Per Capital Income in the Country



Per Capital Income in the Country

As per the estimates of the Central Statistics Office (CSO), the per capita net national income of the country at current prices for the year 2015-16 is estimated to attain the level of Rs. 93231/-. The per capita net national income at constant (2011-12) prices for the year 2015-16 is estimated to attain the level of Rs. 77, 431/-.


As per the CSO’s estimates, the per capital net national income at current prices increased from Rs. 71050/- in 2012-13 to Rs. 79412/- in 2013-14 and further to Rs. 86,879/- in 2014-15. The per capita net national income at constant (2011-12) prices increased from Rs. 65,664/- in 2012-13 to Rs. 68867/- in 2013-14 and further to Rs. 72889 in 2014-15.

This was stated by Shri Jayant Sinha, Minister of State in the Ministry of Finance in written reply to a question in Lok Sabha today.

*****

Policy for Adequate Autonomy to Companies

In its endeavour to ease the process for FDI applications, Government launched a new secured FIPB website namely http://fipb.gov.in in 2015. Website offers increased portfolio services to applicants in an efficient manner and also allows more transparent way of business to keep applicant informed on the current status of their applications.

The efforts of the Government have yielded results and FDI during 2014-15 is US $44,877 million as compared to US $36,046 million in 2013-14. To further boost the investment environment and to bring in foreign investments in the country, the Government has brought in FDI related reforms and liberalization. The salient measures are:

No approval required for eligible investment in Limited Liability Partnerships.

Special treatment applicable for investment by non-resident Indians on non-repatriation basis through companies, partnerships, trusts etc.

No approval required for foreign investment by way of share swap; new sectors opened up for foreign investment, including plantations, duty free shops and ownership in real estate for purposes of leasing.

Foreign shareholding limits increased in many sector including broadcasting and airline services.

Investment in certain sectors including defence, broadcasting and airline services, now under automatic route.

Full fungibility for portfolio investment in private banking sector.

Conditions attached to FDI relaxed in certain sectors, including removal of restriction on e-commerce by manufacturers and removal of minimum land and capitalization requirement for construction development sector.

Present FDI Policy and other Press Notes are available at DIPP website namely http://dipp.nic.in.

This was stated by Shri Jayant Sinha, Minister of State in the Ministry of Finance in written reply to a question in Lok Sabha today.

*****

MUDRA Scheme

            Loans are extended under the Pradhan Mantri Mudra Yojana (PMMY), Scheme by banks and Micro Finance Institutions (MFIs) in three categories:

            Shishu (loans upto Rs. 50,000);
Kishore (loans from Rs. 50002 to Rs. 5 lakh);
Tarun (loans from Rs.5 lakh to Rs. 10 lakh)

Till 12th February, 2016, the loans extended are as follows:

Category
No. of borrowers
Shishu
2,50,54,052
Kishore
16,53,010
Tarun
2,93,566
Total
2,70,00628

The PMMY is a demand driven scheme, and all loans proposals are considered on commercial merits. Out of the total disbursement of Rs. 99, 467 crore as on 12th February, 2016, Rs. 21,119 crore is under Tarun Sector. This constitutes 21.23% of the total portfolio.

This was stated by Shri Jayant Sinha, Minister of State in the Ministry of Finance in written reply to a question in Lok Sabha today.

*****

Allocation of Funds to Panchayats

The local bodies grants are released to Gram Panchayats through their respective State Governments as per the recommendations and allocations made by respective Finance Commissions. Presently, the recommendations of the Fourteenth Finance Commission (FFC) are being implemented. FFC, during its award period of 2015-2020, has inter-alia, recommended distribution of grants to the States using 2011 population data with weightage of 90 per cent and area with weightage of 10 per cent. FFC has worked out the total size of the grant amounting to Rs. 2,87,436 crore for the period from 1.4.2015 to 31.3.2020, constituting an assistance of Rs. 488 per capita per annum at an aggregated level. Of this, the grant recommended for panchayats (rural local bodies) is Rs. 2,00,292.2 crore. The earmarked basic grants for gram panchayats is envisaged to be distributed, using the formula prescribed by the most recently approved State Finance Commission (SFC) for the distribution of resources. However, in case the SFC formula is not available, then the share of each gram panchayat as specified above is envisaged to be distributed across the entities using 2011 population with a weight of 90 per cent and area with a weight of 10 per cent.

This was stated by Shri Jayant Sinha, Minister of State in the Ministry of Finance in written reply to a question in Lok Sabha today.

*****
Scheme for Promoting Entrepreneurship among Tribal Women

The Cabinet has approved the “Stand Up India Scheme” to promote entrepreneurship among Scheduled Caste/Schedule Tribe and Women.

The Scheme provides for composite loans by banks between Rs. 10 lakh and upto Rs. 100 lakh, inclusive of working capital component for setting up a new enterprise. These loans would be eligible for refinance and credit guarantee cover.

This was stated by Shri Jayant Sinha, Minister of State in the Ministry of Finance in written reply to a question in Lok Sabha today.

*****

Reforms in Tax Rates


            The details of the tax rates of the major countries of Asia have been taken from the KPMG Report on Global Rates, 2015 and are mentioned below:

Country
Corporate
Individual Income
Afghanistan
20
-----
Bangladesh
27.5
30
China
25
45
India
34.61
33.91
Japan
33.06
50.84
Kazakhstan
20
10
Malaysia
25
25
Pakistan
33
---
Singapore
17
20
Srilanka
28
24

 In view of above, the Indian tax rates for direct taxes are higher than the average tax rate among Asian countries.

            As far as Indirect Taxes are concerned, tax to GDP ratio during Financial Year 2014-15 was 4.4%.

            Tax rates are higher because of exemptions and deductions provided for in the Income Tax Act, 1961. Taking into account the revenue foregone on account of these exemptions and deductions, the effective rate of corporate tax works out to be around 23%.

            Proposal to bring reforms in tax rates to reduce the burden of tax payers is under consideration of the Government. In the Budget Speech 2015, it was stated that the Corporate Tax rate would be reduced from 30% to 25% over the next four years along with phasing out of exemptions and deductions.

This was stated by Shri Jayant Sinha, Minister of State in the Ministry of Finance in written reply to a question in Lok Sabha today.

