. Affordability of non-vegetarian Thalis improved by 18 %.
India’s Economic Performance in 2019-20
India’s GDP growth moderated to 4.8 % in H1 of 2019-20, amidst a weak environment for global manufacturing, trade and demand.
Real consumption growth has recovered in Q2 of 2019-20, cushioned by a significant growth in government final consumption.
Growth for ‘Agriculture and allied activities’ and ‘Public administration, defense, and other services’ in H1 of 2019-20 was higher than in H2 of 2018-19.
India’s external sector gained further stability in H1 of 2019-20:
Current Account Deficit (CAD) narrowed to 1.5 % of GDP in H1 of 2019-20 from 2.1 % in 2018-19.
Impressive Foreign Direct Investment (FDI).
Rebounding of portfolio flows.
Accretion of foreign exchange reserves.
Sharper contraction of imports as compared to that of exports in H1 of 2019-20, with easing of crude prices.
Headline inflation expected to decline by year end:
Increased from 3.3 % in H1 of 2019-20 to 7.35 % in December 2019-20 due to temporary increase in food inflation.
Rise in CPI-core and WPI in December 2019-20 suggests building of demand pressure.
Deceleration in GDP growth can be understood within the framework of a slowing cycle of growth:
Financial sector acted as a drag on the real sector (investment-growth-consumption).
Reforms undertaken during 2019-20 to boost investment, consumption and exports:
Speeding up the insolvency resolution process under Insolvency and Bankruptcy Code (IBC).
Easing of credit, particularly for the stressed real estate and NBFC sectors.
Announcing the National Infrastructure Pipeline 2019-2025.
Survey expects an uptick in the GDP growth in H2 of 2019-20:
5 % GDP growth for 2019-20 based on CSO’s first Advance Estimates.
Expeditious delivery on reforms for enabling the economy to strongly rebound in 2020-21.
Fiscal Developments
Revenue Receipts registered a higher growth during the first eight months of 2019-20, compared to the same period last year, led by considerable growth in Non-Tax revenue.
Gross GST monthly collections have crossed the mark of Rs. 1 lakh crore for a total of five times during 2019-20 (up to December 2019).
Structural reforms undertaken in taxation during the current financial year:
Change in corporate tax rate.
Measures to ease the implementation of GST.
Fiscal deficit of states within the targets set out by the FRBM Act.
Survey notes that the General Government (Centre plus States) has been on the path of fiscal consolidation.
External Sector
Balance of Payments (BoP):
India’s BoP position improved from US$ 412.9 bn of forex reserves in end March, 2019 to US$ 433.7 bn in end September, 2019.
Current account deficit (CAD) narrowed from 2.1% in 2018-19 to 1.5% of GDP in H1 of 2019-20.
Foreign reserves stood at US$ 461.2 bn as on 10th January, 2020.
Global trade:
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.
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.
India’s top five trading partners continue to be USA, China, UAE, Saudi Arabia and Hong Kong.
Exports: Top export items: 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.
The merchandise exports to GDP ratio declined, entailing a negative impact on BoP position.
Slowdown of world output had an impact on reducing the export to GDP ratio, particularly from 2018-19 to H1 of 2019-20.
Growth in Non-POL exports dropped significantly from 2009-14 to 2014-19.
India’s imports continue to be largest from China, followed by USA, UAE and Saudi Arabia.
Merchandise imports to GDP ratio declined for India, entailing a net positive impact on BoP.
Large Crude oil imports in the import basket correlates India’s total imports with crude prices. As crude price raises so does the share of crude in total imports, increasing imports to GDP ratio.
Significant Gold imports also correlate India’s total imports with gold prices. However, share of gold imports in total imports remained the same during 2018-19 and the first half of 2019-20, despite an increase in prices, possibly due to increase in import duty that reduced the import of gold.
Non-POL-non-gold imports are positively correlated with GDP growth.
Non-POL-non-oil imports fell as a proportion to GDP from 2009-14 to 2014-19 when GDP growth accelerated.
This may be because of consumption driven growth while investment rate declined, lowering non-POL-non-gold imports.
Continuous decline in investment rate decelerated GDP growth, weakened consumption, dampened the investment outlook, which further reduced GDP growth and along with it non-POL-non-gold imports as a proportion of GDP from 2018-19 to H1 of 2019-20.
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.
Logistics industry of India:
Currently estimated to be around US$ 160 billion.
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.
Net FDI inflows continued to be buoyant in 2019-20 attracting US$ 24.4 bn in the first eight months, higher than the corresponding period of 2018-19.
Net FPI in the first eight months of 2019-20 stood at US$ 12.6 bn.
Net remittances from Indians employed overseas continued to increase, receiving US$ 38.4 billion in H1 of 2019-20 which is more than 50% of the previous year level.
External debt:
Remains low at 20.1% of GDP as at end September, 2019.
After significant decline since 2014-15, India’s external liabilities (debt and equity) to GDP increased at the end of June, 2019 primarily by increase in FDI, portfolio flows and external commercial borrowings (ECBs).
Repo rate was cut by 110 basis points in four consecutive MPC meetings in the financial year due to slower growth and lower inflation.
However, it was kept unchanged in the fifth meeting held in December 2019.
In 2019-20, liquidity conditions were tight for initial two months; but subsequently it remained comfortable.
The Gross Non Performing Advances ratio:
Remained unchanged for Scheduled Commercial banks at 9.3% between March and September 2019
Increased slightly for the Non-Banking Financial Corporations (NBFCs) from 6.1% in March 2019 to 6.3% in September 2019.
Credit growth:
The financial flows to the economy remained constrained as credit growth declined for both banks and NBFCs.
Bank Credit growth (YoY) moderated from 12.9% in April 2019 to 7.1% as on December 20, 2019.
Capital to Risk-weighted Asset Ratio of SCBs increased from 14.3% to 15.1% between March 2019 and September 2019.
Prices and Inflation
Inflation Trends:
Inflation witnessing moderation since 2014
Consumer Price Index (CPI) inflation increased from 3.7 per cent in 2018-19 (April to December, 2018) to 4.1 per cent in 2019-20 (April to December, 2019).
WPI inflation fell from 4.7 per cent in 2018-19 (April to December, 2018) to 1.5 per cent during 2019-20 (April to December, 2019).
Drivers of CPI – Combined (C) inflation:
During 2018-19, the major driver was the miscellaneous group
During 2019-20 (April-December), food and beverages was the main contributor.
Among food and beverages, inflation in vegetables and pulses was particularly high due to low base effect and production side disruptions like untimely rain.
Cob-web Phenomenon for Pulses:
Farmers base their sowing decisions on prices witnessed in the previous marketing period.
Measures to safeguard farmers like procurement under Price Stabilisation Fund (PSF), Minimum Support Price (MSP) need to be made more effective.
Divergence Between Retail and Wholesale price:
Observed for essential agricultural commodities in four metropolitan cities of the country from 2014 to 2019.
Divergence particularly high for vegetables like onion and tomato. This may be due to the presence of intermediaries and high transaction costs.
Volatility of Prices: o Volatility of prices for most of the essential food commodities with the exception of some of the pulses has actually come down in the period 2014-19 as compared to the period 2009-14. o Lower volatility might indicate the presence of better marketing channels, storage facilities and effective MSP system.
Regional variations: o CPI-C inflation has been highly variable across States ranging between (-)0.04 per cent to 8.1 per cent across States/UTs in financial year (FY) 2019-20 (April-December). o In most states, CPI-C inflation in rural areas is lower than the CPI-C inflation in urban areas o Rural inflation has been more variable across states than urban inflation.
Inflation dynamics: o Convergence of headline inflation towards core inflation as per the CPI-C data from 2012 onwards.
The Economic Survey of India is the flagship annual document of the Ministry of Finance, Govt of India. It is prepared under the guidance of the Chief Economic Adviser of India. This document is presented to both Houses of Parliament during the Budget Session. The first Economic Survey of India was presented in 1950-51 as part of the Union Budget. After 1964 it was separated from the Budget and presented each year during the Budget Session before the presentation of the budget. The document is non-binding.
The Union Minister for Finance & Corporate Affairs, Smt. Nirmala Sitharaman presented the Economic Survey 2019-20 in the Parliament on January 31, 2020. Krishnamurthy V. Subramanian is the Chief Economic Adviser of Ministry of Finance, Government of India.
We will present Highlights of the Economic Survey in PART 1, 2 and 3:
Wealth Creation: The Invisible Hand Supported by the Hand of Trust
India’s dominance as global economic power for three-fourths of economic history manifests by design. Historically, Indian economy relied on the invisible hand of the market with the support of the hand of trust: o Invisible hand of the market reflected in openness in economic transactions. o Hand of trust appealed to ethical and philosophical dimensions.
Post-liberalisation, Indian economy supports both pillars of the economic model advocated in our traditional thinking.
Survey illustrates enormous benefits accruing from enabling the invisible hand of the market.
Exponential rise in India’s GDP and GDP per capita post-liberalisation coincides with wealth generation.
Survey shows that the liberalized sectors grew significantly faster than the closed ones.
Need for the hand of trust to complement the invisible hand, illustrated by financial sector performance during 2011-13.
Survey posits that India’s aspiration to become a $5 trillion economy depends critically on: o Strengthening the invisible hand of the market. o Supporting it with the hand of trust.
Strengthening the invisible hand by promoting pro-business policies to: Provide equal opportunities for new entrants, Enable fair competition and ease doing business, Eliminate policies unnecessarily undermining markets through government intervention, Enable trade for job creation, Efficiently scale up the banking sector.
Introducing the idea of trust as a public good, which gets enhanced with greater use.
Survey suggests that policies must empower transparency and effective enforcement using data and technology.
Entrepreneurship and Wealth Creation at the Grassroots
Entrepreneurship as a strategy to fuel productivity growth and wealth creation.
India ranks third in number of new firms created, as per the World Bank.
New firm creation in India increased dramatically since 2014: o 12.2 % cumulative annual growth rate of new firms in the formal sector during 2014-18, compared to 3.8 % during 2006-2014. o About 1.24 lakh new firms created in 2018, an increase of about 80 % from about 70,000 in 2014.
Survey examines the content and drivers of entrepreneurial activity at the bottom of the administrative pyramid – over 500 districts in India.
New firm creation in services is significantly higher than that in manufacturing, infrastructure or agriculture.
Survey notes that grassroots entrepreneurship is not just driven by necessity.
A 10 percent increase in registration of new firms in a district yields a 1.8 % increase in Gross Domestic District Product (GDDP).
Entrepreneurship at district level has a significant impact on wealth creation at the grassroots.
Birth of new firms in India is heterogeneous and dispersed across districts and sectors.
Literacy and education in a district foster local entrepreneurship significantly: o Impact is most pronounced when literacy is above 70 per cent. o New firm formation is the lowest in eastern India with lowest literacy rate (59.6 % as per 2011 Census).
Physical infrastructure quality in the district influences new firm creation significantly.
Ease of Doing Business and flexible labour regulation enable new firm creation, especially in the manufacturing sector.
Survey suggests enhancing ease of doing business and implementing flexible labour laws can create maximum jobs in districts and thereby in the states.
Pro-business versus Pro-markets
Survey says that India’s aspiration of becoming a $5 trillion economy depends critically on: o Promoting ‘pro-business’ policy that unleashes the power of competitive markets to generate wealth. o Weaning away from ‘pro-crony’ policy that may favour specific private interests, especially powerful incumbents.
Viewed from the lens of the Stock market, creative destruction increased significantly post-liberalisation: o Before liberalisation, a Sensex firm expected to stay in it for 60 years, which decreased to only 12 years after liberalisation. o Every five years, one-third of Sensex firms are churned out, reflecting the continuous influx of new firms, products and technologies into the economy.
Despite impressive progress in enabling competitive markets, pro-crony policies destroyed value in the economy: o An equity index of connected firms significantly outperformed market by 7 % a year from 2007 to 2010, reflecting abnormal profits extracted at common citizens’ expense. o In contrast, the index underperforms market by 7.5 % from 2011, reflecting inefficiency and value destruction inherent in such firms.
Pro-crony policies such as discretionary allocation of natural resources till 2011 led to rent-seeking by beneficiaries while competitive allocation of the same post 2014 ended such rent extraction.
Similarly crony lending that led to wilful default, wherein promoters collectively siphoned off wealth from banks, led to losses that dwarf subsidies for rural development.
Undermining Markets: When Government Intervention Hurts More Than It Helps
Government intervention, though well intended, often ends up undermining the ability of the markets to support wealth creation and leads to outcomes opposite to those intended.
