Highlights from the Economic Survey, 2019 & the Union Budget, 2019-20
- India is still the fastest growing major economy in 2018-19.
- Growth of GDP moderated to 6.8 per cent in 2018-19 from 7.2 per cent in 2017-18. Economic Survey predicts 7% growth rate for this fiscal.
- Inflation contained at 3.4 per cent in 2018-19.
- Non-Performing Assets as percentage of Gross Advances reduced to 10.1 per cent at end December 2018 from 11.5 per cent at end March 2018.
- Investment growth recovering since 2017-18: Growth in fixed investment picked up from 8.3 per cent in 2016-17 to 9.3 per cent next year and further to 10.0 per cent in 2018-19.
- Current account deficit manageable at 2.1 percent of GDP.
- Fiscal deficit of Central Government declined from 3.5 percent of GDP in 2017-18 to 3.4 percent in 2018-19.
- Prospects of pickup in growth in 2019-20 on the back of further increase in private investment and acceleration in consumption.
- FY 2018-19 ended with fiscal deficit at 3.4 per cent of GDP and debt to GDP ratio of 44.5 per cent (Provisional).
- As per cent of GDP, total Central Government expenditure fell by 0.3 percentage points in 2018-19 PA over 2017-18: 0.4 percentage point reduction in revenue expenditure and 0.1 percentage point increase in capital expenditure.
- States’ own tax and non-tax revenue displays robust growth in 2017-18 RE and envisaged to be maintained in 2018-19 BE.
- The revised fiscal glide path envisages achieving fiscal deficit of 3 per cent of GDP by FY 2020-21 and Central Government debt to 40 per cent of GDP by 2024-25.
- Insolvency and Bankruptcy Code led to recovery and resolution of significant amount of distressed assets and improved business culture. Till March 31, 2019, the CIRP yielded a resolution of 94 cases involving claims worthINR1, 73,359 crore. As on 28 Feb 2019, 6079 cases involving INR2.84 lakh crores have been withdrawn. As per RBI reports, INR50,000 crore received by banks from previously non-performing accounts. Additional INR50,000 crore “upgraded” from non-standard to standard assets.
- Benchmark policy rate first hiked by 50 bps and later reduced by 75 bps last year.
- Liquidity conditions remained systematically tight since September 2018 thus impacting the yields on government papers.
- Financial flows remained constrained because of decline in the equity finance raised from capital markets and stress in the NBFC sector.Capital mobilized through public equity issuance declined by 81 per cent in 2018-19. Credit growth rate y-o-y of the NBFCs declined from 30 per cent in March 2018 to 9 per cent in March 2019.
- Headline inflation based on CPI-C continuing on its declining trend for fifth straight financial year remained below 4.0 per cent in the last two years.
- Food inflation based on Consumer Food Price Index (CFPI) also continuing on its declining trend for fifth financial year has remained below 2.0 per cent for the last two consecutive years.
- CPI-C based core inflation (CPI excluding the food and fuel group) has now started declining since March 2019 after increment during FY 2018-19 as compared to FY 2017-18.
- Miscellaneous, housing and fuel and light groups are the main contributors of headline inflation based on CPI-C during FY 2018-19 and the importance of services in shaping up headline inflation has increased.
- CPI rural inflation declined during FY 2018-19 over FY 2017-18. However, CPI urban inflation increased marginally during FY 2018-19. Many States witnessed fall in CPI inflation during FY 2018-19.
- As per WTO, World trade growth slowed down to 3 per cent in 2018 from 4.6 per cent in 2017. Reasons: Introduction of new and retaliatory tariff measures; Heightened US-China trade tensions; Weaker global economic growth; Volatility in financial markets.
- In Indian rupee terms growth rate of exports increased owing to depreciation of the rupee while that of imports declined in 2018-19.
- Net capital inflows moderated in April-December of 2018-19 despite robust foreign direct investment (FDI) inflows, outweighed by withdrawals under portfolio investment.
- India’s External Debt was US$ 521.1 billion at end-December 2018, 1.6 per cent lower than its level at end-March 2018.
- The key external debt indicators reflect that India’s external debt is not unsustainable.
- The total liabilities-to-GDP ratio, inclusive of both debt and non-debt components, has declined from 43 per cent in 2015 to about 38 per cent at end of 2018.
- The share of foreign direct investment has risen and that of net portfolio investment fallen in total liabilities, reflecting a transition to more stable sources of funding the current account deficit.
- The Indian Rupee traded in the range of 65-68 per US$ in 2017-18 but depreciated to a range of 70-74 in 2018-19.
- The income terms of trade, a metric that measures the purchasing power to import, has been on a rising trend, possibly because the growth of crude prices has still not exceeded the growth of India’s export prices.
- The exchange rate in 2018-19 has been more volatile than in the previous year, mainly due to volatility in crude prices, but not much due to net portfolio flows.
- Composition of India’s exports and import basket in 2018-19(P):
- Exports (including re-exports): INR23, 07,663 Cr.
- Imports: INR35, 94,373 Cr.
- Top export items continue to be Petroleum products, precious stones, drug formulations, gold and other precious metals.
- Top import items continue to be Crude petroleum, pearl, precious, semi-precious stones and gold.
- India’s main trading partners continue to be the US, China, Hong Kong, the UAE and Saudi Arabia.
- Exports to these countries stood at US$121.7 billion accounting for 36.9 per cent of India’s total exports.
- Imports from these countries stood at US$266.9 billion accounting for 52.0 per cent of India’s total imports.
- Agriculture sector in India typically goes through cyclical movement in terms of its growth.
- GVA in agriculture improved from a negative 0.2 per cent in 2014-15 to 6.3 per cent in 2016-17 but decelerated to 2.9 per cent in 2018-19.
- Overall Index of Eight Core Industries registered a growth rate of 4.3 percent in 2018-19.
- Rail freight and passenger traffic grew by 5.33 per cent and 0.64 per cent respectively in 2018-19 as compared to 2017-18.
- Total telephone connections in India touched 118.34 crore in 2018-19
- The installed capacity of electricity has increased to 3, 56,100 MW in 2019 from 3, 44,002 MW in 2018.
- Public Private Partnerships are quintessential for addressing infrastructure gaps.
- Institutional mechanism is needed to deal with time-bound resolution of disputes in infrastructure sector.
- Services sector (excluding construction) has a share of 54.3 per cent in India’s GVA and contributed more than half of GVA growth in 2018-19.
- The services sector growth declined marginally to 7.5 per cent in 2018-19 from 8.1 per cent in 2017-18.
- Accelerated sub-sectors: Financial services, real estate and professional services.
- Decelerated sub-sectors: Hotels, transport, communication and broadcasting services.
Securities Transaction Tax (STT)
Customs Duty
· Exemptions from Custom Duty on certain electronic items now manufactured in India withdrawn.
o Inputs for artificial kidney and disposable sterilised dialyser and fuels for nuclear power plants etc.
o Capital goods required for manufacture of specified electronic goods.
Zero Budget Farming in few states where farmers are already being trained to be replicated in other states.
Source: http://ecofin-surge.blogspot.com/2019/08/highlights-from-economic-survey-2019.html
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