*****

In order to provide Food Security, in the current Agriculture Scenario, India has to Focus on Supplies which are timely and Uninterrupted and Affordable for the Poor

57 % of Households had Calorie intake below 2160 KCal/Consumer unit/day

Average Protein intake Per Capita per day Rises Steadily

India Has the Second Highest Number of Undernourished People which Warrants Immediate Attention


                        The Economic Survey 2015-16 presented here today in the Parliament by the Union Finance Minister Shri Arun Jaitley emphasizes that the main aim of food management policy is to provide food security to the population.  Providing food security entails making food available at affordable prices at all times, without interruptions. In order to provide food security, in the current agriculture scenario, India has to focus on supplies which are timely and uninterrupted and affordable for the poor.  Though India’s GDP growth has been impressive and the agricultural production has also increased over the past few decades, hunger and starvation still persist among the poorer section of the population. There has been moderation of inflation including food inflation during the last two years, but more needs to be achieved by freeing up markets, augmenting supply of food and leveraging the use of IT.

According to the data of the 66th round of the National Sample Survey (2009-10), the average dietary energy intake per person per day was 2147 Kcal for rural India and 2123 Kcal for urban India.  As per the Report of Nutritional Intake in India, 2011-12 (NSSO, 68th round), among the bottom 5 per cent of rural population ranked by Monthly Per Capita Expenditure (MPCE), 57 per cent of households had calorie intake below 2160 Kcal/consumer unit/day. The average protein intake per capita per day rises steadily with MPCE level  in  rural India from 43 gm for the bottom  5 per cent of population ranked by MPCE to 91 gm for the top 5 per cent, and in urban India from 44 gm for the bottom 5 per cent to about 87 gm for the top 5 per cent.

                        Economic Survey 2015-16 states that India has the second highest number of undernourished people at 194.6 million person (FAO, State of Food Insecurity in the World, 2015) which warrants immediate attention. Moreover, with 27 per cent of the population below the poverty line, the rise in prices of food impacts the poor adversely, with a greater proportion of their household incomes being spent on food. Therefore, along with provision of food subsidy, stability in agricultural commodity prices is essential for making poorer sections food secure.

There is a strong correlation between stability in agricultural production and food security. Volatility in agricultural production impacts food supplies and can result in spikes in food prices, which adversely affect the lowest income of the population.

With a large number of people who remain undernourished and the issues of volatility in agricultural prices, Economic Survey 2015-16 states that India has one of the largest scheme of food schemes in the World to ensure food security. There is entitlement feeding programs like the Integrated Child Development Scheme (ICDS) (All Children under six, pregnant and lactating mothers) and MDMS (Mid  Day Meal Schemes), food subsidy programmes like the Targeted  Public Distribution  System, Annapurna ( 10 Kgs of free food grain for destitute poor) and the   Employment  Programmes like  Mahatama Gandhi National Rural Employment  Guarantee Scheme (100 days of employment at minimum wages) to ensure food security.

*************

Expects GDP Growth Rate for 2016-17 in the range of 7 % to 7.75 % ;

Increase in Wages and Benefits Recommended by the 7th Pay Commission are not likely to Destabilize Prices and will have little impact on Inflation;

4 R : Recognition, Recapitalization, Resolution, and reform required to Comprehensively resolve the twin balance sheet challenge of Public Sector Banks (PSBs) and some Corporate Houses.

The Economic Survey 2015-16 tabled in Parliament today by the Union Finance Minister Shri Arun Jaitley presents an optimistic picture of Indian economy stating that amidst the gloomy landscape of unusual volatility in the international economic environment, India stands as a haven of stability and an outpost of opportunity. It says the country’s macro-economy is stable, founded on the government’s commitment to fiscal consolidation and low inflation. The Survey underlines that India’s economic growth is amongst the highest in the world, helped by a reorientation of government spending toward needed public infrastructure. Describing these achievements as remarkable, the Survey emphasizes that the task is now to sustain them in an even more difficult global environment.

The Survey further states that the country’s performance reflects the implementation of number of meaningful reforms. There is palpable and pervasive sense that corruption at the centre has been meaningfully addressed which has been reflected in transparent auctions of public assets. FDI has been liberalized across the board and vigorous efforts have been undertaken to ease the cost of doing business. Stability and predictability has been restored in tax decisions reflected in the settlement of the Minimum Alternate Tax (MAT) imposed on foreign companies. Major public investment has been undertaken to strengthen the country’s infrastructure. In the farm sector, a major crop insurance programme has been instituted. The Survey has highlighted creation of bank accounts for over 200 million people under Pradhan Mantri Jan Dhan Yojan (PMJDY), the world’s largest direct benefit transfer programme in case of LPG with about 151 million beneficiaries receiving Rs. 29,000 crore in their bank accounts and the infrastructure being created for extending the JAM (Jan Dhan Aadhar Mobile) agenda to other Government programmes and subsidies.



However, the Survey has expressed concern over approval of GST Bill being elusive so far, the disinvestment programme falling short of targets and the next stage of subsidy rationalization being a work-in-progress. It adds that corporate and bank balance sheets remain stressed affecting the prospects for reviving private investments. It further says that perhaps the underlying anxiety is that the Indian economy is not realizing its full potential.

The Survey states that the country’s long run potential growth rate is still around 8-10% and realizing this potential requires a push on at least three fronts. First, India has moved away from being reflexivity anti-markets and uncritically pro-state to being pro-entrepreneurship and skeptical about the state. But being pro-industry must evolve into being genuinely pro-competition. Similarly, skepticism about the state must translate into making it leaner. It emphasizes that the key to creating a more captive environment will be to address the exit problem which affects the Indian economy. Second, the Survey calls for major investments in health and education of people to exploit India’s demographic dividend to optimal extent. Third, it says that India cannot afford to neglect its agriculture.

The Survey points-out that the upcoming budget and economic policy will have to contend with an unusually challenging and weak external environment.  It suggests that one tail risk scenario that India must plan for is a major currency re-adjustment in Asia in the wake of a similar adjustment in China. Another tail risk scenario could unfold as a consequence of policy actions, to say, capital controls taken to respond to curb outflows from large emerging market countries, which would further moderate the growth. The Survey says that in either case, foreign demand is likely to be weak which requires to find and activate domestic sources of demand to prevent the growth momentum from weakening.

The Survey highlights that India stands out internationally as an investment proposition and the Rational Investor Ratings Index (RIRI) shows that India compares favourably with peer countries in the BBB investment grade and almost matches the performance of A-grade countries.


While reviewing the major developments, the Survey states that according to CSO the growth rate of GDP at constant market prices is projected to increase to 7.6% in 2015-16 from 7.2% in 2014-15. Although agriculture is likely to register low growth for the second year in a row on account of weak monsoons, it has performed better than last year. Industry has shown significant improvement on account of acceleration in manufacturing while services continue to expand rapidly. The Survey points out that even as real growth has been accelerating, nominal growth has been falling.