Four examples of anachronistic government interventions: 1. Essential Commodities Act (ECA), 1955: o Frequent and unpredictable imposition of blanket stock limits on commodities under ECA distorts: • The incentives for the creation of storage infrastructure by the private sector. • Movement up the agricultural value chain. • Development of national market for agricultural commodities. o Imposition of stock limits on dal in 2006-Q3, sugar in 2009-Q1 and onions in September, 2019 spiked up the volatility of the retail and wholesale prices of onions. o The Ministry of Consumer Affairs must examine whether the ECA is relevant in today’s India. o With raids having abysmally low conviction rate and no impact on prices, the ECA only seems to enable rent-seeking and harassment. o Survey suggests there is clear evidence for jettisoning this anachronistic legislation. 2. Drug Price Control under ECA: o The regulation of prices of drugs, through the DPCO 2013, led to increase in the price of the regulated pharmaceutical drug vis-à-vis that of an unregulated but similar drug. o The increase in prices is greater for more expensive formulations than for cheaper ones and for those sold in hospitals rather than retail shops. o These findings reinforce that the outcome is opposite to what DPCO aims to do – making drugs affordable. o Government, being a huge buyer of drugs, can intervene more effectively to provide affordable drugs by combining all its purchases and exercising its bargaining power. o Ministry of Health and Family Welfare must evolve non-distortionary mechanisms that utilise Government’s bargaining power in a transparent manner. 3. Government intervention in Grain markets: o Policies in the food-grain markets led to: • Emergence of Government as the largest procurer and hoarder of rice and wheat. • Crowding out of private trade. • Burgeoning food subsidy burden • Inefficiencies in the markets, affecting the long run growth of agricultural sector. o The food-grains policy needs to be dynamic and allow switching from physical handling and distribution of food-grains to cash transfers/food coupons/smart cards. 4. Debt waivers: o Analysis of debt waivers given by States/Centre: • Full waiver beneficiaries consume less, save less, invest less and are less productive after the waiver, compared to the partial beneficiaries. • Debt waivers disrupt the credit culture. • They reduce formal credit flow to the very same farmers, thereby defeating the purpose. Survey suggests that: o Government must systematically examine areas of needless intervention and undermining of markets; but it does not argue that there should be no Government intervention. o Instead it suggests that the interventions that were apt in a different economic setting may have lost their relevance in a transformed economy. o Eliminating such instances will enable competitive markets spurring investments and economic growth.
Creating Jobs and Growth by Specializing in Network Products
Survey says India has unprecedented opportunity to chart a China-like, labour-intensive, export trajectory.
By integrating “Assemble in India for the world” into Make in India, India can: o Raise its export market share to about 3.5 % by 2025 and 6 % by 2030. o Create 4 crore well-paid jobs by 2025 and 8 crore by 2030.
Exports of network products can provide one-quarter of the increase in value added required for making India a $5 trillion economy by 2025.
Survey suggests a strategy similar to one used by China to grab this opportunity: o Specialization at large scale in labour-intensive sectors, especially network products. o Laser-like focus on enabling assembling operations at mammoth scale in network products. o Export primarily to markets in rich countries. o Trade policy must be an enabler.
Survey analyses the impact of India’s trade agreements on overall trade balance: o India’s exports increased by 13.4 % for manufactured products and 10.9 % for total merchandise o Imports increased by 12.7 % for manufactured products and 8.6 per cent for total merchandise. o India gained 0.7 % increase in trade surplus per year for manufactured products and 2.3 % per year for total merchandise.
Targeting Ease of Doing Business in India
A jump of 79 positions to 63 in 2019 from 142 in 2014 in World Bank’s Doing Business rankings.
India still trails in parameters such as Ease of Starting Business, Registering Property, Paying Taxes and Enforcing Contracts. Survey has numerous case studies: o For merchandise exports, the logistics process flow for imports is more efficient than that for exports. o Electronics exports and imports through Bengaluru airport illustrate how Indian logistical processes can be world class.
The turnaround time of ships in India has almost halved to 2.48 days in 2018-19 from 4.67 days in 2010-11.
Suggestions for further Ease of Doing Business: o Close coordination between the Logistics division of the Ministry of Commerce and Industry, the Central Board of Indirect Taxes and Customs, Ministry of Shipping and the different port authorities. o Individual sectors such as tourism or manufacturing require a more targeted approach that maps out the regulatory and process bottlenecks for each segment.
Golden jubilee of bank nationalisation: Taking stock
Survey observes 2019 as the golden jubilee year of bank nationalization
Accomplishments of lakhs of Public Sector Banks (PSBs) employees cherished and an objective assessment of PSBs suggested by the Survey.
Since 1969, India’s Banking sector has not developed proportionately to the growth in the size of the economy.
India has only one bank in the global top 100 – same as countries that are a fraction of its size: Finland (about 1/11th), Denmark (1/8th), etc. A large economy needs an efficient banking sector to support its growth.
The onus of supporting the economy falls on the PSBs accounting for 70 % of the market share in Indian banking: o PSBs are inefficient compared to their peer groups on every performance parameter. o In 2019, investment for every rupee in PSBs, on average, led to the loss of 23 paise, while in NPBs it led to the gain of 9.6 paise. o Credit growth in PSBs has been much lower than NPBs for the last several years. ·Solutions to make PSBs more efficient: o Employee Stock Ownership Plan (ESOP) for PSBs’ employees o Representation on boards proportionate to the blocks held by employees to incentivize employees and align their interests with that of all shareholders of banks. o Creation of a GSTN type entity that will aggregate data from all PSBs and use technologies like big data, artificial intelligence and machine learning in credit decisions for ensuring better screening and monitoring of borrowers, especially the large ones.
Financial Fragility in the NBFC Sector
Survey investigates the key drivers of Rollover Risk of the shadow banking system in India in light of the current liquidity crunch in the sector.
Key drivers of Rollover Risk: o Asset Liability Management (ALM) Risk. o Interconnectedness Risk. o Financial and Operating Resilience of an NBFC. o Over-dependence on short-term wholesale funding.
Survey computes a diagnostic (Health Score) by quantifying the Rollover risk for a sample of HFCs and Retail-NBFCs (which are representative of their respective sectors).
The analysis of the Health Score has the following findings: o The HFC sector exhibited a declining trend post 2014 and overall health of the sector worsened considerably by the end of FY2019. o The Score of the Retail-NBFC sector was consistently below par for the period 2014 -19. o Larger Retail-NBFCs had higher Health Scores but among medium and small Retail- NBFCs, the medium size ones had a lower score for the entire period of 2014-19.
Survey suggests that the Health Score provides an early warning signal of impending liquidity problems.
Equity markets react favourably to increase in Health Score of individual HFCs and Retail-NBFCs.
The Survey prescribes this analysis to efficiently allocate liquidity enhancements across firms (with different Health Scores) in the NBFC sector, thereby arresting financial fragility in a capital-efficient manner.
Privatization and Wealth Creation
Survey examines the realized efficiency gains from privatization in the Indian context and bolsters the case for aggressive disinvestment of CPSEs.
Strategic disinvestment of Government’s shareholding of 53.29 per cent in HPCL led to an increase of around Rs. 33,000 crore in national wealth.
Survey presents an analysis of the before-after performance of 11 CPSEs which underwent strategic disinvestment from 1999-2000 to 2003-04: o Financial indicators such as net worth, net profit, return on assets (ROA), return on equity (ROE) etc of the privatized CPSEs, on an average, have improved significantly. o Privatized CPSEs have been able to generate more wealth from the same resources. Survey suggests aggressive disinvestment of CPSEs to: o Bring in higher profitability. o Promote efficiency. o Increase competitiveness. o Promote professionalism.
Is India’s GDP Growth Overstated? No!
GDP growth is a critical variable for decision-making by investors and policymakers. Therefore, the recent debate about accuracy of India’s GDP estimation following the revised estimation methodology in 2011 is extremely significant.
As countries differ in several observed and unobserved ways, cross-country comparisons have to be undertaken by separating the effect of other confounding factors and isolating effect of methodology revision alone on GDP growth estimates.
Models that incorrectly over-estimate GDP growth by 2.7 % for India post-2011 also misestimate GDP growth over the same period for 51 out of 95 countries in the sample.
Several advanced economies such as UK, Germany and Singapore have their GDPs misestimated with incompletely specified econometric model.
Correctly specified models that account for all unobserved differences and differential trends in GDP growth across countries fail to find any misestimating of growth in India or other countries.
Concerns of a misestimated Indian GDP are unsubstantiated by the data and are thus unfounded.
Thalinomics: The Economics of a Plate of Food in India
An attempt to quantify what a common person pays for a Thali across India.
A shift in the dynamics of Thali prices since 2015-16.
Absolute prices of a vegetarian Thali have decreased significantly since 2015-16 across India and the four regions; though the price has increased during 2019-20.
Post 2015-16: Average household gained close to Rs. 11, 000 on average per year from the moderation in prices in the case of vegetarian Thali. Average household that consumes two non-vegetarian Thalis gained close to Rs. 12, 000 on average per year during the same period.
From 2006-07 to 2019-20: Affordability of vegetarian Thalis improved 29 %. Affordability of non-vegetarian Thalis improved by 18 %.
India’s Economic Performance in 2019-20
India’s GDP growth moderated to 4.8 % in H1 of 2019-20, amidst a weak environment for global manufacturing, trade and demand.
Real consumption growth has recovered in Q2 of 2019-20, cushioned by a significant growth in government final consumption.
Growth for ‘Agriculture and allied activities’ and ‘Public administration, defense, and other services’ in H1 of 2019-20 was higher than in H2 of 2018-19.
India’s external sector gained further stability in H1 of 2019-20:
Current Account Deficit (CAD) narrowed to 1.5 % of GDP in H1 of 2019-20 from 2.1 % in 2018-19.
Impressive Foreign Direct Investment (FDI).
Rebounding of portfolio flows.
Accretion of foreign exchange reserves.
Sharper contraction of imports as compared to that of exports in H1 of 2019-20, with easing of crude prices.
Headline inflation expected to decline by year end:
Increased from 3.3 % in H1 of 2019-20 to 7.35 % in December 2019-20 due to temporary increase in food inflation.
Rise in CPI-core and WPI in December 2019-20 suggests building of demand pressure.
Deceleration in GDP growth can be understood within the framework of a slowing cycle of growth:
Financial sector acted as a drag on the real sector (investment-growth-consumption).
Reforms undertaken during 2019-20 to boost investment, consumption and exports:
Speeding up the insolvency resolution process under Insolvency and Bankruptcy Code (IBC).
Easing of credit, particularly for the stressed real estate and NBFC sectors.
Announcing the National Infrastructure Pipeline 2019-2025.
Survey expects an uptick in the GDP growth in H2 of 2019-20:
5 % GDP growth for 2019-20 based on CSO’s first Advance Estimates.
Expeditious delivery on reforms for enabling the economy to strongly rebound in 2020-21.
Fiscal Developments
Revenue Receipts registered a higher growth during the first eight months of 2019-20, compared to the same period last year, led by considerable growth in Non-Tax revenue.
Gross GST monthly collections have crossed the mark of Rs. 1 lakh crore for a total of five times during 2019-20 (up to December 2019).
Structural reforms undertaken in taxation during the current financial year:
Change in corporate tax rate.
Measures to ease the implementation of GST.
Fiscal deficit of states within the targets set out by the FRBM Act.
Survey notes that the General Government (Centre plus States) has been on the path of fiscal consolidation.
External Sector
Balance of Payments (BoP):
India’s BoP position improved from US$ 412.9 bn of forex reserves in end March, 2019 to US$ 433.7 bn in end September, 2019.
Current account deficit (CAD) narrowed from 2.1% in 2018-19 to 1.5% of GDP in H1 of 2019-20.
Foreign reserves stood at US$ 461.2 bn as on 10th January, 2020.
Global trade:
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.
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.
India’s top five trading partners continue to be USA, China, UAE, Saudi Arabia and Hong Kong.
Exports: Top export items: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.
The merchandise exports to GDP ratio declined, entailing a negative impact on BoP position.
Slowdown of world output had an impact on reducing the export to GDP ratio, particularly from 2018-19 to H1 of 2019-20.
Growth in Non-POL exports dropped significantly from 2009-14 to 2014-19.
India’s imports continue to be largest from China, followed by USA, UAE and Saudi Arabia.
Merchandise imports to GDP ratio declined for India, entailing a net positive impact on BoP.
Large Crude oil imports in the import basket correlates India’s total imports with crude prices. As crude price raises so does the share of crude in total imports, increasing imports to GDP ratio.
Significant Gold imports also correlate India’s total imports with gold prices. However, share of gold imports in total imports remained the same during 2018-19 and the first half of 2019-20, despite an increase in prices, possibly due to increase in import duty that reduced the import of gold.
Non-POL-non-gold imports are positively correlated with GDP growth.
Non-POL-non-oil imports fell as a proportion to GDP from 2009-14 to 2014-19 when GDP growth accelerated.
This may be because of consumption driven growth while investment rate declined, lowering non-POL-non-gold imports.
Continuous decline in investment rate decelerated GDP growth, weakened consumption, dampened the investment outlook, which further reduced GDP growth and along with it non-POL-non-gold imports as a proportion of GDP from 2018-19 to H1 of 2019-20.
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.
Logistics industry of India:
Currently estimated to be around US$ 160 billion.
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.
Net FDI inflows continued to be buoyant in 2019-20 attracting US$ 24.4 bn in the first eight months, higher than the corresponding period of 2018-19.
Net FPI in the first eight months of 2019-20 stood at US$ 12.6 bn.
Net remittances from Indians employed overseas continued to increase, receiving US$ 38.4 billion in H1 of 2019-20 which is more than 50% of the previous year level.
External debt:
Remains low at 20.1% of GDP as at end September, 2019.
After significant decline since 2014-15, India’s external liabilities (debt and equity) to GDP increased at the end of June, 2019 primarily by increase in FDI, portfolio flows and external commercial borrowings (ECBs).
Monetary Management and Financial Intermediation
Monetary policy:
Remained accommodative in 2019-20.
Repo rate was cut by 110 basis points in four consecutive MPC meetings in the financial year due to slower growth and lower inflation.
However, it was kept unchanged in the fifth meeting held in December 2019.
