Summary of EconomicSurvey 2021
• V-Shaped economic recovery due to mega vaccination drive, robust Recovery in the services sector and robust growth in consumption and investment.
• India to become the fastest growing economy in next two years as Per IMF
India’s GDP is estimated to contract by 7.7 % in FY2020-21.
• Net FPI Inflows recorded an all-time monthly high of 9.8 billion dollars in November 2020.
Scores of lives saved and V-Shaped Economic Recovery bear Testimony to India’s Boldness in taking Short-Term Pain for Long-Term Gain.
• Sustainable Development Core to India’s Development Strategy; Substantive Economic Stimulus and Wide Ranging Economic Reform to Drive the same: Economic Survey 2021
Cumulative Issuance of Global Green Bonds Crosses 1 Trillion US$ Mark in 2020
• National Infrastructure Pipeline for FY 2020-2025 to facilitate world class infrastructure projects to be implemented.
▪️ In FY 20 total investment in roadways had increased to Rs 172767 Crore as compared to Rs 51935 Crore in FY 15.
• Production Linked Incentive Scheme with an overall expenditure estimated at Rs.1.46 lakh crores.
▪️ India’s rank in Ease Of Doing Business In India for 2019 has moved upwards to 63rd position from 77th in 2018.
• FDI inflows into India’s service sector grew by 34 % y-o-y despite global disruptions.
Shipping turnaround time almost halved from 4.67 days in 2010-11 to 2.62 days in 2019-20.
• Economic Survey strongly recommends increase in public health spending from 1% to 2.5-3% of GDP.
“Increased healthcare spending can reduce out-of-pocket expenditure from 65% to 35% of overall healthcare spend”
• Economic Survey 2021 calls for simplification of regulations and process reforms.
Solution is to simplify regulations and invest in greater supervision even if it implies greater discretion.
• Asset quality review exercise must be conducted immediately after forbearance is withdrawn: Suggests Economic Survey 2021.
• India’s Response to Covid19 based on epidemiological and economic research, especially those pertaining to the Spanish FLU : EconomicSurvey
Policy Focused on minimizing losses in a worst case Scenario when uncertainty is very high.
V-Shaped recovery discernible in only 7.5 per cent decline in Q2 and the recovery across all key economic indicators.
Structural reforms introduced to target demand and supply side shocks in the economy.
• India's Sovereign Credit Ratings do not reflect its fundamentals
-a variety of indicators bear testimony to this, notes CEA in Economic Survey.
• Fifth largest economy has typically been rated AAA.
Exceptions - China (A-) and India (BBB+)
Emerging giants are not getting the credit ratings their economic fundamentals demand, observes Economic Survey.
Agriculture Sector
• Indian agriculture contributes to green shoots of the Indian Economy with a Growth Rate of 3.4 % despite COVID19 Pandemic.
Recent agricultural reforms a remedy, not a malady says Economic Survey.
• Combined social sector expenditure by centre and states as % of GDP has increased in 2020-21 compared to previous year.
Slew of measures announced by Govt. to ensure economic and social protection to vulnerable sections during Pandemic.
• India must continue to focus on economic growth to alleviate poverty.
Economic growth and inequality have shown similar relationships with socio-economic indicators in India.
• Years 2019 & 2020 are landmark years in history of labour reforms; 29 central labour laws amalgamated, rationalized and simplified into Four Labour Codes.
Unemployment rates at all India level declined to 5.8 % in 2018-19 from 6.1 Per Cent in 2017-18.
• Online schooling has taken off in a big way during COVID19 pandemic: EconomicvSurvey 2020-21
Percentage of school students owning a smartphone increased from 36.5% in 2018 to 61.8% in 2020 in Rural India.
• During 2020-21, Retail and Wholesale Inflation saw Movements in the Opposite Directions, With the Headline CPI-Combined Increasing, and the WPI Inflation Remaining Benign.
• Key finding of Economic Survey 2021 reveals strong positive impact of Pradhan Mantri Jan Arogya Yojana (PMJAY) on health outcomes.