Among other indicators, the Survey states that low inflation has taken hold and confidence in price stability has improved. The Current Account Deficit has declined and foreign exchange reserves have risen to US$ 351.5 billion in early February, 2016. The fiscal sector registered these striking successes; ongoing fiscal consolidation, improved indirect tax collection efficiency and an improvement in the quality of spending at all levels of government. The Government Tax Revenues are expected to be higher than budgeted levels. Direct taxes grew by 10.7% in the first 9 months of 2015-16 while indirect taxes were also buoyant.



The Survey states that the aggregate capital expenditure by the government increased by 0.6% in 2015-16. This occurred both in the centre and states, with the former contributing 54% and the latter 46%.

In the economic outlook, real GDP growth for 2016-17 is expected to be in the 7% to 7.75% range. However, it cautions that if the world economy remains weak, India’s growth will face considerable headwinds. On the domestic side, two factors can boost consumption, increased spending from higher wages and allowances of government workers if the seventh pay commission is implemented and return of normal monsoon. At the same time, the Survey enumerates three down side risks – turmoil in global economy could worsen the outlook of exports, contrary to expectations oil prices rise would increase the drag from consumption and the most serious risk is combination of the above two factors.

The Survey cautions that one of the most critical short term challenges confronting the Indian economy is the twin balance sheet problem – the impaired financial positions of the Public Sector Banks (PSBs) and some corporate houses. The twin balance sheet challenge is the major impediment to private investment and a full-fledged economic recovery. Comprehensively resolving this challenge would require 4 Rs : Recognition, Recapitalization, Resolution, and Reform. Banks must value their assets as far as possible close to true value (recognition) as the RBI has been emphasizing; once they do so, their capital position must be safeguarded via infusions of equity (re-capitalisation)as the banks have been demanding; the underlying stressed assets in the corporate sector must be sold or rehabilitated (resolution) as the government has been desiring; and future incentives for the Private Sector and corporates must be set-right (reform) to avoid a repetition of the problem, as everyone has been clamouring.

According to the Survey, the time is right for a review of medium term fiscal frame work. It adds that there are new developments in, and approaches to, medium term fiscal frameworks around the world from which India can usefully learn.

About inflation, the Survey says that increase in wages and benefits recommended by the 7th pay Commission are not likely to destabilize prices and will have little impact on inflation.

On the external outlook, the Survey says that overall exports declined by about 18% in the first three quarters. It points-out that in the last two years Indian services exports have been more affected than Indian manufacturing exports and also world service exports. Realizing India’s medium term growth potential of 8-10 percent will require rapid growth of export. To achieve trajectory similar to China, India’s competitiveness will have to improve so that its services exports, currently about 3 percent of world exports, capture nearly 15% of world market share.

On the issue of trade policy, the Survey says that introspection is overdue on five issues which are – providing support to farmers in light of WHO rules, mitigating the impact of erratic trade policy on farmers incentives, reconciling the “big but poor” dilemma that confronts India in trade negotiations, dealing with outgoing stresses brought on by the external environment, and engaging more broadly with the world on trade. The Survey underlines that India’s position in agriculture has changed, it has become more competitive and relies relatively more on domestic support. It suggests India’s WTO obligations could predominantly be based on this domestic shift away from border protection to domestic support. It further suggests that India could consider offering reduction in its very high tariff bindings and instead seek more freedom to provide higher levels of domestic support.

Stating that the trade policy is under stress also for reasons related to the ongoing turmoil in the international environment and the global demand is weak, the Survey suggests that India should resist calls to seek recourse in the protectionist measures, especially in relation to items that could undermine the competitiveness of downstream firms and industries. It also suggests that India should strengthen procedures that allow WTO-consistent and hence legitimate actions against dumping (anti-dumping), subsidization (countervailing duties), and surges in imports (safeguard measures) to be taken expeditiously and effectively.

********

India Ranks First in Milk Production, Accounting for 18.5 Per Cent of World Production

India Recording A Growth of 6.26 % whereas World Milk Production Increases by  3.1 %

Per Capita Availability of Milk in India has Increased from 176 grams per day in 1990-91 to 322 grams per day by 2014-15

Egg and Fish Production has also Registered an Increasing trend over the Years

Production of Fish During the Last Quarters of 2015-16 has also shown an Increasing Trend and is Estimated at 4.79 MT


 The Economic Survey 2015-16 presented today in the Parliament by the Union Finance Minister Shri Arun Jaitley emphasizes that the  Indian agricultural system is predominantly a mixed crop-livestock farming system, with the livestock segment supplementing farm incomes by providing employment, draught animals and manure. India ranks first  in  milk production, accounting for 18.5 per cent of world production, achieving an annual  output of 146.3  million  tones during 2014-15 as compared to 137.69 million tonnes during 2013-14 recording a    growth of 6.26 per cent. Whereas, the Food and Agriculture Organization (FAO) has reported a 3.1 per cent increase in world milk production  from 765 million tones in 2013 to 789 million tones in 2014.

            The per capita availability of milk in India has  increased  from 176 grams per day in 1990-91 to 322 grams per day by 2014-15. It is more than the  world average of 294 grams per day during 2013. This  represents a sustained growth in availability of milk  and milk products for the growing population Dairying  has become an important secondary  source of  income for millions of rural households engaged in agriculture. The success of the dairy industry  has resulted from the  integrated  co-operative system of milk collection, transportation, processing and distribution, conversion of the same to milk powder and products, to minimize seasonal impact on suppliers and buyers, retail  distribution  of milk and milk products, sharing of profits with the farmer, which are ploughed  back to enhance productivity  and needs to be emulated by other farm produce/producers.

In the poultry segment, the Government’s focus, besides framing suitable  policies for enhancing commercial poultry  production, is for strengthening the family poultry system, which addresses livelihood issues. Both egg and fish production has also registered an increasing trend over the years. Egg production was around 78.48 billion eggs in 2014-15, while poultry meat production was estimated  at 3.04 MT. Fisheries constitute about 1 per cent of the GDP  of the country  and 5.08 per cent of agriculture GDP. The total fish production during 2014-15 was 10.16 MT, an production during the last quarters of 2015-16 has also shown an increasing  trend  and is estimated at 4.79 MT( Provisional). There is increasing  significance  of poultry and livestock  products  in the context of diversifying  farm and non-farm activities  in the agriculture  sector to increase livelihood security.