In 2019-20, liquidity conditions were tight for initial two months; but subsequently it remained comfortable.
The Gross Non Performing Advances ratio:
Remained unchanged for Scheduled Commercial banks at 9.3% between March and September 2019
Increased slightly for the Non-Banking Financial Corporations (NBFCs) from 6.1% in March 2019 to 6.3% in September 2019.
Credit growth:
The financial flows to the economy remained constrained as credit growth declined for both banks and NBFCs.
Bank Credit growth (YoY) moderated from 12.9% in April 2019 to 7.1% as on December 20, 2019.
Capital to Risk-weighted Asset Ratio of SCBs increased from 14.3% to 15.1% between March 2019 and September 2019.
Prices and Inflation
Inflation Trends:
Inflation witnessing moderation since 2014
Consumer Price Index (CPI) inflation increased from 3.7 per cent in 2018-19 (April to December, 2018) to 4.1 per cent in 2019-20 (April to December, 2019).
WPI inflation fell from 4.7 per cent in 2018-19 (April to December, 2018) to 1.5 per cent during 2019-20 (April to December, 2019).
Drivers of CPI – Combined (C) inflation:
During 2018-19, the major driver was the miscellaneous group
During 2019-20 (April-December), food and beverages was the main contributor.
Among food and beverages, inflation in vegetables and pulses was particularly high due to low base effect and production side disruptions like untimely rain.
Cob-web Phenomenon for Pulses:
Farmers base their sowing decisions on prices witnessed in the previous marketing period.
Measures to safeguard farmers like procurement under Price Stabilisation Fund (PSF), Minimum Support Price (MSP) need to be made more effective.
Divergence Between Retail and Wholesale price:
Observed for essential agricultural commodities in four metropolitan cities of the country from 2014 to 2019.
Divergence particularly high for vegetables like onion and tomato. This may be due to the presence of intermediaries and high transaction costs.
Volatility of Prices: o Volatility of prices for most of the essential food commodities with the exception of some of the pulses has actually come down in the period 2014-19 as compared to the period 2009-14. o Lower volatility might indicate the presence of better marketing channels, storage facilities and effective MSP system.
Regional variations: o CPI-C inflation has been highly variable across States ranging between (-)0.04 per cent to 8.1 per cent across States/UTs in financial year (FY) 2019-20 (April-December). o In most states, CPI-C inflation in rural areas is lower than the CPI-C inflation in urban areas o Rural inflation has been more variable across states than urban inflation.
Inflation dynamics: o Convergence of headline inflation towards core inflation as per the CPI-C data from 2012 onwards.
India’s security market watchdog Securities and exchange Board of India (SEBI) has decided to appoint auditors to perform forensic audit of financial statements of listed companies to put a check on rising frauds.
Concerns regarding some of the auditors’ negligence have come up wherein they ignore different inconsistencies in the financial statement while examining the books of listed entities. SEBI has also put the directive to conduct forensic audit of some of the firms that include Fortis Healthcare.
FACTFILE – Forensic Auditing
Forensic Auditing is a specialization within the field of accounting, and forensic auditors often provide expert testimony during trial proceedings. Most large accounting firms have a forensic auditing department.
It is an examination and evaluation of a firm’s or individual’s financial information for use as evidence in court. A forensic audit can be conducted in order to prosecute a party for fraud, embezzlement or other financial claims.
The audit covers a wide range of investigative activities performed by accountants. The process may also include serving as an expert witness in a fraud trial. A forensic audit could also cover situations that do not involve fraud or embezzlement, such as disputes related to a bankruptcy, business closures, and divorces.
FACTFILE – The Securities and Exchange Board of India (SEBI)
SEBI was established on April 12, 1992 in accordance with the provisions of the Securities and Exchange Board of India Act, 1992.
Securities and exchange Board of India (SEBI) was first established in the year 1988 AQF as a non-statutory body for regulating the, securities market.
It became an autonomous body by The Government of India on 12 May 1992 and given statutory powers in 1992 with SEBI Act 1992 being passed by the Indian Parliament.
SEBI has its headquarters at the business district of Bandra Kurla Complex in Mumbai, and has Northern, Eastern, Southern and Western Regional Offices in New Delhi, Kolkata, Chennai and Ahmedabad respectively.
It has opened local offices at Jaipur and Bangalore and is planning to open offices at Guwahati, Bhubaneshwar, Patna, Kochi and Chandigarh in Financial Year 2013 – 2014.
Lok Sabha passed The Insolvency and Bankruptcy Code (Second Amendment) Bill, 2018
The Lok Sabha on 31st July passed the The Insolvency and Bankruptcy Code (Second Amendment) Bill, 2018, seeking to give home buyers the status of financial creditors. This will give the home buyers, just like the financial creditors, the right to decide the fate of defaulting builders.
Union Finance Minister Piyush Goyal said the financial creditor status will help home buyers protect their hard earned savings. Whether home buyers are secured or unsecured creditors will be decided on a case to case basis by the resolution professional and the courts.
Once it becomes a law, home buyers would be able to invoke Section 7 of the Insolvency and Bankruptcy Code against errant developers. This would allow financial creditors to file application seeking insolvency resolution process.
As financial creditors, home buyers will be able to participate in the decision-making process when developers are declared bankrupt under the bankruptcy law – IBC (Insolvency and Bankruptcy Code, 2016). It also proposes to reduce the minimum voting threshold for the Committee of Creditors (CoC) to 66 per cent, from 75 per cent for key decisions.
Micro, Small and Medium Enterprises (MSME) sector would also benefit from the Insolvency and Bankruptcy Code amendment. The promoter of MSME will no longer be disqualified to bid for their own enterprise as long as they are not the willful defaulters.
Earlier this year, the Insolvency and Bankruptcy Code was amended to prevent dishonest persons from misusing the law. Willful defaulters and those whose accounts were classified as ‘non-performing assets’ were barred from bidding for stressed assets.
Infrastructure growth jumps to 6.7% in June month
Growth of eight core sectors expanded to 7 month high of 6.7 % in June due to better performance by cement, refinery and coal segments, especially. The eight sectors, which also include fertilisers, steel, natural gas, electricity and crude oil, had expanded by 1 % in June last year.
The previous high rate of growth was recorded in November 2017 at 6.9%. The expansion in cement, refinery products and coal was 13.2 %, 12 % and 11.5 % respectively, year-on-year basis.
Crude oil and natural gas registered a negative growth of 3.4 % and 2.7 % respectively in June compared to the year-ago period.
The expansion in the electricity generation was 4 % in June compared to 2.2 % in the same month of the last fiscal.
Steel sector, however witnessed a slower growth of 4.4 % compared to 6 % in June 2017.
Expansion rate in the fertiliser segment was 1 %, better than negative growth recorded in the year ago month.
April-June quarter of the current fiscal, the eight core industries recorded a growth of 5.2 % as against 2.5 % in the same period last year.
These eight core industries comprise 40.27 % of the weight of items included in the Index of Industrial Production (IIP).
Reliance overtakes TCS to become Most Valued Indian Company
Reliance Industries Ltd has overtaken Tata Consultancy Services Ltd in market capitalisation to reclaim the tag of India’s most valuable company.
The company is currently valued at Rs 7.44 lakh crore, higher than the Rs 7.39 lakh crore market cap of the India’s largest software exporter. The oil-to-telecom company reported its highest-ever quarterly profit in the April-June period, driven by its petrochemicals and consumer businesses.
FACTFILE – Reliance Industries Limited (RIL)
Reliance Industries Limited (RIL) is an Indian conglomerate holding company headquartered in Mumbai, Maharashtra, India.
Reliance owns businesses across India engaged in energy, petrochemicals, textiles, natural resources, retail, and telecommunications.
Reliance is one of the most profitable companies in India and the second largest company in India as measured by revenue after the government-controlled Indian Oil Corporation.
On 18 October 2007, Reliance Industries became the first Indian company to breach $100 billion market capitalization.
The company is ranked 203rd on the Fortune Global 500 list of the world’s biggest corporations as of 2017.
It is ranked 8th among the Top 250 Global Energy Companies by Platts as of 2016.
Reliance continues to be India’s largest exporter, accounting for 8% of India’s total merchandise exports with a value of Rs 147,755 crore and access to markets in 108 countries.
Reliance is responsible for almost 5% of the government of India’s total revenues from customs and excise duty.
It is also the highest income tax payer in the private sector in India.
India’s Fiscal Deficit reached 68.7% of budgeted target
India has already reached fiscal deficit of $62.57 billion (Rs 4.29 lakh crore) for the April-June quarter, which is 68.7 percent of the budgeted target of Rs 6.24 lakh crore for the current fiscal year of 2018-19 compared to 80.8 percent in the same period of the previous year.
For the same quarter of 2017-18, the government’s finances were constrained owing to the revision of the deficit target upwards to implement the new tax system-GST, that was launched on 1 July 2017.
For the first quarter of fiscal year ended March 2019, net tax receipts were Rs 2.37 lakh crore, that is 16 percent of the budgeted full-year target.
India aims to trim the deficit to 3.3 percent of GDP (gross domestic product) in this fiscal year, after meeting an upwardly revised fiscal deficit target of 3.5 percent of GDP in the FY 2017-18.
Union government’s total expenditure for the quarter rose to Rs 7.07 lakh crore, or 29 percent of the full-year target, while revenue receipts stood at 15.5 percent of the target.
Fiscal deficit = The difference between total revenue and total expenditure
It indicates the total borrowings needed by the government. Fiscal deficit takes place either due to revenue deficit or a major hike in capital expenditure (expenditure is incurred to create long-term assets such as factories, buildings and other development).
The gross fiscal deficit (GFD) is the excess of total expenditure including loans net of recovery over revenue receipts (including external grants) and non-debt capital receipts. The net fiscal deficit is the gross fiscal deficit less net lending of the Central government. A deficit is usually financed through borrowing from either the central bank of the country or raising money from capital markets by issuing different instruments like treasury bills and bonds.
August 2
US passes bill to waive sanctions against India for buying Russian weapons
The United States Congress has passed the conference report on National Defense Authorization Act-2019 (NDAA-19), which paves the way for waiver to India from punitive Countering America’s Adversaries Through Sanctions Act or CAATSA, under which sanctions kick off on countries that purchase significant military equipment from Russia.
The Senate passed the John McCain National Defense Authorization Act for Fiscal Year 2019 (NDAA) by an overwhelming, bipartisan vote of 87 to 10.
Passed by the House last week, the bill, named after Senate Armed Services Committee Chairman John McCain, would provide USD 716 billion support in funding for national defense for fiscal year 2019.
The bill, which now moves to the White House for President Donald Trump to sign it into law, as, the proposed modified waiver requires presidential certifications designed to protect US alliances, military operations and sensitive technology.
RBI hikes repo rates by 25 basis points
The Reserve Bank of India increased the repo rate by 25 basis points to 6.5% and the reverse repo rate to 6.25%, in their third bi-monthly policy review of the 2018-’19 financial year. The marginal standing facility rate and the bank rate have been adjusted to 6.75%.
The Monetary Policy Committee headed by RBI Governor Urjit Patel made the decision after a two-day meeting. Five of the six members on the rate panel voted for an increase.
The committee retained the growth forecast of 7.4% for the economy. Gross domestic product is likely to grow at 7.5% to 7.6% in the first half and 7.3% to 7.4% in the second half of the financial year.
The RBI lowered the retail inflation target for the first half of the 2018-’19 financial year to 4.7% from 5.1% on the grounds of a normal monsoon forecast and moderation in food price rise. For the second half 2018-’19, it has predicted an inflation outlook of 4.4%, lower than its last forecast of 4.5% to 4.6%.
The central bank takes the contrary position in the event of a fall in inflationary pressures. Repo and reverse repo rates form a part of the liquidity adjustment facility.
Repo rate is the rate at which the central bank of a country (Reserve Bank of India in case of India) lends money to commercial banks in the event of any shortfall of funds. Repo rate is used by monetary authorities to control inflation. In the event of inflation, central banks increase repo rate as this acts as a disincentive for banks to borrow from the central bank. This ultimately reduces the money supply in the economy and thus helps in arresting inflation.
Reverse repo rate is the rate at which the central bank borrows money from commercial banks in India.
7 Indian companies in the Fortune 500 list
Seven Indian companies have made it to the latest Fortune 500 list of the world’s biggest corporations in terms of revenue, with state-owned Indian Oil Corporation (IOC) continuing to be the highest ranked Indian firm and Reliance Industries (RIL) jumping 55 places.
In the list topped by retail giant Walmart, Indian Oil Corporation with 23 per cent rise in revenues at USD 65.9 billion was ranked 137th, up from the 168th position in 2017.
RIL was the top private sector company from the country as it jumped from 203rd rank last year to 148th. It had a revenue of USD 62.3 billion in 2017-18. RIL was also the most profitable Indian firm on the list. On the globally most profitable list, it secured the 99th position on the list topped by Apple.
Oil and Natural Gas Corp (ONGC) made a come back into the list with a ranking of 197, with USD 47.5 billion revenue. It did not feature in the 2017 ranking.
State Bank of India (SBI) with USD 47.5 billion revenue is on rank 216, a shade higher than 217 last year.
Tata Motors improved its ranking from 247th last year to 232nd.
State-owned Bharat Petroleum Corp Ltd (BPCL) that moved up to 314th position from 360th last year.
Rajesh Exports was the seventh Indian firm on the list though its ranking slipped to 405th this year from 295th last year.