People relied on PMJAY even during lockdown.
• Rating methodology needs to be made more transparent and objective, to reflect willingness and ability of country to meet sovereign obligations.
Survey calls for fiscal policy to focus on growth, not withstanding credit ratings.
• Economic Survey 2021 calls for a more active, counter-cyclical fiscal policy to boost growth.
Survey indicates sustainable DEBT-to-GDP over the next decade irrespective of growth and interest rate indicators.
• Access to “The Bare Necessities” Such as housing, water, sanitation, electricity and clean cooking fuel are a Sine Qua Non to live a decent life: EconomicSurvey.
• Various Government Initiatives like Swachh Bharat Mission, Jal Jeevan Mission, PradhanMantri Awas Yojana, Saubhagya and Ujjwala Yojana have Improved access to bare necessities thus leading to improvement in health and education Indicators.
• India 🇮🇳 is expected to witness current account surplus after a gap of 17 Years.
▪️ Foreign exchange reserves rose to all –time high of US $586.1 Billion as on January 8, 2021; External debt decreases by US $2.0 Billion.
• During 2020-21, Retail and Wholesale Inflation saw Movements in the Opposite Directions, With the Headline CPI-Combined Increasing, and the WPI Inflation Remaining Benign.
Monthly Gross Revenue GST collections Cross 1 Lakh Crore mark for 3 Months in a row.
▪️ Capital Expenditure for April to December 2020 stands at 3.14 Lakh Crore which is 24% higher than corresponding period of previous year.
• Improved monetary policy transmission; Repo rate cut by 115 BPS.
📒Gross non performing Asset ratio of scheduled commercial Banks Declined; from 8.21% in Mar. 2020 to 7.49% in Sept. 2020.
Rating methodology needs to be made more transparent and objective, to reflect willingness and ability of country to meet sovereign obligations
Survey calls for fiscal policy to focus on growth, not withstanding credit ratings.
• Ayushman Bharat is resulting in various direct and spillover effects, finds Economic Survey.
* Saving Lives And Livelihoods
• Crucial life saving procedures were not impacted due to COVID19, AyushmanBharat has helped ensure this, observes Economic Survey.
• Contracts in real world cannot take care of all contingencies
Once we acknowledge this reality, incomplete regulations become inevitable.
- points out EconomicSurvey.
Excessive regulation leads to excessive and opaque supervision and exercise of discretion, making a call for simple regulation and transparent supervision.
• ✓Simple Regulation
✓Transparent Decision Making Process
✓Transparent Supervision
✓Stronger Accountability Mechanisms
✓Resolution Mechanisms
- Economic Survey calls for key process reforms
• Regulatory restraint should not become a staple diet, remember that it is an emergency medicine.
- cautions Economic Survey, drawing lessons from the 2008 global financial crisis where regulatory forbearance continued for much longer than required.
• We need to avoid a recurrence of the issues that arose due to an extended provision of regulatory forbearance following the 2008 global recession.
• India has been an outlier in its global innovation performance, India must aspire to increase its Gross Expenditure on R&D from around 1.5% to 3% of GDP.
• Private sector needs to contribute more to innovation and R&D
Business sector contribution to gross R&D expenditure in India much less as compared to govt., when compared with scenario in top 10 economies.
• Economic Survey creates an Index of Bare Necessities that a typical household in India gets.
There has been a pan India improvement in access to bare necessities, in 2018 vs situation in 2012 for both rural and urban India.
- Economic Survey finds, based on data on 26 bare necessities.
• Rich can access private options for public goods, poor rarely have such access.
Against this backdrop, along with improvement in overall access to bare necessities, there has been an improvement in equity of access as well.
• India is witnessing a V-shaped economic recovery
History will judge India's COVID19 policy response as mature.
Reason for optimism on health & economic fronts.
Be cautious till vaccination.
So, above are the highlights of the Economic Survey 2020-'21
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