Economic Survey

Mrunal economic survey 2015-16

Mrunal has posted economic survey 2015-16 videos on YouTube, they are in Hindi, but are easy to understand what he is saying, also he has covered wide range of areas.

Overview of Economic Survey for UPSC-2016

Twin Balance sheet problem, NPA, Insolvency & Bankruptcy Code 2015

“4R” Solution to resolve Twin Balancesheet Problem

BASEL Norms & Bank Recapitalization

Indradhanush Plan to revamp PSB; Bank Board Bureau, Bank Consolidation

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GS Score Economic Survey Summary

Economic Survey 2015–16 reviews the developments in the Indian economy over the previous 12 months, summarizes the performance of major development programmes, and highlights the policy initiatives of the government.

The prelims questions on Indian economy are generally related to the current events thus Economic Survey is very useful as it provides a clear cut picture of the Indian Economy and latest trend associated with it.This will be helpful for Mains also as will help in analysing the different economic perspectives.

GS Score have compiled summary of

  • Volume I of Economic Survey 2015-16 Download the PDF. 2.6mb 46 pages.
  • Volume 2 coming soon .

All credit lies with GS score, we are just sharing the good stuff.

Economic Survey 2016 Highlights and PDF download

Ahead of the Union Budget on Monday, FM Arun Jaitley tabled Economic Survey 2016 report today; Which opens with “Amidst gloomy international economic landscape, India stands as a haven of stability “.

Download the Economic Survey 2016 PDF Volume 1 and Volume 2 (All Chapters)

You can also buy the Economic Survey 2015-2016 (Two-Volume Set) from amazon.

Index of the Survey

Volume 1 

  • Economic Outlook, Prospects, and Policy Challenges
  • The Chakravyuha Challenge of the Indian Economy
  • Spreading Jam across India’s Economy
  • Agriculture: More from Less
  • Mother and Child
  • Bounties for the Well-Off
  • Fiscal Capacity for the 21st Century
  • Preferential Trade Agreements
  • The Fertiliser Sector
  • Structural Changes in India’s Labour Markets
  • Powering “One India”

Volume 2 

  • State of the Economy: an overview
  • Public Finance
  • Monetary Management and Financial Intermediation
  • External Sector
  • Prices, Agriculture and Food Management
  • Industrial, Corporate, and Infrastructure Performance
  • Services Sector
  • Climate Change and Sustainable Development
  • Social Infrastructure, Employment and Human Development

Economic Survey 2015-16 Expects

  • GDP growth rate for 2015-16 in the range of 7 % to 7.75 %
  • Increase in wages under 7th pay commission are unlikely to destabilize prices & will have little impact on inflation
  • Recognition, Recapitalization, Resolution, & Reform needed to resolve Twin Balance Sheet challenge of PSBs & corporate firms
  • Govt will meet its fiscal deficit target of 3.9 per cent of GDP, continuing the commitment to fiscal consolidation
  • According to IMF Fiscal deficit is expected to decline from 4.2 % of GDP in 2014-15 to 4.0 % of GDP in 2015-16
  • Current Account Deficit has declined and foreign exchange reserves have risen to US$ 351.5 billion in early Feb,16

Useful Info Graphic on Economic Survey 2016-17

Overview

PIB Articles on Economic survey

Economic Survey Summary: Shanta Kumar Committee Report

This is summary of Shanta Kumar Committee Report on FCI , The high Level Committee (HCL) on restructuring of Food Corporation of India (FCI),major issue before the Committee was how to make the entire food grain management system more efficient by reorienting the role of FCI in MSP operations, procurement, storage and distribution of grains under Targeted Public Distribution System (TPDS).