FACTFILE – The Fortune Global 500
Fortune 500, also known as Global 500, is an annual ranking of the top 500 corporations worldwide as measured by revenue and the list is compiled and published annually by Fortune
The world’s 500 largest companies generated USD 30 trillion in revenues and USD 1.9 trillion in profits in 2017. Together, this year’s Fortune Global 500 companies employ 67.7 million people worldwide and are represented by 33 countries.
Retail inflation hovers at 4.8%
The Reserve Bank pegged retail inflation at 4.8 per cent for the second half of current fiscal expecting increase in food prices due to hike in minimum support price (MSP). For the July-September quarter, it has projected inflation to be at 4.6 per cent.
RBI made the projections in its third monetary policy review for the current fiscal. Retail inflation has been projected to rise further to 5 per cent in the first quarter of the next financial year 2019-20.
The Monetary Policy Committee (MPC), chaired by RBI Governor Urjit Patel has raised the benchmark repo rate by 0.25 per cent to 6.25 per cent citing inflation worries, which is likely to make consumer products costlier.
FACTFILE – Retail inflation
Retail inflation means the increase in prices of certain products or commodities compared to a base price.Retail inflation is linked to Consumer Price Index(CPI) which is managed by Ministry of Statistics.
Currently the base year for India’s CPI is 2012 which means the prices for the certain commodities for the 2012 year are considered as the base price to calculate the price rise.
CPI numbers are widely used as a macroeconomic indicator of inflation, as a tool by governments and central banks.
Assam Finance Minister Himanta Biswa Sarma on March 12, 2018 presented Assam Budget 2018-19, the state’s first e-Budget at the legislative Assembly. The state Budget presented in the electronic format and each legislator will be provided with a tablet (computer) with details of the Budget during discussions and cut motion on the Budget inside the House. This unique digital budget will also be the first one in the country to be drafted with citizens’ participation and streamed on social media and is made available on Google app. The proceedings of the Assam budget presentation will also go live on Twitter and Facebook.
Receipts
Rs 90,673.42 crore under the Consolidated Fund, of which Rs 74,118.50 crore is on Revenue Account and the remaining Rs 16,554.92 crore is under Capital Account. Contingency Fund of 100.00 crore and Public Account of 290914.84crore. Total receipt of 381688.26 crore.
Expenditure
Consolidated Fund 90269.92 crore , Contingency Fund of 100.00 crore and Public Account of 290318.35 crore. Total Expenditure estimated at 380688.27 crore.
Handloom, Textile and Sericulture Department – 5082 Crore
Industries and Commerce Department– 839 Crore
Irrigation Department– 1700 Crore
Panchayat and Rural Development – 5808 Crore
Border Areas Department – Rs 161 Crore
Co Operation Department – Rs 156.99 Crore
Cultural Affairs Department – Rs 155.83 Crore
Environment and Forest Department – Rs 505 Crore
Food and Civil Supplies Department – Rs 877 Crore
General Administration Department – Rs 727 Crore
Hill Areas Department – Rs 161.39 crore
Home and Political Department – Rs 5584 crore
Judicial Department – Rs 582 Crore
Legislative Department – Rs 45 Crore
Public Health Engineering Department – Rs 2661 Crore
Revenue and Disaster Management Department – Rs 1565 Crore
Social Welfare Department – Rs 2098 Crore
Sports and Youth Welfare Department – Rs 163 Crore
Tourism Department – Rs 81 Crore
Industry-wise analysis of Assam Budget 2018-19
Tea Industry
Cess on green tea leaves completely exempted. In the previous two budgets, the cess had been reduced from 25 paise to 10 paise per kg green tea leaf in two phases.
Rs 7 crore earmarked for digitizing mode of payment in Tea Gardens. Each Sardar, around 20,000 in total, to be provided with a smartphone of around Rs 3000-5000.
Rs 99 Crore for payment of outstanding PF dues, gratuity, arrear wages, salary, bonus, etc. of a retired worker & staff of Assam Tea Corporation
Token provision of Rs 20 crore to construct paver block roads along labour lines in all Tea Gardens in Assam
Rs 120 crore earmarked for Phase 2 of Chah Bagicha Dhan Puraskar aru Jeevan Suraksha Yojana. Rs 2500 has already been transferred to tea garden employees across 752 Tea Gardens during Chah Bagicha Dhan Purashkar Mela, launched in January 2018.
Agriculture Sector & Food
Exemption limits under the Agriculture Income Tax Act raised up to 2.5 lakh from the exemption limit of Rs 1 lakh and the other tax slabs have already been rationalized.
Rs 50 crore earmarked for Price Stabilization Fund which will provide cushion for consumers from price fluctuations in essential commodities
To activate inactive Kisan Credit Card accounts, a one-time cash incentive of Rs 3000 per inactive KCC holding farmer, if he renews the card.
For the agriculture sector, zero interest on crop loans, debt relief for farmers and financial assistance for farm implements.
Education
Govt to set Media Fellowship for pursuing higher studies in journalism so that 20 journalists can be selected for this fellowship at rate of Rs 50,000 each. One-time grant of Rs 10 lakh.
100 meritorious girl students studying in Polytechnics and Engineering colleges will be given a scholarship of Rs. 30,000 per year.
New Colleges at Baksa, Udalguri and Chirang Women Colleges at Mangaldoi, Hailakandi and Karimganj.
Polytechnic Colleges at Majuli, Tingkhong and Hajo
10 New B.Ed Colleges to be established (Karbi Anglong, Bongaigaon, Baksa, Nalbari, Kamrup, Morigaon, Dima-Hasao, Sivasagar, Biswanath, Lakhimpur)
9 New Women’s Law Colleges in Assam (Sonari, Senga, Batadrawa, Jaleswar, Golokganj, Bilasipara, Mangaldoi, Hailakandi and Karimganj ).
Rs 980 crore for Schools
Rs 256 crore under the ‘Tejasvi Nav-adhitam-astu Edu-Infra Funds (TNEIF)’ for infrastructure development of leading colleges.
Rs 250 crore allotted to scholarship scheme for girl students Rs 2000, Rs 4000, Rs 6000 and Rs 10,000 for girl students between class 10 to Post Graduation.
Rs 250 crore allotted for the Kanaklata Mahila Sabalikaran Yojana.
Scooties for 5000 girls securing the top 5000 position in HS Exam Results, 2018. Earlier the scheme had covered 1000 girls.
Reservation of two seats in our medical colleges for students from other North-Eastern states that do not have a State medical college.
Higher Education Department has also identified two clusters of leading colleges to be upgraded and developed into two New cluster universities one each in Jorhat and Guwahati. Jorhat cluster University will consist of JB college, Bahona College, DCB Girls college & CKB Commerce College and Guwahati cluster University will consist of Arya Vidyapeeth College, B Barooah College, Handique Girls College, Gauhati Commerce College & Pragjyotish College.
Legislation to be proposed for Regulation of Private Educational Institutions and Appropriate payment structure to be worked out for Teachers and allied functionaries in such institutions.
Rs 25 crore earmarked for Pratyahban scheme to be launched for selected Private Schools on the lines on Gunotsav.
Skill Development & Employment Generation
13,000 urban youths to be trained under Deendayal Antyodoya Yojana – National Urban Livelihoods Mission (DAY-NULM)
Rs 5 crore for providing Self Employment grants to Educated Youths under Atal Atma Sansthapon Yojana
Rs 10 crore allocated for Atal Tinkering Lab (ATL) set up by the NITI Aayog, at the Secondary School Level. The Laboratories are dedicated work spaces where young minds are exposed to the latest technological advancements. ATLs to be set up in 50 government schools on a pilot basis.
Govt will invest Rs 14,800 per individual under skills training program
Rs 300 crore allotted for Swami Vivekananda Assam Youth Empowerment Yojana (SVAYEM) which envisages to provide financial assistance to young entrepreneurs.
Surrendered Cadres of insurgent outfits to be provided loans up to Rs 2 Lakhs and skill training under the SVAYEM Scheme.
Rs 77 crore has been allotted for State Level Mega Skill Development Scheme wherein Rs 14, 800 will be invested per individual. The state has set a target of empowering 1.5 lakh youth over a period of 3 years through this scheme.
Kanaklata Mahila Sabalikaran Yojana – A scheme to promote at least one lakh self-sustainable, self-help groups (SHGs) in the State through loan and capital subsidy will be launched in the upcoming financial year.
Treasury Challan system for third and fourth grade jobs has been terminated. Upper Age Limit extended from 38 to 44 for third and fourth grade employees, this however won’t be applicable in Police, Home Guards, Defence and Fire Dept.
Rs 10 crore allocated for readying Engineering and Commerce graduates for employment. ERP majors like SAP to establish 10 Centres of Excellence with intake capacity of about 5000 Engineering and Commerce graduates over a period of 3 years.
Health Sector
Rs 16 crore allocated under Sanjeevani- Village Health Outreach Program in 7680 villages of Assam
Salary allowances of Anganwadi workers and ASHA workers to be increase by Rs 1000 and of Anganwadi Helpers by Rs 500
Rs 250 Crore earmarked for Deen Dayal Divyang Xahajya Achoni which provides assistance for medical treatment of persons with disabilities. Around 1.4 Lakh differently abled persons received assistance of Rs 5000 per person in 2017-18.
Rs 400 crore allocated for Atal Amrit Abhiyan, which will cover about 92% of Assam’s total population one of the largest universal health assurance schemes in the world. With 1.6 crore beneficiaries already enrolled under this scheme, almost all major hospitals across India from Medanta Medicity to Apollo Bengaluru have been empaneled.
Rs 4 crore earmarked for Swastha Sewa Utsav and Gram Utsav to carry out an assessment of the Public Heakth Institutions of the State.
Inclusive Cancer Control Programme: A Partnership with Tata Trusts – An entire sum of Rs 980 crore has been allocated in one go, during the Financial Year 2018-19
Six Government Medical Colleges and 11 District Hospitals will be strengthened by 2019 to provide varying degrees of cancer care.
Sports
Each panchayat will be given Re 25,000 to organize Gaon Panchayat level Football tournament
Rs 5 crore each for installing flood lights in stadium in Dibrugarh, Jorhat, Karimganj, Diphu, Mangaldai, Tezpur & Tinsukia thereby strengthening rural sports infrastructure.
Wages, Salaried Class & Pension Schemes
Daily Wage of Home Guards to increase from Rs 250 per day to Rs 300 per day. The enhanced wages will start from FY 2018-19.
Rs 400 crore allocated for Universalization of Old Age Pension Scheme under PRANAM Act. A pension scheme that covers each and every senior citizen of the State, irrespective of whether they are above poverty line or below poverty line. Each elderly citizen will be entitled to a monthly pension of Rs.250 per month.
Financial assistance in form of a onetime grant of Rs 5 Lakh to families of the staff members who die in harness. Rs 45 crore against various societies.
Pension Scheme for Journalists- ‘Journalist Family Benefit Fund (JFBF)’ for providing financial assistance to the bereaved family members of journalists who may have lost their lives while on duty. Rs.100 lakh sanctioned for this purpose and also adequate Budget Provision for this are being made in the budget 2018-19.
UGC pay scales to Teachers across Degree Colleges, Universities and Technical & Medical Institutions.
Salary Hike for Contractual Teachers, to hike from 15500 to 20000.
Law and Order
6 tourist PS, 1 each at KazirangaNationalPark, ManasNationalPark (Barpeta), DibruSaikhowaNational Park (Tinsukia), NameriNationalPark (Sonitpur), OrangNationalPark (Rowta), and one at Guwahati.
Rs 100 crore in the financial year 2018-19 for Mission for Overall Improvement of Thana for Responsive Image (MOITRI).
Girls (Gender Budgeting)
Girls in Assam (age 12-20) with family income below Rs 5 lakh can avail of an annual stipend of Re 600 which will be directly transferred to her bank a/c linked to their DOB. Payments will automatically stop once they reach 20 years
Govt proposes to cover 5 lakh girls during the financial year 2018-19 under the monthly stipend for purchase of sanitary napkins. A sum of Rs 30 crore has been earmarked for this scheme.
New scholarship scheme for girl children belonging to the Minority Communities. Annual scholarship of Rs. 2,000, Rs. 4,000, Rs. 6,000, Rs. 10,000 for girl students belonging to minority community studying in class 10th, 11th-12th, graduation & post-graduation, respectively.
Business & Industry
Rs 100 crore allotted to MSME Credit Guarantee Scheme wherein the amount will be parked in a credit guarantee fund and will cover upto 50% of the loan amount taken from scheduled banks and RRBs for loans upto Rs 50 lakh.
The guarantee will cover up to 50 percent of loan amount taken from scheduled commercial banks & RRBs for loans up to Re 50 Lakh.
Rs 17.5 crore to be allocated for revival of Sarthebari Bell Metal and other such industrial clusters. Rs 50 lakh subsidy for reopening a closed Cinema Hall and Rs 25 lakh as subsidy for renovating existing halls to be provided.
A subsidy of 25% of the capital cost for the establishment of New Cinema Halls will also be given
The budget proposed a levy of electricity duty at 5 per cent on ad valorem basis and 1 per cent increase on stamp duty registration fee for transactions in immoveable properties.
The budget also proposed to increase the tender fee from Rs 8.25 to Rs 100 for tenders up to Rs 20 lakh and Rs 500 for tenders beyond Rs 20 Lakh.