*********

Impressive strides made in the power sector in the last two years: addition of record generation capacity, moves towards one market in power, reform of discoms and development of renewable energy

Time is ripe for industries to absorb excess generation capacity through “Open Access” to energize “Make in India”

A progressive tariff structure can reduce costs for the poor without unduly burdening the rich


The Economic Survey notes that sweeping changes have been made in the power sector in the last two years. 2014-15 witnessed the highest ever increase in generation capacity of 26.5 GW compared to the average annual addition of around 19 GW over the past five years. Capacity enhancements have brought down the peak electricity defecit to its lowest ever level of 2.4%. Central and state governments have come together to address problems related to the health of distribution companies and the debt overhang problem via the Ujwal DISCOM Assurance Yojna (UDAY).

The Survey states that renewable energy targets have been revised from 32 GW to 175 GW to give a policy push to the renewable sector and sustainable development. Grid parity for solar generation is on its way to becoming a reality with auctions under the National Solar Mission resulting in all time low tariff of Rs. 4.34 per KWh.

The Survey points out that the complexity of the tariff structure because of different tarriffs for different sectors prevents economic actors from responding sufficiently to price signals. Simplification in tariffs may improve transparency and yield consumption and collection efficiency along with governance benefits.

Further, the Survey states that the debt overhang of discoms has traditionally been a major bottleneck for the power sector. The States with highest losses are those where tariffs fail to cover the costs of electricity supply. Several states are now attempting to close this gap under the UDAY scheme.

Power sector’s impact on ‘Make in India’

The Economic Survey notes that the electricity supply and its quality impacts industrial outpout.  The electricity tariffs are unusually high for Indian industry, especially when quality is taken into account. The use of diesel generators in on the rise to protect against uneven power supply with total capacity around 72 GW and growing at the rate of 5 GW per year. High tariffs and erratic supply have led to a slow but steady decline in the growth of industrial electricity purchases from utilities and a gradual transition towards captive generation.
The compund annual growth rate (CAGR) of captive power generation between 2006-07 and 2014-15  is 9.3% compared to 4.6%  for electricity procured from utilities. This could be exacerbated in the coming years as decline in oil prices and costs of renewable energy alternatives may prompt a further shift to captive power.

Need of making India “One Market in Power” – Providing ‘Open Access’

The Survey states that steps have been taken towards ”Making One India”  in the power sector. The Open Access (OA) policy introduced under the Electricity Act 2003, which allows consumers with electricity load above 1 MW to procure electricity directly from electricity markets was the first step towards discovering a single market price for power around the country. Power Exchanges were set up in 2008 to operationalize the OA policy and create a national electricity market where price discovery occurs through competitive bidding. Increases in cross subsidy and additional surcharges for purchasing electricity from power exchanges, have acted as significant barriers, though they are key to balancing DISCOMS.

The power generation capacity has increased while the financial ability of discoms to purchase electricity has diminished. This has resulted in current power plant load factors reaching their lowest mark at around 60% as The Survey notes that the time is ripe to allow industries with higher power demands to absorb excess generation capacity through “Open Access” to energize “Make in India”.




                                                       
Progressivity in tariff rates to reduce burden on the poor

The Economic Survey says that India’s domestic power tariff schedules have greater scope for progressivity. It discusses the need to balance greater revenue collection with greater welfare allocations. It suggests that the tariffs for the poor can be reduced while covering costs and without unduly burdening those better off. Cross-subsidization will occur within the residential consumers itself – i.e. rich consumers with high consumption intensity within the residential sectors subsidise prices for consumers with lower consumption due to differential demand price elasticities.


***************

Economy to clock more than 7 per cent growth this fiscal; Economic Survey 2015-16 predicts over 8 per cent growth in next couple of years.



The Economic Survey 2015-16 presented here today in the Parliament by the Union Finance Minister Shri Arun Jaitley emphasizes that Indian economy will continue to grow more than 7 percent for the third year in succession in 2016-17 helped by a normal monsoon, despite global meltdown. The Economic Survey (2015-16) states that due to Government’s commitment to carry the reform process forward, conditions do exist for raising the economy’s growth momentum to 8 percent or more in the next couple of years. The survey underlines that despite global headwinds and a truant monsoon, India registered 7.2 per cent growth in 2014-15 and 7.6 per cent in 2015-16, thus becoming the fastest growing major economy in the world.




The Survey points out that the growth in agriculture sector in 2015-16 has continued to be lower than the average of last decade, mainly on account of it being the second successive year of lower-than-normal monsoon rains. As per the information of the Department of Agriculture, Cooperation and Farmers Welfare for 2015-16, the production of foodgrains and oil-seeds is estimated to decline by 0.5 per cent and 4.1 per cent respectively, while the production of fruits and vegetables is likely to increase marginally. A brighter picture is expected to emerge from the allied sectors consisting of livestock products, forestry and fisheries with a growth exceeding 5 per cent in 2015-16, which will provide some impetus to rural incomes.

Growth in industry is estimated to have accelerated during the current year on the strength of improving manufacturing activity. The private corporate sector, with an around 69 per cent share of the manufacturing sector, is estimated to grow by 9.9 per cent at current prices in April-December 2015-16. The Index of Industrial Production (IIP) showed that manufacturing production grew by 3.1 per cent during April-December 2015-16, vis-à-vis a growth of 1.8 per cent in the corresponding period of the previous year. The ongoing manufacturing recovery is is aided by robust growth in petroleum refining, automobiles, wearing apparels, chemicals, electrical machinery and wood products including furniture. Apart from manufacturing, the other three segments of the industry sector- electricity, gas, water supply and related utilities, mining and quarrying and construction activities are witnessing a deceleration in growth.



The Survey underlines that the growth in the services sector moderated slightly, but still remains robust. Being the main driver of the economy, the sector contributed about 69 per cent of the total growth during 2011-12 to 2015-16 and in the process expanding its share in the economy by 4 percentage points from 49 to 53 per cent.




The Survey in its outlook clearly points out that though the emerging market economies have clearly slowed down, the Indian economy stands out as a haven of macroeconomic stability, resilience and optimism and can be expected to register GDP growth that could be in the range of 7.0 per cent to 7.75 per cent in the coming year.


***************


Making Investments in Maternal Nutrition and Sanitation and Changing Social Norms to Enhance their Effectiveness can help to Exploit India’s Demographic Dividend

The National Food Security Act and Swachh Bharat are part of the Government’s Policy Agenda to Improve Maternal and Early Life Health

The Economic Survey 2015-16 presented today in the Parliament by the Union Finance Minister Shri Arun Jaitley highlights that relatively low cost maternal and early life health and nutrition programs offer very high returns on investments. Investments in maternal, nutrition and sanitation and enhancing their effectiveness by changing social norms can help India exploit its demographic dividend.

The Survey pointed out that early life conditions affect cognitive development. A healthy mother is more likely to give birth to a healthy baby. Further, returns to human capital investments vary with the age of the child, being highest for programs that target young children and in-utero health. Programs targeting younger children are also relatively cheaper investments. The Survey suggests that early life investments are thus a real opportunity for fiscal and capacity constrained governments.