This post contains summary from Economic Survery Vol 2 . I also recommend heavily that you read this post Summary: Shanta Kumar Report FCI reform & Food security by Mrunal Bhai.

procurement related issues:

  •  The FCI should hand over all procurement operations of wheat, paddy, and rice to states that have gained sufficient experience in this regard and have created reasonable infrastructure for procurement. The FCI will accept only the surplus (after deducting the needs of the states under the NFSA) from these state governments (not millers) to be moved to deficit states. The FCI should move on helping those states where farmers suffer from distress sales at prices much below MSP, and which are dominated by small holdings.
  •  Centre should make it clear to states that in case of any bonus being given by them on top of MSP, it will not accept grains under the central pool beyond the quantity needed by the state for its own PDS and OWS.
  •  The statutory levies including commissions need to be brought down uniformly to 3 per cent, or at most 4 per cent of MSP, and this should be included in the MSP itself (states losing revenue due to this rationalization of levies can be compensated through a diversification package for the next three-five years);
  •  The Government of India must provide better price support operations for pulses and oilseeds and dovetail their MSP policy with trade policy so that their landed costs are not below their MSP.
  •  Cash transfers in PDS should be gradually introduced, starting with large cities with more than 1 million population; extending it to grain surplus states; and then giving deficit states for the option of cash or physical grain distribution.

 On PDS- and NFSA-related issues:

  • Given that leakages in the PDS range from 40 to 50 per cent, the GoI should defer implementation of the NFSA in states that have not done end to end computerization; have not put the list of beneficiaries online for anyone to verify; and have not set up vigilance committees to check pilferage from PDS.
  •  Coverage of population should be brought down to around 40 percent.
  •  BPL families and some even above that they be given 7kg/person.
  •  On central issue prices, while Antyodya households can be given grains at ` 3/2/1/kg for the time being, but pricing for priority households must be linked to MSP.

On stocking and movement related issues:

  • FCI should outsource its stocking operations to various agencies.
  •  Covered and plinth (CAP) storage should be gradually phased out with no grain stocks remaining in CAP for more than 3 months.
  •  Silo bag technology and conventional storages wherever possible should replace CAP.

On Buffer Stocking Operations and Liquidation Policy:

  • DFPD/FCI have to work in tandem to liquidate stocks in OMSS or in export markets, whenever stocks go beyond the buffer stock norms. A transparent liquidation policy is the need of hour, which should automatically kick-in when FCI is faced with surplus stocks than buffer norms.
  •  Greater flexibility to FCI with business orientation to operate in OMSS and export markets is needed.

On direct subsidy to farmers:

  • Farmers be given direct cash subsidy (of about Rs 7000/ha) and fertilizer sector can then be deregulated.

On end to end computerization:

The HLC recommends total end-to-end computerization of the entire food management system, starting from procurement from farmers, to stocking, movement, and finally distribution through the TPDS.

On the new face of the FCI:

The new face of the FCI will be akin to an agency for innovations in the food management system with the primary focus of creating competition in every segment of the foodgrain supply chain, from procurement to stocking to movement and finally distribution under the TPDS, so that overall costs of the system are substantially reduced and leakages plugged and it serves a larger number of farmers and consumers.

Suggested Reading :

Economic Survey 2015 32 key highlights and PDF download.

Ahead of the Union Budget on Saturday, FM Arun Jaitley tables Economic Survey 2015 report; economic growth in India seen at 8.5 pct in 2015-16 – indicating scope for big bang reforms.

As per the Economic Survey 2015 tabled in Parliament today, India must adhere to medium-term fiscal deficit target of 3 percent of the country’s gross domestic product (GDP).The government should ensure expenditure control to reduce fiscal deficit, the report suggests. (Read Full Report: Economic Survey)

What is the Economic Survey of India?

The Finance Ministry of India presents the Economic Survey in the parliament every year, just before the Union Budget. 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.

This document is presented to both houses of Parliament during the Budget Session. It contains certain prescriptions that may find a place in the Union Budget which is presented a day or two later. It is authored by the Chief Economic Advisor in the Finance Ministry. There is no statutory obligation to present the document.

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Download Links and content.

  1. Economic Survey – Volume-I(All Chapters)
  2. Economic Survey – Volume-II(All Chapters)
  • Economic Outlook, Prospects, and Policy Challenges
  • Fiscal Framework
  • ‘Wiping Every Tear From Every Eye’ : The JAM Number Trinity Solution
  • The Investment Climate: Stalled Projects, Debt Overhang and The Equity Puzzle
  • Credit, Structure and Double Financial Repression: A Diagnosis of the Banking Sector
  • Putting Public Investment on Track: The Rail Route to Higher Growth
  • What to Make in India? Manufacturing or Services?
  • A National Market for Agricultural Commodities – Some Issues and Way Forward
  • From Carbon Subsidy to Carbon Tax: India’s Green Actions
  • The Fourteenth Finance Commission (FFC) – Implications for Fiscal Federalism in India?
  • State of the economy and Public Finance
  • Monetary management and financial intermediation
  • External sector and Service sector
  • Prices, agriculture and food management
  • Industrial, corporate and infrastructure performance
  • Climate change and sustainabke development
  • Social infrastructure, employment and human development

What is JAM Trinity, according to the Economic Survey 2015 and why is it emphasized?