Infrastructure & Development Work
Rs 150 crore allocated for conversion of 1000 Timber Bridges across rural Assam into RCC Bridges
City Infrastructure Development Fund (CIDF): Rs 200 crore to be earmarked for improvement of roads and drainage in 8 cities (other than Guwahati), with the population above 40000 (Census 2011).
Uttoron State Government Signature Projects for Legislative Constituencies: Over next 3 years, Gov will select 2 villages in each of the 126 assembly constituencies which would then be supported as model villages with holistic, inclusive social & economic development as fundamental objectives. Under the Axom Adarxo Gram Yojana, Rs 50 lakh, therefore, to be allocated to each of the two model villages.
Construction of a 6 lane bridge with an estimated cost of Rs 1950 cr, which will connect Panbazar with North Guwahati.
Rs 15 crore earmarked for State Innovation Fund which will enable Deputy Commissioners to finance innovative grassroots solutions to local governance issues.
Rs 200 crore allocated for reconstruction and maintenance of Roads and RCC Bridges under the Axom Mala Program for State Highway and Major District Road Improvement and Reconstruction in line with ‘Bharat Mala’. The fund will also include continuous field data collection and sustenance of Road Asset Management System.
18 Crore announced for Mega Skill City.
Rs 10 crore earmarked for infrastructure development of 100 Foreigner’s Tribunal offices spread across the state. Each FT Office will be receiving Rs 10 lakh each.
Rs 20 crore allocated as token provision to development of road infrastructure along labour lines in tea gardens.
42 New Fire Dept Offices to be set up in Assam.
Token Amount of Rs 20 crore earmarked for Road Improvement Projects in villages under Sansad Adarsha Gram Yojana (SAGY).
Rs 68.54 crore allocated for equity infusion for expansion of Capital Projects Assam Petro-Chemicals Limited.
Environment & Sustainable Development
An amount of Rs 5 crore has been earmarked as seed money to create an Assam Climate Change Management Society to monitor Climate Change related matters and to co ordinate mitigating efforts.
Rs 8 crore allocated for a botanical garden at Kaziranga to put the state on the Orchid Map of the Country.
CM Adarsh Dweep Yojna – Special Scheme for Power Conservationm, 52 lakh families will get 4 bulbs each of 9W LED Bulbs.
Miscellaneous
Rs 91 Crore allocated for carrying out of NRC works for 2018-19
ssam Government has constituted a commitee to examine the anomalies in 7th APPPC report. The report is under examination and the grievances of the employees will be resolved shortly.
North East Foundation, which will act as a think tank for the region to be set up. Assam Government will take lead in establishment of this foundation and will provide seed funding as a goodwill gesture.
Rs 3 crore allocated for Social Media Presence for the Government Departments. Social Media Cell to be established in every department.
The famous flag lowering ceremony at the Wagah border in Punjab will be replicated at the international border points in Assam. Government has decided to develop border infrastructure on similar lines with an allocation of Rs 5 crore in four districts – Cachar, Karimganj, Dhubri and South Salmara.
Paying homage to the 140 martyrs of Patharughat peasants’ uprising on the rebellion’s 125th anniversary this year, the Assam government proposed a slew of incentives and schemes to help the farming community in the state. The last year’s budget also had focused on the agriculture sector, including the Chief Minister’s Samagra Gramya Unnayan Yojana (CMSGUY) which aims to double the farm income, and other measures such as Zero-Interest crop loans to farmers, financial incentives for farmers using Kisan Credit Cards. To activate inactive Kisan Credit Card accounts, a one-time cash incentive of Rs 3000 per inactive KCC holding farmer, if he renews the card.
Rs 5 crore allocated for development of Assam Bamboo Experience Centres (ABECs) at Assam Bhawans/ Houses in various cities alongwith Guwahati and district headquarters of the state.
NOTE – Andhra Pradesh is the first state to introduce e-budget. The e-budget documents could only be accessed by the legislators and were not available in the public domain. But Assam Budget 2018-19 is the first one in India to be drafted with citizens’ participation and streamed on social media and is made available on Google app. The proceedings of the Assam budget presentation will also go live on Twitter and Facebook.
The State of Assam comprised of two valleys namely the Brahmaputra and Barak. The geographical area of Assam is 78,438.00 Sq. Km out of which 56,194.00 Sq. Km and 22,244.00 Sq. Km fall under the Brahmaputra and Barak Valley including 2 (Two) hill districts respectively. The flood prone area of the state is 31,500.00 Sq Km, which is about 39.58 % of the total area of the state and 9.40% of total flood prone area of the whole India.
River System of Assam
A) Brahmaputra river system
The main river of the valley, Brahmaputra is one of the largest rivers in the world and is a trans-boundary river which flows through China, India and Bangladesh. With 3,848 km in length, it is the 15th longest and tenth largest river in the world by discharge.
The river originates from the Kailalsh ranges of Himalayas at an elevation of 5300 M. After flowing through Tibet it enters India through Arunachal Pradesh and flows through Assam and Bangladesh as the Jamuna. It merges with the Padma, the popular name of the river Ganges in Bangladesh, and finally the Meghna and from here it is known as Meghna before emptying into the Bay of Bengal.
The river drains the Himalaya east of the Indo-Nepal border, south-central portion of the Tibetan plateau above the Ganga basin, south-eastern portion of Tibet, the Patkai-Bum hills, the northern slopes of the Meghalaya hills, the Assam plains, and the northern portion of Bangladesh. The basin, especially south of Tibet, is characterized by high levels of rainfall. Kangchenjunga (8,586 m) is the only peak above 8,000 m, hence is the highest point within the Brahmaputra basin.
The river is often called Tsangpo-Brahmaputra river. The lower reaches are sacred to Hindus. While most rivers on the Indian subcontinent have female names, this river has a rare male name, as it means “son of Brahma”.
The Brahmaputra is an important river for irrigation and transportation. It is a classic example of a braided river and is highly susceptible to channel migration and avulsion. It is also one of the few rivers in the world that exhibit a tidal bore. It is navigable for most of its length. The catchments area of Brahmaputra in Tibet is 2,93,000 Sq. Km; in India and Bhutan is 2,40,000 Sq. Km and in Bangladesh is 47,000 Sq. Km. The Brahmaputra basin extends over an area of 5,80,000 Sq. Km up to its confluence within Bangladesh.
The average width of Brahmaputra is 5.46 Km. The average annual discharge is about 20,000 cumec and average dry season discharge is 4,420 cumec. The river slope is very steeptill it enters India. A drop of about 4800 M is achieved in a length at about 1700 Km. This average slope of about 2.82 m/Km in China (Tibet) gets reduced to about 0.1m/Km in Assam valley. Due to this sudden flattening of river slope, the river becomes braided in nature in the Assam valley. During its course in Assam valley from Kobo to Dhubri the river is joined by about 20 (twenty) important tributaries on its North bank and 13 (thirteen) on its South bank. Joining of these tributaries bringing high sediment load activates braiding.
The drainage area lying in India is 1,94,413 sq.km which is nearly 5.9% of the total geographical area of the country. The sub-basin lies in the States of Arunachal Pradesh, Assam, Nagaland, Meghalaya, West Bengal and Sikkim.
The most predominant soil type found in the sub-basin is the red loamy soil and alluvial soil. Other important soil types are sandy, loamy, clayey soils, their combinations and laterite soils. The culturable area of the sub-basin is about 12.15 M. ha which is 6.2% of the culturable area of the country.
Heavy precipitation occurs here from May to September. All its tributaries experience number of flood waves as per rainfall in respective catchments. If the flood of the tributaries coincides with the flood of Brahmaputra, it causes severe problem and devastation. The severity of flood problem of the state has been further aggravated by the acuteness of erosion on both banks of river Brahmaputra and its tributaries. Study reveals that an area of 4.27 Lakh Hectare of the state has been eroded by the rivers since 1950, which is 7.40 % of area of the state. The average annual rate of erosion is 8000.00 Ha. The world’s largest river island Majuli is also under the grip of erosion by river Brahmaputra and about 60 % of its original area has already been engulfed by the river.
The tributaries namely Subansiri, Ronganadi, Dikrong, Buroi, Borgong, Jiabharali, Dhansiri (North) Puthimari, Manas, Beki, Aie, Sonkosh are the main tributaries on the North while the Noadehing, Buridehing, Desang, Dikhow, Bhogdoi, Dhansiri (South), Kopilli, Kulsi, Krishnai, Dhdhnoi, Jinjiran are the main tributaries on the south bank of the river Brahmaputra.
The characteristics of the north bank tributaries are different than that of the south bank tributaries, which may be summarized as below –
The North Bank Tributaries:
Have very steep slopes and shallow braided channels for a considerable distance from the foot hills and in some cases right up to the outfall.
Have boulder, pebble and coarse sandy beds and carry a heavy silt charge.
Generally have flashy floods.
The South bank Tributaries:
Have comparatively flatter grades and deep meandering channels almost from the foot hills.
Have comparatively low silt charge.
Right Bank Tributaries of the Brahmaputra River
Rivers
Length (km)
Subansiri
442
Ranganadi
150
Baroi
64
Bargang
42
Jia Bharali
247
Gabharu
61
Dhansiri
123
Noa-Nadi
75
Nanoi
105
Barnadi
112
Puthimari
190
Pagladiya
197
Manas-Aie-Beki
215
Champamati
135
Gaurang
98
Tipkai
108
Godadhar
50
Balsiri
110
Left Bank Tributaries of the Brahmaputra River
Rivers
Length (km)
Buridihing
360
Desang
230
Dikhow
200
Jhanji
108
Bhogdoi
160
Dhansiri
352
Kopili
297
Krishna
81
Kulsi
93
Jinari
60
Barak River system
Barak is the second largest river system in Assam as well as in North East. The river with a total length of 900 km from source to mouth drains an area of 52,000 sq. km. The Barak is also a perennial river of the state.
It originates from Japvo mountain of Manipur hills at an altitude of 3,015 m, near the border of Manipur and Nagaland and forms a part of the northern boundary of the Manipur State with Nagaland where it is known as Kirong. Then it flows south through mountainous terrain up to Tipaimukh near the tri-junction of the three states: Assam, Manipur and Mizoram. Here, the river takes a hairpin bend and debouches into the plains of Cacher district of Assam and forms the border of Assam and Manipur states up to Jirimat. The river then flows through the Barak valley of Assam and then it enters Bangladesh where it forks into the Surma and Kushiyara rivers. From the source to the Indo-Bangladesh border, the Barak River flows for 564 km.
The local rainfall run off of the valley along with that of adjacent hilly areas flows through river Barak and its various tributaries and is drained out to Bangladesh. The Katakhal, Jiri, Chiri, Modhura, Longai, Sonai, Rukni and Singla are the main tributaries of the valley. The tributaries are mainly rain fed and cause flood problems when precipitation occurs.
The Barak sub-basin drains areas in India, Bangladesh and Burma. The drainage area lying in India is 41723 sq.km which is nearly 1.38% of the total geographical area of the country. It is on the north by the Barail range separating it from the Brahmaputra sub-basin, on the east by the Na Lushai hills and on the south and west by Bangladesh. The sub-basin lies in the States of Meghalaya. Manipur, Mizoram, Assam, Tripura and Nagaland.
There are two major physiographic regions in the sub-basin, namely, the hilly region and the plain plains are thickly populated and extensively cultivated. The predominant soil types found in the sub-basin are laterite and red and yellow soils. The culturable area in the sub-basin 0.893 M-ha which is only about 0.5% of the culturable area of the country.
Some important north bank tributaries of Barak River
Jiri
Siri
Madhura
Jatinga
Larang
Some important south bank tributaries of Barak River
Sonai
Ghagra
Katakhal
Dhaleswari
Singla
Longai
Statewise Drainage Area of Barak River
Meghalaya – 10,650 Km2
Manipur 9,550 Km2
Mizoram 8,280 Km2
Assam 7,224 Km2
Tripura 4,725 Km2
Nagaland 728 Km2
Total Drainage Area of Barak Basin- 41,157 Km2
Hydropower Potential – The Hydro power Potential at 60% load factor for Barak River is 3908 MW.
Major Projects – Tipaimukh Dam Project, Tista Champamati and Dhansiri barrages.
The state of Assam along with whole Northeast India region is full of amazing valleys, Astonishing Waterfalls, dense forest and great hills and that’s why it’s also called as “The land of the Red River and Blue Hills”. Assam has numerous mountain ranges and hills which are home to wide range of flora and fauna.
Some of the major mountain ranges and hills located in Assam ( along with other neighboring states)
Purvanchal Range
The Purvanchal Mountains or Eastern Mountains are a sub-mountain range of the Himalayas in northeast India covering the states of Assam, Arunachal Pradesh, Manipur, Tripura, Nagaland, Meghalaya and Mizoram.
The range is an eastern extension of the Himalayan Range System, is north eastern India. It bends sharply to the south beyond the Dihang River gorge, and spreads along the eastern boundary of India with Myanmar.
The Purvanchal range includes the hill ranges of the Patkai Hill, Barail Range, MizoHills and Naga Hills.
The Garo, Khasi and Jaintia hills are part of Shillong Plateau, and not part of the Purvanchal range.
Assam Himalaya
A portion in the lower Himalayan mountains range is known as Assam Himalaya between the border of Bhutan and the Great Bend of the Tsangpo River. Yarlung Tsangpo River originates from Lake Manasarovar in Mount Kailash and known as Dihang river in Arunachal Pradesh. The range provides shelter to number of flora and fauna.