The Survey notes three things with regards to height for age of children in India –

There has been a gradual improvement in both rural and urban India. The children surveyed during the RSCO 2013-14 round are on average taller than those surveyed during NFHS 2005-06.

There is a persistent rural-urban height gap.

India remains a negative outlier with children being on average two standard deviation shorter than the healthy average.

The Survey identifies neo-natal mortality as an important indicator of in-utero nutrition. Out of all infants to die in India, 70% die in the first month. A leading cause of this is low birth weight. Underweight women at the beginning of pregnancy are far more likely to have low birth weight babies. 42.2% of Indian women are underweight at the beginning of pregnancy in contrast to 35% of non-pregnant women of child bearing age being underweight. The Survey says that thus, pregnant women are more likely to be underweight. Additionally, Indian women do-not gain enough weight during pregnancy. Women in India gain 7 kgs. during pregnancy compared to the WHO recommended figure of 12.5-18 kgs.

Another reason for poor maternal health is that social norms accord young women low status in joint households. This results in stark within-household nutritional differential.

Investing in maternal health could become a top policy priority of the government. The National Food Security Act 2013, legislating a universal cash entitlement for pregnant women of at least Rs. 6000 is a promising opportunity to improve nutrition during pregnancy. The Survey recommended pairing cash transfers with education about pregnancy weight gain.

The Survey identifies open defecation as a source of early life disease in India. According to WHO and UNICEF joint monitoring program, 61% of rural Indians defecated in the open in 2015. The Survey notes that income constraints may not be the main determinants of open defecation. Evidence suggests that open defecation leads to child stunting, diarrhoea and environmental enteropathy. Households who do-not defecate in the open have higher height for age scores.

The Survey notes the vital importance of the Prime Minister’s Swachh Bharat Mission in raising the profile of the problem of open defecation. In the last year alone, the government has built over 80 lakh toilets. The Survey says that the next challenge in rural India is behavioral.

The Survey says that the breast-feeding example illustrates how some investments by the state can lead to tangible changes in social norms in a relatively short period of time. Programs like Janani Suraksha Yojana and other schemes under the Integrated Child Development Scheme delivered via Anganwadi program has increased the proportion of breast feeding mothers to 62%. The Survey says that creating a nudge unit within government is a useful way of changing norms.

*******

Agriculture Sector needs a Transformation to ensure Sustainable Livelihoods for the Farmers and Food Security

Economic Survey Emphasizes to Improved Productivity in Agriculture

 Disbursal of Subsidy on Fertilizers should Shift to DBT

Fixed Amount of Subsidy in the case of P And K Fertilizer Subsidy

There needs to be a Shift to Demand-Driven Agricultural Advisory Services


The Economic Survey 2015-16 presented today in the Parliament by the Union Finance Minister Shri Arun Jaitley stressed on the declining growth in agriculture, owing to two consecutive drought years and due to decline in production and area sown of major crops.The agriculture sector needs a transformation to ensure sustainable livelihoods for the farmers and food security for the population. The transformation in agriculture has to be steered by raising productivity in agriculture, by investing in efficient irrigation technologies, and efficient use of all inputs. Economic Survey 2015-16  emphasizes that to improve productivity in agriculture in India needs to be guided by followings:

(i)                 Irrigation

To raise the productivity of agriculture in India there is need to expand the acreage under irrigation along with adoption of  appropriate technologies for efficient utilization of water through  suitable pricing. First, adoption of irrigation technologies which improve efficiency in the use of water is imperative in a scenario  where flood irrigation has resulted  in wastage of water. Second, focus on efficient  irrigation technologies  is owing to climate change and indiscriminate wastage of water in agriculture  and other uses. Having ‘more crop per drop’ through motto to improve  productivity  in agriculture which can ensure food and water security in the future.

Net irrigated Area to Total cropped area in India

                        As per the latest available data on irrigation, the all India percentage distribution  of net irrigated are to the total cropped area during 2012-13 was 33.9 per cent.  There is regional disparity in irrigated farming, with net irrigated area to Total cropped area at more than 50 per cent in the states of Punjab, Tamil Nadu and Uttar Pradesh, while it is at less than 50 per cent in the remaining States. There is need to scope for increasing  the coverage  of irrigated area  across the country to  increase productivity in agriculture.

There is need to arrest the declining trend in efficient utilization  of irrigation potential and also reverse it in the next two three years. A larger share of funds available under the Mahatama Gandhi National Rural Employment Guarantee Act (MGNEREGA)/ other employment  generating schemes need to be  deployed  for creating and maintenance of community assets including de-silting  and repair of  tanks and other water bodies that are used for irrigation.

Efficiency in Irrigation

                        Achieving efficiency  in the use of irrigation  systems will be the main determinant of agriculture productivity. The conventional systems of  irrigation have become on-viable in many parts of India due to  increasing  shortages of water, wastage of water through over irrigation, and concerns of salination of soil as per Task force on Agriculture (NITI Aayog, 2015). The introduction  of efficient  irrigation  technologies which are  both economically  and technically efficient like drip and sprinkler irrigation  can improve water use efficiency , reduce costs of production by reducing labour  costs  and power consumption.

Water Productivity

Water productivity at  the all India level is very low and needs to be enhanced through tapping, harvesting and recycling water, efficient on-farm water management  practices, mirco-irrigation (MI), use of waste  water and resource  conservation  technologies. The overall irrigation efficiency of the major and medium irrigation projects in India is estimated  at around 38 per cent. Efficiency of the surface irrigation system can be improved  from about 35-40 per cent  to around 60 per cent and that of groundwater from about  65-70 per cent  to 75 per cent.

Mechanization

The level of farm mechanization in India requires more to be done in terms of introduction of better equipment for each farming operation in order to reduce drudgery, to improve efficiency by saving on time and labor, improve productivity, minimize wastage and reduce labor costs for each operation. With shortage of labour for agriculture operations owing to rural urban migration, shift from agriculture  to services  and rise in demand for  labor in non- farm activities, there is need to use labour for  agriculture operation judiciously,  which makes a strong case for  mechanization of farming. The overall level of mechanization in farming is below 50 per cent in the case of majority of the farming operations in India.  With increasing fragmentation of landholdings and low rates of tractor penetration among small farmers, there is need for a market in tractor rentals, akin to cars and road construction equipment, driven by private  participation.  With suitable  mobile and internet  applications,  manufacturers of  tractors along with other stakeholders  need to deliberate  on this,  since it will also increase  demand for tractors.