A. Government subsidises many commodities like rice, wheat, pulses, sugar, kerosene, LPG, naphtha, water, electricity, fertilizer etc The estimated direct fiscal cost of subsidies is about Rs 3.78 lakh crore or about 4.24 per cent of GDP.Prime Minister Narendra Modi recently stated that leakages in subsidies must be eliminated without reducing the subsidies themselves. Price subsidies are often regressive, meaning “a rich household benefits more from the subsidy than a poor household”. It gives the example of good, electricity and kerosene, to name a few, and explains how price subsidies distort and lead to leakages( leakages means that the intended beneficiaries do not receive the benefit).

Economic Survey says ‘JAM Trinity’ of Jan Dhan Yojana, Aadhaar and Mobile numbers should be linked effectively for better transfer of subsidies to the intended beneficiaries. JAM has potential to “wipe every tear from every eye” with direct transfer of benefits.

It says the JAM allows the state to offer this support to poor households in a targeted and less distorting way. There are many other benefits as we discussed in the class like fiscal savings etc.

The survey also made a case that Post Offices can fit into the Aadhaar linked benefits-transfer architecture.

India has the largest postal network in the world with over 1,55,015 Post Offices of which (89.76 percent) are in the rural areas.

“Similar to the mobile money framework, the Post Office (either as payment transmitter or a regular Bank) can seamlessly fit into the Aadhaar linked benefits-transfer architecture by applying for an IFSC code which will allow post offices to start seeding Aadhaar linked accounts,” it said.

Economic Survey: Outlook and challenges:

A) Macroeconomic fundamentals have dramatically improved in 2014-15

1. Inflation has declined by over 6 percentage points since late 2013

2. Current Account Deficit down from a peak of 6.7% of GDP (in Q3, 2012-13) to an estimated 1% in 2014-15

3. Foreign portfolio flows have stabilized the rupee

4. After a nearly 12-quarter phase of deceleration, real GDP has been growing at 7.2% since 2013-14, based on the new growth estimates of the

B. Central Statistics Office

5. Notwithstanding the new estimates, the balance of evidence suggests that India is a recovering, but not yet a surging economy

6. Going forward inflation is likely to remain in the 5-5.5% range, creating space for easing of monetary conditions.

7. Using the new estimate for 2014-15 as the base, GDP growth at constant market prices is expected to accelerate to between 8.1 and 8.5% in 2015-16.

8. Private investment must be the engine of long-run growth.

9. There is a case for reviving targeted public investment as an engine of growth in the short run to complement and crowd-in private investment

10. India faces an export challenge, reflected in the fact that the share of manufacturing and services exports in GDP has stagnated in the last five years.

C. Fiscal Framework:

11. India must adhere to the medium-term fiscal deficit target of 3 percent of GDP

12. India must move toward the golden rule of eliminating revenue deficits

13. Expenditure control with growth recovery and GST will ensure that medium-term targets are met

14. The quality of expenditure needs to be shifted from consumption to investment.

D. Subsidies and the JAM Solution:

15. The direct fiscal cost of all the subsidies is roughly Rs. 378,000 crore or 4.2 percent of 2011-12 GDP.

16. 41% of PDS kerosene is lost as leakage and only 46% of the remaining 59% is consumed by poor

17. The JAM Number Trinity – Jan DhanYojana, Aadhaar, Mobile – can eliminate leakages and distortion

D. The Investment Challenge

18. The stock of stalled projects stands at about 7% of GDP, accounted for mostly by the private sector.

19. Manufacturing and infrastructure account for most of the stalled projects.

20. This has weakened the balance sheets of the corporate sector and public sector banks,

21. Despite this, the stock market valuations of companies with stalled projects are quite robust, which is a puzzle

22. Expectation that the private sector will drive investment needs to be moderated

23. Public investment may need to step in to ramp up capital formation.

E. The Banking Challenge

24. Indian banking balance sheet is suffering from ‘double financial repression’

25. Going forward, capital markets and bond-financing need to be given a boost.

26. Private sector banks did not partake in the biggest private-sector-fuelled growth episode in Indian history during 2005-2012

F. The Rail Route to Higher Growth.

27. Econometric evidence suggests that the railways public investment multiplier — the effect of a Rs 1 increase in public investment in the railways on overall output — is around 5.