Namcha Barwa is the highest mountain peak of Assam Himalaya range. Namcha Barwa (7,782 m) is the highest peak of its own section as well as Earth’s easternmost peak over 7,600 metres.
Other high peaks include Gyala Peri, sister peak to Namcha Barwa; Kangto, and Nyegyi Kangsang.
Patkai Range
The Patkai mountain range also known as Purvanchal Range, one of the eight mountain range in India and the major of India’s North Eastern states. Patkai Range is consist of three major hills, viz. The Patkai-Bum,the Garo-Khasi-Jaintia and Lushai Hills.
The Patkai hill range are not as rugged as the Himalayas and the peaks are much lower in height. Features of the range include conical peaks, steep slopes and deep valleys. The climate range from temperate to alpine due to differencies in altitude.
Three mountain ranges come under the Patkai. The Patkai-Bum (Burmese Kumon Taungdan), the Garo-Khasi-Jaintia, and the Lushai Hills, highest point Phawngpui Tlang, also known as ‘Blue Mountain‘. The Garo-Khasi range is in the Indian state of Meghalaya. Mawsynram and Cherrapunji, on the windward side of these hills are the world’s wettest places, having the highest annual rainfall.
The Pangsau Pass offers the most important route through the Patkai. The Ledo Road was built through Pangsau Pass as a strategic supply road built over the range during World War II to link India with the Burma Road into China.
Khasi Hills and Jaintia Hills
The Khasi and Jaintia Hills are a mountainous region is a part Meghalaya, which includes the present districts of East Jaintia Hills district, West Jaintia Hills district, East Khasi Hills district, and West Khasi Hills district.
The hills of Khasi is the part of major Garo-Khasi range in Meghalaya and also the part of the Patkai mountain ranges. Khasi Hills got its name by Khasi tribes of the region.
Cherrapunji is the wettest place in the world is situated in the East Khasi Hills and Lum Shyllong is the highest peak(1,968 metres high).
The Jaintia Hills are located further to the east from the Khasi Hills.
Garo Hills
The Garo Hills is located in Meghalaya state and part of Garo-Khasi range. It is one of the wettest places in the world. The range is part of the Meghalaya subtropical forests eco-region.
Nokrek Peak is the highest point of the Garo Hills region of the State, Nokrek Peak stands 1412 metres above sea level. The mother germo plasm of Citrus-indica have been discovered by science researchers within Nokrek Range. This discovery led to the establishment of the National CitrusGene Sanctuary-cum-Biosphere Reserve at Nokrek covering an area of forty seven square kilometres.
Tura Peak is a majestic hill stands on the eastern flank of Tura, the largest town in the Garo Hills region of the State. It peaks 872metres above sea level.
Balpakram is a National Wildlife Park, located in SouthGaro Hills and 167 km from Tura. It is home to the rare Lesser Panda, the Indian bison and the Stag like Serow.
Siju Caves is the famous limestone caves of Siju are located near Simsang River in Siju village.
Lushai Hills
The Lushai Hills also known as Mizo Hills is one of the three part of Patkai mountain range, located in Mizoram and Tripura. Mizo Hills is highly covered with dense bamboo jungle and rank undergrowth; but in the eastern portion, owing probably to a smaller rainfall, open grass-covered slopes are found, with groves of oak and pine interspersed with rhododendrons.
Phawngpui, also known as Blue Mountain is the highest mountain peak (elevation of 2157 m), located in Mizoram.
Naga Hills
The Naga Hills are actually part of Indian Territory mountain ranges of Arakan Mountains between the western Burma and the Naga Hills district. The hills, due to their complexity and position, form a barrier between the India and Myanmar (Burma).
The Naga Hills, reaching a height of around 3,825 metres (12,549 ft). The highest point of Naga hills is Mount Saramati (3826 m).
Naga Hills is one of the major tribal region of Nagaland state and inhabited by Naga people.
Jampui Hills
Jampui Hills is a hill range located in the North Tripura district of Tripura. The average altitude of the hill range is approximately 1000 metres above sea level. Its habitants are mainly Mizo or Lushai.
The Jampui Hills stretch from North to South and are bordering the state Mizoram in the east.
Betalongchhip (930 m high), also known as Betlingchhip, Balinchhip and Thaidawr, is the highest point in Tripura.
Jampui Hills is famous for its unique Orange Festival, view of rising and setting sun and excellent panoramic views of the deep valley and villages around.
Chin Hills
The Chin Hills is a range of mountains extends northward from Manipur to Chin State of Myanmar. Chin Hills are the part of Arakan Mountain Range with an highest peak of Nat Ma Taung with 3,053 m(10,500 feet). Chin Hills are very close to Lushai Hills of Patkai Range and offers a wide range of flora and fauna.
In the Second World War the hills formed a point of armed conflict between Japanese forces and a combined British and Indian force.
Mikir Hills are a group of hills located to the south of the Kaziranga National Park, Assam. It is part of the Karbi Anglong Plateau.
Daphla Hills is a tract of hilly country on the border of western Arunachal and Assam occupied by an independent tribe called Daphla. It lies to the north of the Tezpur and North Lakhimpur subdivisions, and is bounded on the west by the Aka Hills and on the east by the Abor Range.
The KUSUM (Kisan Urja Suraksha evam Utthaan Mahabhiyan) scheme was announced in the Union Budget in 2018-19. It is a solar farming scheme to be introduced soon by government to provide additional income and water security to farmers. The scheme is for setting up solar power projects on the agriculture land and providing options to farmers to sell additional power to grid.
The scheme involving decentralized solar power production upto 28250 MW over a period of five years, will be implemented by the Ministry of New and Renewable Energy, from the next fiscal year.
Aims of the Scheme
Promote decentralized solar power production
To support the financial health of DISCOMs by reducing the burden of subsidy to the agriculture sector
Reduce transmission losses
To promote energy efficiency and water conservation
Provide water security to farmers through provision of assured water sources through solar water pumps – both off-grid and grid connected
To provide reliable power to utilise the irrigation potential created by state irrigation departments
To fill the void in solar power production in the intermediate range between roof tops and large parks
Main features of this scheme
The government will spend 48,000 crore rupees over 10 years as central financial assistance (CFA).
The scheme aims to encourage the use of barren land for setting up solar power plants.
This programme will help set up more than 28 GW of combined solar capacity through these solar pumps.
Scheme incentivizes farmers to run solar farm water pumps.
Four components of the Scheme:
Setting up of 10,000 MW of Decentralized Ground Mounted Grid Connected Solar Power Plants
Installation of 17.50 Lakh Stand-alone Solar Pumps
Solarizing government tube wells of 8,250 MW capacity.
Targets of the Scheme
Setting up of 10,000 MW of Decentralized Ground Mounted Grid Connected Solar Power Plants
Installation of 17.50 Lakh Stand-alone Solar Pumps
Solarisation of 10 Lakh Grid Connected Agriculture Pumps
50 Thousand Tube-wells/Lift Irrigation Projects
Some Advantages of the scheme
Transmission losses and power theft would drop significantly.
As proposed in the scheme, the main priority will be to rely on Local generation of power.
It promotes decentralized solar power production.
The scheme would also promote energy efficiency, water conservation and water security to farmers.
The government’s plan to purchase the surplus power through electricity distribution companies will certainly increase agricultural incomes and reduce electricity losses.
The sale of excess power from farmers will discourage over-utilization of groundwater.
Possible limitations of the scheme
The feasibility of purchasing surplus solar power seems challenging. There is a need to address the issue of grid stability that this injection of surplus power is bound to create.
Balancing of all power grids is more important. Because power generation should work round the clock as electricity generated can’t be stored.
The existing electrical gridlines were created to depend on reliable and controllable generators of coal, oil and even hydroelectric power.
So, for inclusion of solar and wind power generators into the grid, a more precise balance will have to be created.
Variations in weather patterns make it more difficult for the grid operator to predict the balance of electrical energy that will be required to meet the demand.
Solar and wind power are fluctuating in nature which depend on sunlight and cloud conditions.
So to maintain a consistent round-the-clock power delivery the grid operators will need to have a back-up source of power in the form of coal or oil.
Need of the hour
Because of India’s sheer size, the variability factor considerably increases like when some areas have low consumption; others are likely to have high consumption.
So, more stability can be achieved by integrating the grids into all-India grids.
Attention also should be given to the stability of the grid; otherwise the grid network collapses due to the uncertainties of power supply and demand.
Expected advances in storage technology would also significantly improve grid stability.
Centre along with state governments should put in place adequate procedures to purchase the excess solar power from farmers.
Note – This topic is little technical in nature, concepts more related to computer science. But everyone should have a fair idea of it, as it’s very important development and especially the ‘Blockchain technology’ bitcoin has popularized, is going to be used in many areas in near future.
Bitcoin is a cryptocurrency and worldwide payment system. It is the first decentralized digital currency, as the system works without a central bank or single administrator.
The network is peer-to-peer and transactions take place between users directly, without an intermediary. These transactions are verified by network nodes through the use of cryptography and recorded in a public distributed ledger called a blockchain.
Bitcoin was invented by an unknown person or group of people under the name Satoshi Nakamoto and released as open-source software in 2009. Bitcoins are created as a reward for a process known as mining. They can be exchanged for other currencies, products, and services.
The price of bitcoin skyrocketed into the thousands in 2017. Bitcoins can be used to buy merchandise anonymously. In addition, international payments are easy and cheap because bitcoins are not tied to any country or subject to regulation.
Small businesses may like them because there are no credit card fees. Some people just buy bitcoins as an investment, hoping that they’ll go up in value. Bitcoins are stored in a “digital wallet,” which exists either in the cloud or on a user’s computer. The wallet is a kind of virtual bank account that allows users to send or receive bitcoins, pay for goods or save their money.
What makes Bitcoins different is that a decentralized network of computers keeps track of them, instead of a single person, company, or government. They can be sent to someone via a computer or a mobile device, with each transaction being recorded in what is called a blockchain.
Bitcoin Mining – People compete to “mine” bitcoins using computers to solve complex math puzzles. This is how bitcoins are created. Currently, a winner is rewarded with 12.5 bitcoins roughly every 10 minutes.
Many marketplaces called “bitcoin exchanges” allow people to buy or sell bitcoins using different currencies. Coinbase is a leading exchange, along with Bitstamp and Bitfinex. People can send bitcoins to each other using mobile apps or their computers. It’s similar to sending cash digitally.
Pros and Cons of Bitcoins and other Crypto currencies
Low transfer fees – A big advantage to using Bitcoins is the low transfer fees. You can send as well as receive payments at a very low cost — often for free. In any case, the fees are lower than what you would have to pay when doing business through a bank. Additionally, Bitcoins can’t be counterfeited, making it safer than paper money in this regard.
Anonymity – Another advantage is that although all transactions are visible to everyone, they are anonymous, as you don’t have to disclose your personal info such as your name, address, and so on. This is also a disadvantage in a way, as it allows for some shady business. There’s no way to connect the money back to them. That’s why it has become the currency of choice for people online buying drugs or other illicit activities.
Security – A big problem with Bitcoins is security. As already mentioned, your Bitcoin wallet can be stored in the cloud or offline, on your computer. The offline method is more secure due to the reduced risk of getting hacked, but can also mean that you can lose all of your Bitcoins if whatever device that houses the wallet stops working. Bitcoins worth tens of millions of dollars were stolen from Bitfinex when it was hacked in 2016.
Irreversible Nature – Bitcoin transactions are also irreversible unlike those made with a credit card, so there’s a bigger chance of losing your money when dealing with sketchy sellers online.
Unstable – They aren’t as stable as most currencies, as their value fluctuate too much very frequently.
Uncertain Future – No one knows what will become of bitcoin. It is mostly unregulated, but recently some countries like Japan, China and Australia have begun weighing regulations. Governments are concerned about taxation and their lack of control over the currency.
Important Concepts
Blockchain
The blockchain is a public ledger that records bitcoin transactions. A novel solution accomplishes this without any trusted central authority: the maintenance of the blockchain is performed by a network of communicating nodes running bitcoin software.
Transactions of the form payer X sends Y bitcoins to payee Z are broadcast to this network using readily available software applications. Network nodes can validate transactions, add them to their copy of the ledger, and then broadcast these ledger additions to other nodes. The blockchain is a distributed database – to achieve independent verification of the chain of ownership of any and every bitcoin amount, each network node stores its own copy of the blockchain.
Approximately six times per hour, a new group of accepted transactions, a block, is created, added to the blockchain, and quickly published to all nodes. This allows bitcoin software to determine when a particular bitcoin amount has been spent, which is necessary in order to prevent double-spending in an environment without central oversight. Whereas a conventional ledger records the transfers of actual bills or promissory notes that exist apart from it, the blockchain is the only place that bitcoins can be said to exist in the form of unspent outputs of transactions.
Mining
Mining is a record-keeping service done through the use of computer processing power. Miners keep the blockchain consistent, complete, and unalterable by repeatedly grouping newly broadcast transactions into a block, which is then broadcast to the network and verified by recipient nodes.
Each block contains a SHA-256 cryptographic hash of the previous block, thus linking it to the previous block and giving the blockchain its name.