The promotion of appropriate  farm equipment which are durable, light weight  and low cost, region, crop and operation specific using  indigenous/ adapted technologies need to be made available for small and marginal farmers to improve  productivity.

The basic inputs for increasing productivity  in agriculture is seed. It is estimated  that the quality  for seed accounts for  20-25 per cent  of productivity  (DAC&FW, 2015).
The issues that require immediate  attention  are:

(i)                 Affordability:

Seeds which are open pollinated verities can be developed  by farmers from  their own harvested crops.  However,  for high-yielding  hybrid verities, the farmer has to depend on the market for  each crop.\

(ii)                Availability:

                        Another concern is shortage in the supply of quality seeds. While there is a demand for banning  non-certified seeds, certification per-se does not ensure  quality seeds Ideally, facilitating  more  players (private and public) and competition in the market for seeds would improve availability  of quality  seeds at lower/comprehensive prices.

(iii)             Research and technology  for seed development.

Inadequate research and genetic engineering has been a constraint  in the development  of seeds/ seeds technology  in major crops during  the past few decades in India.  There is need to encourage  development  of seeds/ seed technologies  in both private and public sectors to initiate another round of Green revaluation. This development  should cover a all agriculture segments/ corps-cereals, coarse cereals, fruits and vegetables, pulses, oilseeds, animal husbandry  and pisciculture—simultaneously.

(iv)             GM crops and seeds:

                        Concerns  about affordability  of hybrids  and GM seeds, environmental and ethical issues  in cultivation of GM crops, risk to the food chain, dieses spread and cross pollination have resulted in their non-introduction . These issues needs to be debated, tested, evaluated, so that introduction of hybrids is facilitated in the next six months. The adoption of hybrid and HYV seeds is one definite pathway to raising productivity in  Indian agriculture.

Fertilizers

                        Fertilizers is a critical and expensive input required to improve agricultural output.  To facilitate and promote the use of fertilizers in order to improve  productivity, the  Government  has been providing  fertilizer subsidy  to farmers. The fertilizer subsidy is around 10 per cent of the total agriculture  GDP in 2013-14.

There is a need to rationalize fertilizer subsidy in an input, crop and region neutral format and minimize diversions. The disbursal of subsidy on fertilizers should shift to DBT, the benefits of which will be maximized, if all controls (including imports) on the fertilizer industry/outputs are lifted simultaneously. In the case of P and K fertilizer subsidy, with the Nutrient Based Subsidy (NBS) scheme, a fixed amount of subsidy will be given on each grade based on their content.

Crop-responsive, balanced use of fertilizers:

It is important to facilitate the optimal use of fertilizers depending on the soil health and fertility status.  Linking the soil health card to provide profile of the soil and fertilizer on the basis of the same profile utilizing fertilizer, even if not subsidized can improve the yield of crops.

Micro nutrients and organic fertilizers:

Indian soils show deficiency of micro nutrients like boron, zinc, copper and iron in most parts of the country, which limits crop yields and productivity. According to agronomic trails conducted by the Indian Council of Agricultural Research (ICAR), fertilizers  which supplement  micro nutrients the range of 0.3 to 0.6 ton per ha. The micro nutrient deficiency can be overcome if there is expansion of the use of organic fertilizer.  Moreover, it is cheaper for small farmers to adopt and use organic composting and manure.  This can help improve and retain soil fertility. With 67 % of Indian soil characterized by low organic carbon, there is great scope for enhancing the use  of  organic fertilizers.


Nutrient Management:

Judicious use of chemical fertilizers, bio-fertilizers and locally available organic manures like farmyard manure, compost, vermin compost and green manure based on soil testing is necessary to maintain soil health and productivity.

Regional disparity in fertilizer consumption:

There are wide regional disparities in the consumption of fertilizers. These disparities in fertilizer consumption may be attributed to  the  availability  of irrigation facilities  in the high consuming  state since irrigation  is  a requirement for proper absorption of fertilizers.  I is necessary to reduce the disparities through appropriate   soil-testing  faculties and policy measures.

Pesticides:

In India, the farmer’s crop yield losses range from 15 to 25 per cent owing to the presence of weeds, pests, diseases and rodents. However, the use of pesticides without following proper guidelines, use of sub standard pesticides and lack of awareness about pesticides  use are key concerns  in India. These practices have give rise to pesticide residues being found in food products in India, posing major threats to the environment and human beings.

Farmers need to be educated about the classification of insecticides on rte basis of their toxicity. They should also be advised whether specific pesticides are suitable for aerial application.

Being environment friendly, non-toxic and cost effective, bio-pesticides need to be promoted among small farmers to improve  productive  in agriculture.  There is need to address the problem of availability of credit on several fronts. In respect of high interest rates, DBT may be considered  to replace subvention  of interest rates. The intermediation and refinance model to promote agricultural credit needs to be revisited and replaced with  DBT that shall subsidize  the interest  paid by the farmer, instead of subsidizing  refinance to financial  institutions.

The ratio of agricultural credit to agricultural GDP has  increased from 10 per cent in 1999-2000 to around 38 per cent by 2012-13. However, the share of  long-term credit in agriculture or investment  credit has declined from  55 per cent in 2006-07 to 39 per cent in 201-12. The decline in needs to be arrested  and reversed.

The regional disparity in the distribution of agriculture credit also needs or be addressed.  In India, farmers can avail of crop loans up to  Rs. 3lakh at 7k per cent interest  and the effective  rate of  interest has been lowered to 4 per cent during 2015-16 for those who repay their loans promptly. These measures help farmers tide over short-term contingencies and price shocks which may affect their seasonal operations.

The small and marginal farmers with Kisan Credit Cards (KCCs) can also avail the benefit of interest subvention scheme extended  for a further period of  up to  six months (post-harvest) against Negotiable Warehouse Receipts (NWRs) at the same rate as  available  to crop loan to discourage distress sale of corps by small  farmers.

Agriculture  Extension Services

 Agriculture extension services  constitute another key input which can improve  productivity  in agriculture  by providing  timely advisory services to farmers to adopt best  practices, technology, meet with contingencies, market information etc.  In India, though there are multiple agencies offering agricultural advisory services, lack of functional autonomy, rigid hierarchal  structures  leading to lack of innovative  methods of  providing extension services  and coordination failures at multiple levels have resulted in inefficient  deliver of extension services.

There needs to be a shift to demand-driven agricultural advisory services that will cater to farmer, region and crop-specific needs. This can be done through a virtual connect, using IT (mobile and internet), integration of agricultural  extension services  with all stakeholders, their respective  hierarchy,  extension services  in other villages, blocks, agro climate  regions, largely for  sharing of information, suppliers of inputs, agro-processors, markets and their activity, especially price.