28. However, in the long run, the railways must be commercially viable and public support must be linked to railway reforms.

G. A National Market for Agricultural Commodities

29. India has not one, not 29, but thousands of agricultural markets

30. APMCs levy multiple fees of substantial magnitude that are non-transparent

31. The Model APMC Act, 2003 could benefit from drawing upon the ‘Karnataka Model’

32. The key here is to remove the barriers that militate against the creation of choice for farmers and against the creation of marketing infrastructure by the private sector

I thank Sri Ram IAS  and Financial Express for the data.

Mrunal Economic Survey 2014 Lectures

Mrunal has done it again and this time he has uploaded economic survey videos and he promised to update the articles too.The lectures are in Hindi but they are very much understandable,Please read the economic survey and for analysis watch his videos.

The following are the Mrunal Economic Survey 2014 Lectures . Will keep updated.

 Part 1: Overview of Economic survey

Part 2: Budget Taxation part

Part 3: Budget Subsidies, Deficits

Highlights of Economic Survey 2013-14 and PDF’s.

The  Economic Survey 2013-14  has been tabled and following are the highlights of the document and if time permits a detailed analysis will be updated soon,chapter wise.

You can download the survey free from here Economic Survey 2013-14 .

Chapter 1: State of the Economy and Prospects

  •  Economy to grow in the range of 5.4 – 5.9 per cent in 2014-15 overcoming sub-5 percent growth.
  •  Growth slowdown was broad based, affecting in particular the industry sector.
  •  Aided by favourable monsoons, agricultural and allied sector registered a growth of 4.7 per cent in 2013-14.
  •  Industry and Service sectors also witnessed slowdown.

Chapter 2: Issues and Priorities

  • Reforms needed for long term-growth prospects on 3 fronts- low and stable inflation regime, tax and expenditure reform and regulatory framework.
  • Survey suggests removal of restriction on farmers to buy, sell and store their produce to customers across the country and the world.
  • Rationalisation of subsidies on inputs such as fertilizer and food is essential.
  • Government needs to eventually move towards income support for farmers and poor households.

Chapter 3: Public Finance

  • The fiscal policy for 2013-14 was calibrated with two-fold objectives; first, to aid growth revival; and second, to reach the FD level targeted for 2013-14.
  • The Budget for 2013-14 followed the policy of revenue augmentation and expenditure rationalization to contain government spending within sustainable limits.
  • The fiscal outcome of the central government in 2013-14 was achieved despite the macroeconomic challenges of growth slowdown, elevated levels of global crude oil prices, and slow growth of investment.

Chapter 4: Prices and Monetary Management

  • High inflation, particularly food inflation, was the result of structural as well as seasonal factors.
  • IMF projects most global commodity prices are expected to remain flat during 2014-15.
  • The RBI with a view to restoring stability to the foreign exchange market, hiked short term interest rate in July and compressed domestic money market liquidity.

CHAPTER 5: FINANCIAL INTERMEDIATION

  • RBI has indentified five sectors — infrastructure, iron and steel, textiles, aviation and mining as the stressed sectors.
  •  Public sector banks (PSBs) have high exposures to the ‘industry’ sector in general and to such ‘stressed’ sectors in particular.
  •  The New Pension System (NPS), now National Pension System, introduced for the new recruits who join government service on or after January 2004, represents a major reform of Indian pension arrangements.
  •  The next wave of infrastructure financing will require a capable bond market.

Chapter 6: Balance of Payments

  • The India’s balance-of-payments position improved dramatically in 2013-14 with current account deficit at US $ 32.4 billion as against US$ 88.2 billion in 2012-13.
  • India’s foreign exchange reserves increased from US$ 292.0 billion at end March 2013 to US$ 304.2 billion at end march 2014.
  • India’s external debt has remained within manageable limits due to the external debt management policy with prudential restrictions on debt varieties of capital inflows.