To be accepted by the rest of the network, a new block must contain a so-called proof-of-work. The system used is based on Adam Back’s 1997 anti-spam scheme, Hashcash. The PoW requires miners to find a number called a nonce, such that when the block content is hashed along with the nonce, the result is numerically smaller than the network’s difficulty target.[5]:ch. 8 This proof is easy for any node in the network to verify, but extremely time-consuming to generate, as for a secure cryptographic hash, miners must try many different nonce values (usually the sequence of tested values is the ascending natural numbers: 0, 1, 2, 3, …) before meeting the difficulty target.
Every 2,016 blocks (approximately 14 days at roughly 10 min per block), the difficulty target is adjusted based on the network’s recent performance, with the aim of keeping the average time between new blocks at ten minutes. In this way the system automatically adapts to the total amount of mining power on the network. Between 1 March 2014 and 1 March 2015, the average number of nonces miners had to try before creating a new block increased from 16.4 quintillion to 200.5 quintillion.
The proof-of-work system, alongside the chaining of blocks, makes modifications of the blockchain extremely hard, as an attacker must modify all subsequent blocks in order for the modifications of one block to be accepted. As new blocks are mined all the time, the difficulty of modifying a block increases as time passes and the number of subsequent blocks (also called confirmations of the given block) increases.
The Department of Economic Affairs, Finance Ministry of India presents the Economic Survey in the parliament every year, just before the Union Budget. It is prepared under the guidance of the Chief Economic Adviser, Finance Ministry.
It is the ministry’s view on the annual economic development of the country. A flagship annual document of the Ministry of Finance, Government of India. Economic Survey reviews the developments in the Indian economy over the previous 12 months, summarizes the performance on major development programs, and highlights the policy initiatives of the government and the prospects of the economy in the short to medium term.
Chief Economic Adviser
The Chief Economic Adviser (CEA) is the economic advisor to the Government of India and the ex-officio cadre controlling authority of the Indian Economic Service. He/She is under the direct charge of the Minister of Finance.
J J Anjaria was the first CEA of India, from 1956-61.
Arvind Subramanian is the current CEA of India.
10 New Economic Facts on Indian Economy
Large increase in registered indirect and direct taxpayers – A 50 percent increase in unique indirect taxpayers under the GST compared with the pre-GST system. Increase in individual income tax filers as well and a large increase in voluntary registrations.
Formal non-agricultural payroll is much greater than believed – India’s formal sector, especially formal non-farm payroll, is substantially greater than believed. This has increased the formal sector payroll share to 53% from the earlier 31% of the non-agricultural work force.
States’ prosperity is correlated with their international and inter-state trade – States that export more internationally, and trade more with other states, tend to be richer. But the correlation is stronger between prosperity and international trade. States that export internationally and trade with other states were found to be richer.
5 States of Maharashtra, Gujarat, Karnataka, Tamil Nadu and Telangana account for 70% of India’s exports.
India’s internal trade is about 60% of the GDP.
India’s firm export structure is substantially more egalitarian than in other large countries Top 1 percent of Indian firms account for 38 percent of exports; in all other countries, they account for a substantially greater share (72, 68, 67, and 55 percent of exports in Brazil, Germany, Mexico, and USA respectively). And this is true for the top 5 percent, 10 percent, and so on. This is indicative of a better contribution from the smaller firms than in other countries.
The clothing incentive package boosted exports of readymade garments – The Rebate of State Levies (ROSL) was announced in 2016, under which, the Centre gives garment exporters refunds against all the levies they shell out at the state level.
The relief was offered under the duty drawback scheme as part of the package for the garments industry in the GST regime.
The incentive package boosted exports of ready-made garments by about 16%.
Indian society exhibits strong son “Meta” Preference – The survey highlighted that Indian society still exhibited a strong desire for a male child.
It pointed out that most parents continued to have children until they get number of sons.
This kind of fertility-stop-ping rule leads to skewed sex ratios but in different directions: skewed in favor of males if it is the last child, but in favor of females if it is not the last.
There is substantial avoidable litigation in the tax arena which government action could reduce – There is substantial avoidable litigation in the tax arena which government action could reduce.
The tax department’s petition rate is high, but its success rate in litigation is low and declining (well below 30%).
A smaller share of total pending cases accounted for a larger share of the money value at stake (due to the tax dispute). E.g. 2% of pending cases – 56% of the value at stake
66% of cases (each less than Rs 10 lakh) – 1.8% of the value at stake
To re-ignite growth, raising investment is more important than raising saving – It was highlighted that growth in savings did not bring economic growth.
But the growth in investment did bring a substantial growth to the economy.
The survey thus emphasizes that raising investment was more important than raising savings.
Own direct tax collections by Indian states and local governments are significantly lower than those of their counterparts in other federal countries
Indian states and other local governments empowered for tax collection realise lesser collection than their actual potential.
The footprint of climate change is evident and extreme weather adversely impacts agricultural yields
The impact of weather is felt only with extreme temperature increases and rainfall deficiencies
This impact is twice as large in unirrigated areas as in irrigated ones.
Economic Growth
Projections – The survey forecasts real GDP growth to reach 6.75% this fiscal. It is projected to rise to 7 – 7.5% in 2018-19. This could re-instate India as the world’s fastest growing major economy.
The Gross Value Added (GVA) at constant basic prices is expected to grow at 6.1 % in 2017-18, as against the 6.6% in 2016-17. Agriculture, industry and services sectors are expected to grow at 2.1, 4.4 and 8.3 percentages respectively in 2017-18.
Factors – The growth projections were based on the various reform measures undertaken in the recent years.
It includes GST, resolution of the Twin Balance Sheet (TBS) problem through IBC, recapitalization package for PSBs.
Also, with liberalization of FDI and export uplift from the global recovery, the economy began to accelerate in the second half.
Comparative performance – India’s average GDP growth during last 3 years is around 4 percentage points higher than the global growth. India’s growth averaged to 7.3% in 2014-15 to 2017-18 period. Lower inflation, improved current account balance and reduction in the fiscal deficit to GDP ratio are notable factors behind.
Way Ahead – The agenda for the next year to ensure a favourable growth trend
stabilizing the GST
completing the TBS actions
reducing unviable banks and allowing greater private sector participation
privatizing Air India
staving off threats to macro-economic stability
Areas of policy focus:
Employment – for the young and burgeoning workforce, especially women
Education – creating an educated and healthy labour force
Agriculture – raising farm productivity and strengthening agricultural resilience
Inflation
The Consumer Price Index (CPI) based headline inflation averaged to 3.3% during 2017-18. Many states have also witnessed a sharp fall in CPI inflation during 2017-18.
This is notably the lowest in the last six financial years. It has been below 4% for twelve straight months, from November, 2016 to October, 2017.
The CPI food inflation averaged around 1% during April-December in the current financial year. This has been possible due to Good agricultural production coupled with regular price monitoring by the Government. However, the recent rise in food inflation is mainly due to factors driving prices of vegetables and fruits.
Factors – The decline in inflation was broad-based across major commodity groups except Housing and Fuel & Light. In rural areas food was the main driver of CPI inflation and in urban areas, housing sector contributed the most.
Monetary Management
Monetary policy during 2017-18 was conducted under the revised statutory framework that provided for the MPC. The Monetary Policy Committee (MPC) decided to reduce the policy Repo Rate by 25 basis points to 6%, in August. Monetary policy has remained steady during 2017-18 with only one policy rate cut made in August.
Liquidity – Post the demonetisation in November 2016, the re-monetisation process began from November, 2017. This set in a favourable base effect. Resultantly, the Y-o-Y growth of both Currency in Circulation and M0 turned sharply positive.
Tax Collections
The growth in direct tax collections of the Centre was at 13.7% during April-November 2017. The indirect taxes growth rate was 18.3% during the same period. The States’ share in taxes grew by 25.2%. This is much higher than the growth in net tax revenue (to Centre) at 12.6% and of gross tax revenue at 16.5 %.
There was a slow pace in non-tax revenue but the robust progress in disinvestment compensated for this.
There is a 50% increase in the number of indirect tax payers.
Banking Sector
Banking sector performance, the PSBs in particular, continued to be subdued in the current financial year. The new Insolvency and Bankruptcy Code mechanism is being used actively to resolve the NPA problem of the banking sector.
Non Food Credit (NFC) grew at 8.85% in November 2017 as compared to 4.75% in November 2016.
Bank credit lending to Services and Personal Loans (PL) segments continues to be the major contributor to overall NFC growth.
The NBFC sector, as a whole, accounted for 17% of bank assets and 0.26% of bank deposits as on Sep 30, 2017.
External Sector
The global economy is expected to accelerate from 3.2% in 2016 to 3.6% in 2017 and 3.7% in 2018. It reflects an upward revision of the earlier projections by IMF.
India’s balance of payments situation continued to be favourable in the first half of 2017-18 as since 2013-14. This is despite some rise in the Current Account Deficit (CAD) in the first quarter (Q1). India’s CAD stood at US $7.2 billion in Q2 of 2017-18, i.e. 1.2% of the GDP.
India’s trade deficit (on custom basis) had widened. It stood at US$ 74.5 billion in the first half of 2017-18. This is against a declining trend in CAD observed since 2014-15.
Engineering goods, and petroleum crude and products registered a good export growth. Chemicals & related products and textiles & allied products witnessed a moderate growth. Negative growth was recorded by the gems and jewellery.
Future Prospects for India’s External Sector in coming year look bright. The world trade is projected to grow at 4.2 % and 4% in 2017 and 2018 respectively, as against 2.4% in2016. The trade of major partner countries is improving, and India’s export growth is also picking up.
However, rise in oil prices is emphasized as a huge challenge in the coming period, posing a downside risk to trade. This could also lead to higher inflow of remittances which have already started picking up.
Supportive policies like the GST, logistics and trade facilitation policies could help balance the risks.
Foreign Direct Investment
FDI equity inflows registered a 0.8% growth in total during 2017-18 (April-October) and FDI Equity Inflows to the Services sector grew by 15%, mainly due to higher FDI in two sectors i.e. Telecommunications and Computer Software and Hardware.
25 sectors also including services activities and covering 100 areas of FDI policy have undergone reforms recently. At present, more than 90% of FDI inflows are through automatic route.
Trade Policy
Two important developments on the trade policy front during the year relate to:
mid-term review of Foreign Trade Policy (FTP)
multilateral negotiations of WTO in December 2017
Foreign Exchange Reserves – India’s foreign exchange reserves crossed over US$ 409.4 billion on end-December 2017. India is 6th largest foreign exchange reserve holder among all countries of the world.
Industrial Sector
Index of Industrial Production (IIP) (base year 2011-12) indicates industrial output increase of 3.2 % (April-Nov 2017-18). This was a composite effect of robust growth in electricity generation and moderate growth in both mining and manufacturing sectors.
Core Industries – The 8 Core Infrastructure Supportive Industries had a cumulative growth of 3.9%(Apr-Nov 2017-18). They eight core industries are:
Coal
Crude Oil
Natural Gas
Petroleum Refinery Products
Fertilizers
Steel
Cement
Electricity
The production growth of Coal, Natural Gas, Refinery Products, Steel, Cement and Electricity was positive during this period. While the production of crude oil and fertilizers fell marginally.
Reforms – These include the GST, IBC, and announcement of bank recapitalization. Make in India programme, Start-up India and Intellectual Rights Policy to boost industrial growth are also the reasons. Notable sectoral initiatives include anti-dumping duty, Minimum Import Price (MIP) on a number of items for the steel sector and Pradhan Mantri Mudra Yojana for the MSMEs.
Performance indicators
India jumped 30 places to enter the top 100 for the first time in the World Bank’s Ease of Doing Business Report, 2018. It leaped 53 and 33 spots in the taxation and insolvency indices, respectively.
International ratings agency Moody’s upgraded India’s sovereign bond rating for first time in more than a decade.
Services Sector
The services sector continued to be the key driver of India’s economic growth. It has a share of nearly 55% in India’s Gross Value Added (GVA) and contributed almost 72.5 % of GVA growth in 2017-18.
Some of the notable areas include Tourism, Information Technology-Business Process Management, Real Estate, R&D, and Space.
India’s services sector registered an export growth of 5.7% in 2016-17. It remained the 8th largest exporter in commercial services in 2016 and has 3.4% of global share. This is double the share of India’s merchandise exports in the world which is 1.7%.
Enhanced global uncertainty, protectionism and stricter migration rules would be key challenges in shaping future services exports.
In the State-wise comparison of the performance of the Service sector in India. Out of the 32, in 15 states and UTs, the Services Sector is the dominant sector. It has contributed more than half of the Gross State Value Added (GSVA).
Services GSVA share ranges from over 80% in the case of Delhi and Chandigarh to around 31% in Sikkim. Services GSVA growth ranges from 14.5% as in Bihar to 7% in UP.
Infrastructure
The Global Infrastructure Outlook forecasts around US$ 4.5 trillion worth of investments for India till 2040 to develop infrastructure essential for both economic growth and community wellbeing.
India certainly lags behind many emerging economies in terms of providing qualitative transportation related infrastructure. Addressing this is essential to provide better access and thereby enhancing economic activities.
The umbrella programme ‘BharatmalaPariyojana’ aims to achieve optimal resource allocation for holistic highway development. Government has taken steps for streamlining of land acquisition and environment clearances to expedite delayed projects.
Railways showed an increase of over 5% in revenue- earning freight traffic carrying during 2017-18 (upto Sep 2017). The pace of commissioning Broad Gauge (BG) lines and completion of electrification have been accelerated.
Over 400 kms of metro rail systems are operational across the country. And another 680 kms (appx.) are under construction in various cities across India.