***********

Economy will continue to Weather Global Sluggishness with Resilience; Outlook of Multilateral Institutions positive for India

Multilateral Institutions in their latest assessments have underlined that in the short run, Indian growth may fall short of its growth potential of 8-9 per cent, but the economy could continue weathering the global sluggishness with resilience and consolidate the gains in macroeconomic stability in the year ahead. This is the Outlook in the Economic Survey 2015-16 presented today in Parliament by the Finance Minister Shri Arun Jaitley. The Survey highlights that with the focus on reforms in key sectors coupled with stable macroeconomic conditions, the growth prospect of 7.0 to 7.75 per cent in 2016-17 appears reasonable. Yet, the outlook will be conditioned by a number of factors and the strongest of them being weak global demand.

Economic Survey 2015-16 stresses that the external vulnerability indicators improved and the rupee weathered the depreciation pressure better than the currencies of most emerging market economies. The headwinds to growth may come from sluggish global demand as the Indian economy is closely integrated with the rest of the world. Exports and imports together constitute 42 per cent of the GDP, even at the reduced levels in 2015-16. On the brighter side, however, the composite growth of India’s trading partners is projected to modestly improve in 2016.

From the angle of aggregate demand, the survey underlines that domestic absorption has remained reasonably strong, despite reduction in overall investment. Private consumption has, of late, been the major driver of growth. The possible shifts on the consumption front in the next year are; first, consumption incentives flowing from declining oil prices may partially recede in the next year; second, the pay commission awards could potentially add modestly to consumption demand; third, an improved farm sector performance can add to rural consumption. However, it may be hard to endlessly expect significantly higher growth impetus from consumption.

Economic Survey 2015-16 stresses that Government’s focus on fiscal consolidation rightly limits the option of raising general government consumption expenditure. Private corporate savings and investment showed encouraging results in 2014-15; but the eventual outcome may also be influenced by indications of excess capacity in some sectors. However, with multifaceted measures from the government to foster industry and enterprises, investment-led growth should return.

The outlook in the Survey points-out that India’s external sector outcome continues to be strong and sustainable because of strong macroeconomic fundamentals and low commodity prices. This is significant in the wake of volatility in global financial markets and their spill overs causing shocks in vulnerable economies, mainly the recent bout of uncertainty owing to developments and concerns about China’s growth, financial markets and currency. The survey says, while export slowdown may continue for a while before picking up in the next fiscal, continuance of low global commodity prices augurs well for sustaining low trade and current account deficits. As a proportion of GDP, the CAD is likely to be in the low range of 1 to 1.5 per cent. It adds that deficit in the current account is likely to be more than fully financed through stable flows and the volatility in global financial markets may affect the exchange rate less than in other emerging economies.

***************

Finance Minister Shri Arun Jaitley Presents Economic Survey 2015-16 in the parliament today

Says Rates of 8 Per Cent or Higher Expected in the next couple of years as there is Macro-Economic Stability now

Economic Survey 2015-16 : with reforms in key areas, there is reduction in Macro-Vulnerability today



Indian economy has taken impressive strides with reduction in macro-vulnerability due to reforms in key areas, pursuit of fiscal prudence and focus on price stability. The Economic Survey 2015-16 presented in the Parliament today by the Finance Minister Shri Arun Jaitley states that the benign price situation and comfortable level of external current account in the country makes it possible now for growth rates of 8 % or higher in the next couple of years.

It says as the Government is committed to carrying the reform process forward and conditions exists today for such growth aided by the prevailing macro-economic stability.

The Report portends growth rate in the range of 7 to 7.5 per cent in 2016-17.   After 7.2 per cent in 2014-15 and 7.6 per cent in 2015-16, such growth rate of over 7 per cent makes India the fastest growing major economy in the world.  It states that India’s contribution in the global economy has become much more valuable today as China is rebalancing.   The Survey further mentions that the recent growth revival in India is predominantly consumption driven.  It says while the growth in services sector has moderated slightly. The acceleration in manufacturing growth has compensated for the lower growth in agriculture sector, due to two successive years of lower than normal monsoon rains.



The Survey, however, expresses a caution of weak global demand.

Post Fourteenth Finance Commission (FFC) recommendations, equilibrium is sought to be achieved between higher capital expenditure, higher net resource transfers to States and higher gross tax revenues, the Economic Survey 2015-16 states.

It says that in spite of challenges and lowers than projected GDP growth during 2015-16, the fiscal deficit target of 3.9 per cent of GDP seems achievable. This became possible as the Gross Tax Revenue (GTR) targets were achieved, due to improved tax buoyancy and prudent expenditure management, assisted by declining oil prices.

The Survey points out that an indication of better fiscal management is that the total expenditure for 2015-16 was estimated at Rs.17.77 lakh crore which was 5.7 per cent higher than the revised estimates of 2014-15. A growth of 25.5 per cent was envisaged in capital expenditure, reiterating the focus on quality of expenditure. The notable highlights of the benign fiscal outcome in the current year till December 2015 included: robust growth in indirect taxes, increased tax devolution to the states in line with the recommendations of the FFC, the highest increase in capital expenditure in the last six years and decline in major subsidies.



The Economic Survey 2015-16 further points-out that the wholesale price inflation had been in the negative territory for more than a year and the consumer price inflation has also declined to about half of what it used to be in earlier years. It says the astute policies and management of inflation by the government through buffer stocking, timely release of cereals and import of pulses had helped in keeping prices of essential commodities under check during 2015-16.

The Survey however indicates that the  recurrence and rebound in the prices of some essential food items, as experienced in the second half of the year, indicates that we would require continued deft supply management in the near future.



It points out that with easing of inflation measures, the RBI had brought down the repo rate by 125 basic points (bps) from the beginning of 2015 to 6.75 per cent by the end of September 2015.   It says that the RBI also further conducted various measures like variable repo rate and reverse repo (overnight and term) auctions to address the day-to-day liquidity requirements.  The operating target of monetary policy thus remained closely aligned to the policy repo rate the Economic Survey 2015-16 asserts.

The Economic Survey points-out that there is urgent need to rationalize agricultural policies including subsidies by making them ‘input-crop and region-neutral’ to improve productivity in agriculture. It says the adoption of Quality/GM/Pest resistant seeds will be another pathway to improve the productivity in agriculture. The concerns around GM seeds need to be resolved through debate and tests. The Direct Benefit Transfer (DBT) mode for inputs like seeds and fertilizer can prevent leakage and diversions in the system and reach the targeted beneficiaries, the Survey says.