Chapter 7: International Trade

  •  World trade volume which decelerated to 2.8 per cent in 2012 has shown signs of recovery in 2013, albeit slow with a 3.0 per cent growth.
  •  The sharp fall in imports and moderate export growth in 2013-14 resulted in a sharp fall in India`s trade deficit by 27.8 per cent.
  •  In April-May 2014, trade deficit declined by 42.4 per cent.

Chapter 8: Agriculture and Food Management

  • Record food grains and oilseeds production of 264.4 million tonnes (mt) and 32.4 mt is estimated in 2013-14.
  • Horticulture production estimated at 265 mt in 2012-13 has exceeded the production of foodgrains and oilseeds for the first time.
  • Due to higher procurement, stocks of foodgrains in the Central Pool have increased to 69.84 million tonnes as on June 1, 2014.
  • The net availability of foodgrains increased to 229.1 million tonnes and that of edible oils to 12.7 kg per year in 2013.

Chapter 9: Industrial Performance

  •  The latest gross domestic product (GDP) estimates show that industry grew by just 1.0 per cent in 2012-13 and slowed further in 2013-14, posting a modest increase of 0.4 per cent.

Chapter 10: Services Sector

  •  India ranked 12th in terms of services GDP in 2012 among the world’s top 15 countries in terms of GDP (at current prices).
  •  India has the second fastest growing services sector with its CAGR at 9.0 per cent, just below China’s 10.9 per cent, during 2001 to 2012.
  •  In 2013-14, FDI inflows to the services sector (top five sectors including construction) declined sharply by 37.6 per cent to US$ 6.4 billion compared to an overall growth in FDI inflows at 6.1 per cent resulting in the share of the top five services in total FDI falling to nearly one-sixth.

Chapter 11: Energy, Infrastructure and Communications

  •  Major sector-wise performance of core industries and infrastructure services during 2013-14 shows a mixed trend. While the growth in production of power and fertilizers was comparatively higher than in 2012-13, coal, steel, cement, and refinery production posted comparatively lower growth. Crude oil and natural gas production declined during 2013-14.
  • The performance of the coal sector in the first two years of the Twelfth Plan has been subdued with domestic production at 556 MT in 2012-13 and 566 MT in 2013-14.
  • A total length of 21,787 km of national highways has been completed till March 2014 under various phases of the NHDP. In spite of several constraints due to the economic downturn, the NHAI constructed 2844 km length in 2012-13, its highest ever annual achievement. During 2013-14 a total of 1901 km of road construction was completed.
  • From the infrastructure development perspective, while important issues like delays in regulatory approvals, problems in land acquisition & rehabilitation, environmental clearances, etc. need immediate attention, time overruns in the implementation of projects continue to be one of the main reasons for underachievement in many of the infrastructure sectors.

Chapter 12: Sustainable Development & Climate Change

  •  Human- induced Greenhouse gas (GHG) emissions are growing and are chiefly responsible for climate change.
  • The world is not on track for limiting increase in global average temperature to below 2◦C, above pre-industrial levels. GHG emissions grew on average 2.2 per cent per year between 2000 and 2010, compared to 1.3 per cent per year between 1970 and 2000.
  • There is immense pressure on governments to act through two new agreements on climate change and sustainable development, both of which will be global frameworks for action to be finalized next year.
  • The cumulative costs of India’s low carbon strategies have been estimated at around USD 834 billion at 2011 prices, between 2010 and 2030.

Chapter 13: Human Development

India’s Human Development Rank and performance

  • According to HDR 2013, India has slipped down in HDI with its overall global ranking at 136 (out of the 186 countries) as against 134 (out of 187 countries) as per HDR 2012. It is still in the medium human development category.
  • The poverty ratio (based on the MPCE of ` 816 for rural areas and `1000 for urban areas in 2011-12 at all India level), has declined from 37.2 per cent in 2004-05 to 21.9 per cent in 2011-12.
  • In absolute terms, the number of poor declined from 407.1 million in 2004-05 to 269.3 million in 2011-12 with an average annual decline of 2.2 percentage points during 2004-05 to 2011-12.
  • During 2004-05 to 2011-12, employment growth [CAGR] was only 0.5 per cent, compared to 2.8 per cent during 1999-2000 to 2004-05 as per usual status.