Ports – The port-led development along Indian coast line is undertaken under Sagarmala Programme. Almost 289 Projects worth over Rs. 2 Lakh Crore are under various stages of implementation and development. The cargo traffic handled at Major Ports has shown a marginal increase in the last year, valuing to around 500 million tonnes.
Telecommunication – Programmes like ‘Bharat Net’ and ‘Digital India’ could convert India into a digital economy.
Civil Aviation – Domestic airlines has showed a growth rate of 16% (in terms of increase in passenger carrying) in 2017-18 (April – Sep 2017) over the previous year period. Initiatives like liberalization of air services, airport development and regional connectivity through scheme like UDAN are being taken up.
Power – All-India installed power generation capacity has reached well over 3.3 lakh MW till Nov, 2017. The Ujjawal DISCOM Assurance Yojana (UDAY) has focused on enhancing the financial health of DIStribution COMpanies. It has reduced their interest burden, cost of power and aggregated technical and commercial losses. Electrification in 15,183 villages has been completed. Saubhagya (Pradhan Mantri Sahaj Bijli HarGhar Yojana), was launched in September 2017.
Logistics – The Indian logistics industry has grown at a compound annual growth rate (CAGR) of 7.8% during the last five years. The logistics sector provides employment to more than 22 million people.
World Bank’s 2016 Logistics Performance Index India improved to 35th rank in 2016 from 54th in 2014.
Housing – India’s housing policies have been mostly focused on building more homes and on home ownership.
Agriculture
Feminisation
The trend of ‘feminisation’ of agriculture sector i.e. increasing number of women in multiple roles as cultivators, entrepreneurs, and labourers. This is a consequence of growing rural to urban migration by men.
Women make presence at all levels of the agricultural value chain. Rural women are responsible for the integrated management and use of diverse natural resources to meet the daily household needs.
Importantly, the entitlements of women farmers will be the key to improve agriculture productivity.
Measures to ensure mainstreaming of women in agriculture sector:
earmarking at least 30% of the budget allocation for women beneficiaries in all ongoing schemes and initiatives
initiating women centric activities to ensure benefits of various beneficiary-oriented programs/schemes reach them
focusing on women self-help groups to connect them to micro-credit, ensuring representation in decision-making bodies
declaring 15th October of every year as Women Farmer’s Day, acknowledging the role of women in agriculture
Women farmers’ enhanced access to resources like land, seeds, water, credit, markets, technology and training is a necessity.
India needs an ‘inclusive transformative agricultural policy’ aimed at gender-specific intervention.
Mechanisation
Indian Farmers were adapting to farm mechanization at a faster rate in comparison to recent past. In 1960-61, about 93% farm power was coming from animate sources, which has reduced to about 10%in 2014-15.
Indian tractor industries have emerged as the largest in the world. They account for about 1/3rd of total global tractor production.
According to the World Bank estimates, half of the Indian population would be urban by the year 2050. It is estimated that the percentage of agricultural workers in total work force be around 25% by 2050.
Intensive involvement of labour in different farm operations makes the cost of production of many crops quite high.
All these call for a more enhanced level of farm mechanization in India. This also significantly reduce the cost of operation.
Land Holdings Consolidation
There is predominance of small operational holding in Indian Agriculture. The survey thus stresses the need for land holdings consolidation. This is especially essential for reaping the full benefits of agricultural mechanization.
Interest Subvention
A sum of around Rs.20,ooo crore has been approved in 2017-18 to meet various obligations arising from interest subvention.
This includes those provided to the farmers on short term crop loans and also loans on post-harvest storages.
The crop insurance under Pradhan Mantri Fasal Bima Yojana (PMFBY) is being linked to availing of crop loans.
Market Reforms
e-NAN – The electronic National Agriculture Market (e-NAM) was launched by Government on April, 2016. It aims at integrating the dispersed APMCs (Agricultural Produce Market Committee) through an electronic platform. It enables price discovery in a competitive manner to offer remunerative prices to farmers for their produce.
Farmers’ Income
Economic Survey emphasizes the Government’s goal to double farmers’ income by 2022, using programs like Soil Health Card, Input Management, Per Drop More Crop in Pradhan Mantri Krishi Sinchai Yojana (PMKSY), PMFBY, e-Nam, etc.
Innovation
Agricultural R&D is important for sustaining agricultural productivity growth in the long-term. The compound annual growth rate of expenditure has been 4.2% over the years. New Varieties/hybrids tolerant to biotic and abiotic stresses were released for cultivation in different agro-ecologies of the country. These have been developed for Cereals, Pulses, Oilseeds, commercial crops and Forage crops (for use as feed for animals).
Social Expenditure
The Expenditure on Social services by the Centre and States as a proportion of GDP stands at 6.6% in 2017-18 (BE). Components-based expenditure on social services in relation to GDP in 2017-18 (BE):
Education – 2.7%
Health – 1.4%
Others – 2.6%
Significance – Priority to social infrastructure are stated as essentials to inclusive and sustainable growth. Bridging the gender gaps in education, skill development, employment earnings, reducing social inequalities find mention in the survey.
Education
There is substantial improvement in the enrolment and completion rates of education in both primary and elementary school. There is also an increased percentage of schools which comply with Student Classroom Ratio (SCR) and Pupil Teacher Ratio (PTR) at the all India level. However, there are inter-state variations in adherence to SCR and PTR norms.
Gender Parity Index (GPI) at the primary and secondary levels of school has shown improvement.
RTE Act, 2009 is an initiative towards the goal of universalization of elementary education. Recent programmes like Beti Padhao, Beti Bachao are started to address gender bias in access to education.
Labour Reforms
The Survey mentions the technology enabled transformative initiatives such as:
Shram Suvidha Portal (facilitate reporting of Inspections, and submission of Returns)
Ease of Compliance (to maintain registers under various Labour Laws/Rules)
Universal Account Number
National Career Service portal (linking all employment exchanges)
These aim at reducing complexity in compliance and bringing transparency and accountability in labour laws enforcement.
Maternity Benefit (Amendment) Act, 2017, offers women entitlement to enhanced maternity leave for a period of 6 months.
India's gender gap in labour force
Mahila E-Haat is launched to provide e-marketing to products made/manufactured/sold by women entrepreneurs/SHGs/NGOs.
The legislative reforms in Labour sector include rationalizing 38 Central Labour Acts into 4 labour codes. They are the Codes on Wages, Safety and Working Conditions, Industrial Relations, Social Security and Welfare.
India’s gender gap in labour force participation rate is more than 50 percentage points, which is relatively high among many developing countries.
Women workers are the most disadvantaged in the labour market as they (a) constitute a very high proportion among the low skilled informal worker category, and (b) engaged in low-productivity and low paying work.
The lower participation of women in economic activities adversely affects the growth potential of the economy.
As per the ‘Women in Politics’ 2017 report:
Lok Sabha – 11.8% women MPs
Rajya Sabha – 11% women MPs
only 9% of MLAs across the country are women.
About 4.6 crore households were provided employment under the Mahatma Gandhi National Rural Employment Guarantee Act, out of this, 54% were generated by women.
Nai Roshni (leadership development programme for benefiting the women belonging to minority communities) is operational. Mahila Shakti Kendra scheme has been launched for leadership development and to address women’s issues at village levels.
Health
The National Health Policy 2017 recommends increasing State sector health spending to more than 8% of the States’ Government Budget by 2020. Strengthening health delivery systems and achieving universal health coverage are the objectives.
Government healthcare providers accounted for about 23% of the Current Health Expenditure (CHE). This reflects the prominence of private hospitals and clinics among health care providers.
Out of Pocket Expenditure (OoPE) is around 62% in total health expenditure. The higher levels of Out of Pocket Expenditure (OoPE) on health adversely impact the poorer sections and widen then inequalities. Lack of affordable diagnostic facilities consumes a significant part OoPE.
Average prices of diagnostic tests widely vary across cities, despite government’s efforts to regulate prices of Drugs and Diagnostics.
The concept of Disability Adjusted Life Years (DALYs) helps analyse the disease burden and associated risk factors. It is the sum of years of potential life lost due to premature mortality and the years of productive life lost due to disability.
There has been significant improvement in the health status of individuals in India. Evidently, life expectancy at birth has increased by 10 years during the period from 1990 to 2015. States with higher life expectancy are reflecting lower DALYs rates i.e. lower incidence of diseases and vice-versa.
Malnutrition still remains the most important risk factor, despite the drop in rate from 1990. Integrated Child Development Services, Pradhan Mantri Matru Vandana Yojana, National Nutrition Mission are efforts at addressing this.
The contribution of air pollution to disease burden is high in India with levels of exposure remaining among the highest in the world. Pradhan Mantri Ujjwala Yojana is a measure in this regard.
The other key risk factors include dietary risks, high blood pressure and diabetes etc. These is a shift in disease burden from Communicable Diseases to Non-Communicable Diseases over last two decades.
Sanitation
Sanitation coverage in rural India is stated to have increased from 39% in 2014 to 76% in January, 2018. It is mainly attributed to Swachh Bharat Mission (SBM) (Gramin) launched in 2014.
ODF – The number of persons defecating in open in rural areas has significantly declined, creating positive health and economic impact. So far, 296 districts and around 3 lakh villages all over India have been declared Open Defecation Free (ODF).
8 states (Sikkim, Himachal Pradesh, Kerala, Haryana, Uttarakhand, Chhattisgarh, Arunachal Pradesh, Gujarat) are declared ODF completely. 2 Union Territories (Daman & Diu and Chandigarh) also join this category.
The NSSO and Quality Council of India’s surveys reported more than 90% of individuals, who have access to toilets, using them.
UNICEF report, ‘The Financial and Economic Impact of SBM in India’, estimated that a household in an ODF village saves Rs 50,000/- a year.
Fiscal Federalism
Concerns
Difference in fiscal empowerment between urban and rural local government
The Survey highlights the low level of tax collections by the Rural Local Governments in India. RLGs received about 95% of their revenues from the devolved funds from the Centre/State. RLGs in India generate only about 6% of revenues from own resources compared to 40% in Brazil and Germany.
On the other hand, the urban local governments generate 44% of their total revenue from own sources. ULGs also collect 18% of total revenues from direct taxes, much closer to International norms.
Less Direct Taxes collection Direct Taxes account for only about 35% in India as against 70% in Europe. Indian States generate only about 6% of their revenue from direct taxes as against 19% and 44% in Brazil and Germany respectively. Moreover, unlike in other countries, reliance on direct taxes in India seems to be declining.
Causes
State Governments have not devolved enough taxation powers to the Panchayats. Even in cases where more powers are devolved, land revenue collection remained low. This is due to low base values applied to properties and also low rates of taxes levied.
Other reasons are (a) unwillingness to tax by the state, possibly due to close proximity between the state and the citizens, (b) unwillingness by abled citizens to pay because of dissatisfaction with the quality of services, and (c) Centre and States govt unwilling to their devolution powers to control lower levels of government.
Suggestions
The Survey emphasized the importance of fiscal decentralization. Fiscal decentralization is grounded on the idea that spending and tax decisions must reflect local preferences as far as possible. This is essential to address the issue of low tier governments remaining stuck in a ‘low equilibrium trap’depending largely on outside resources.
Financial Savings And Investment
India witnessed an unprecedented climb to historic high levels of investment and saving rates in the mid-2000s.
The ratio of domestic saving to GDP fell from the peak 38.3% in 2007 to about 29% in 2016.
The current slowdown where both investment and saving have slumped is the first in India’s history. India’s current investment/saving slowdown episode has been lengthy compared to other cases and it still continues. The cumulative fall over 2007 and 2016 has been milder for investment than saving. However, India’s investment slowdown is unusual.
There is a clear shift visible towards market instruments, largely driven by demonetization. Investment slowdowns are more detrimental to growth than savings slowdown. So, given the changing trend in savings side through recent measures, the need now is to focus more on investment revival.
The policy conclusion is urgent prioritization of investment revival to arrest the more lasting growth impacts.
Science & Technology
In 2013, India ranked 6th in the world in scientific publications and its ranking has been increasing as well. The growth of annual publications between 2009 and 2014 was almost 14%. This growth increased India’s share in global publications from 3.1 % in 2009 to 4.4 % in 2014. Broadly, the publication trends reveal that India is gradually improving its performance.
The Nature Index that assesses counts of high-quality research outputs ranked India at 13 in 2017.
According to the WIPO, India has the world’s 7th largest Patent Filing Office. However, India produces fewer patents per capita. One major challenge in India has been the domestic patent system. While India’s patent applications and grants have grown rapidly in foreign jurisdictions, the same is not true at home.
Sustainable Development
India’s urban population is projected to grow to about 600 million by 2031. The survey thus suggests Urban Local Bodies to generate resources through varied financial instruments like municipal bonds, PPPs and credit risk guarantees, to deliver on varied basic services.
Climate Change
India’s commitment to environment and response to the threat of climate change in accordance with the principles of equity and Common but Differentiated Responsibilities. Also, with the “Paris Pledge” to reduce the emission intensity of GDP by 33-35% over 2005 levels by the year 2030.
Renewable energy
Access to sustainable, modern and affordable energy is the basis of achieving Sustainable Development Goals. The increasing share of renewables has tripled in the last 10 years. As on 30th November 2017, the share of renewable energy sources was 18% in the total installed capacity of electricity in the country.
International Solar Alliance (ISA) entered into force in December, 2017.