The Survey indicates that there was a good performance on the front of Government’s initiatives towards achieving the overall goal of Financial Inclusion through Pradhan Mantri Jandhan Yojana(PMJDY), Pradhan Mantri Suraksha  Bima Yojana(PMSBY), Pradhan Mantri  Jeevan Jyoti Bima Yojana(PMJJBY), the Atal Pension Yojana(APY) and setting- up of Micro Units Development Refinance Agency (MUDRA) in the banking and insurance sectors.  The Survey also points-out as to how measures were taken to mobilize gold for productive purposes, through the Sovereign Gold Bond Scheme and the Gold Monetization Scheme.
                                                     
It, however, stated that the performance of the Scheduled Commercial Banks remained subdued during 2015 and there had been sluggish growth of bank credit.

The Survey, however, expects continued good performance by the Industrial, Corporate and Infrastructure Sectors in the wake of various recent reform measures undertaken by the Government.  It says development of the Infrastructure Sector has been a priority area for the Government and it witnessed enhanced public investment.  Growth in the freight carriage by Indian Railways, at Ports, the growth in the Civil Aviation Sector, Telecommunication Sector and National Highways Construction have all been impressive.



Some reform measures which contributed to such growth include: Auctions successfully undertaken for allocation of coal and mines blocks.

Improvements in Policy  for production sharing contracts under NELP and testing requirements along with  a Uniform Licensing and Open Acreage Policy etc., in the petroleum sector has been taken up.

Tax-free infrastructure bonds have been allowed for rail, roads and irrigation programmes

National Investment and Infrastructure Fund (NIIF) to extend equity support to infrastructure Non-Bank Financial Companies (NBFC).

More open FDI policy has been adopted with FDI allowed for Defence sector up to 49%; Railways 100%; Insurance and Pension 49% etc. Apart from this, a number of sectors like construction, broadcasting, civil aviation, plantation, trading, private sector banking, satellite establishment and operation and credit information companies etc. have been liberalized.

It points out that the Services Sector continues to be the key driver of India’s economic growth and it accelerated to 10.3 per cent in 2014-15 from 7.8 per cent in the previous year and it is expected to be 9.2 per cent (constant prices) in 2015-16 as per the advanced estimates. This is due to lower growth in Public Administration, Defence and other Services.  There has been a rising trend in FDI equity inflows to the services sector in the first seven months of 2015-16 with FDI inflows growing by 74.7 per cent.  The Report, however, points out that there has been sluggishness in India’s service exports in the recent months due to global slowdown.



The Survey points-out that at the end-September 2015, India’s external debt has remained in safe limits as shown by long term debt accounted for 82.2 per cent of India’s total external debt, vis-à-vis 82.0 per cent at end-March 2015. The proportion of short term debt to total external debt decreased from 18.0 per cent at end-March 2015 to 17.8 per cent at end-September 2015. External debt to GDP ratio of 23.7 per cent and debt service ratio of 7.5 per cent in 2014-15 are at comfortable levels, it adds.



On the front of Social Infrastructure, Employment and Human Development, the report points at the preponderance of unskilled workers in India. The Economic Survey 2015-16,   states that the Government is committed to invest in bridging the skill gap.  It also talks of technology for Efficient Delivery of Services.  The Report points out those more than 122 lakh toilets have been constructed in rural areas since the beginning of Swachh Bharat Mission (Gramin) for improving sanitation situation in rural India.

The Economic Survey 2015-16 points-out the need to focus on the quality of education in both the public and private sectors. There is need for professionally qualified and trained teachers to improve educational outcomes. To strengthen the delivery of public health services and infrastructure facilities, both public investments and leveraging of private investments are necessary. To improve the efficiency in the delivery of services and to overcome the shortages in the skilled personnel in health sector policy interventions are felt needed.

On the Climate Change and Sustainable Development front, Survey states that India had been an active participant and a signatory to the United Nations Framework Convention on Climate Change (UNFCCC) Agreement signed in December 2015 and to the Sustainable Development Goals (SDGs) agreement signed in September 2015.

India stated its Intended Nationally Determined Contribution (INDC) goals for the renewable energy sector, mainly from solar and wind energy.  The aim is to achieve a target of 60 GW of wind power as well as 100 GWs of solar power to be in the country installed by 2022, the Survey adds.


********

Economic Survey 2015-16: Percentage Share of Horticulture Output in Agriculture is more than 33 Per Cent

Over the Last Decade, The Area Under Horticulture grew by about 2.7 % Per Annum and Annual Production Increased by 7 %

Production of Horticulture Crops have Outpaced the Production of Food Grain Since 2012-13

The Economic Survey 2015-16 presented today in the Parliament by the Union Finance Minister Shri Arun Jaitley emphasizes that the scenario of horticulture crops in India has become very encouraging. The percentage share of horticulture output in agriculture is more than 33 per cent. Under the purview of agriculture and allied activities, the share of plan outlay for horticulture, which was 3.9 per cent during Ninth Plan, has increased to 4.6 per cent during the Twelfth Plan.

India has witnessed voluminous increase in horticulture production over the last few years. Significant progress has been made I area expansion resulting in higher production. Over the last decade, the area under horticulture grew by about 2.7 per cent per annum and annual production increased by 7.0 per cent. During 2013-14, the production of horticulture crops was about 283.5 million tones from an area of 24.2 million hectares. Out of the six categories e.g., Fruits, Vegetables, Flowers, Aromatic plants, Spices and Plantation Crops, the highest annual growth of 9.5 per cent is seen in fruit production during 2013-14. The production of vegetables has increased from 58,532 thousand tones to 1,67,058 thousand tones since 1991-92 to 2014-15(3rd AE).

India witnessed sharper increase in acreage in horticulture crops compared to food grains over the last five years (from 2010-11 to 2014-15) the area under horticulture crops increased around 18 per cent compared to an expansion of area under food grains by 5 per cent during the stipulated period. The production of horticulture crops have outpaced the production of food grain since 2012-13.

***********

Several Initiatives Taken Would Help Transforming Infrastructure Sector ; Results Achieving & Sustaining Higher Economic Growth

2015-16 tabled in the Parliament here today by the Union Finance Minister Shri Arun Jaitley states that riding high on the performance of manufacturing sector , industrial sector in India have registered higher growth during 2015-16. Many policy measures taken by the Government for creating enabling environment for industrial growth have started showing its impact on increased FDI inflows, better performance of infrastructure sector. The landmark initiatives like Make in India , Ease of doing Business, Start Up India, Digital India , and Smart Cities, etc. will provide further impetus to industries and the industrial sector is expected to be the key driver of economic growth in the country. These initiatives would also help in transforming infrastructure sector which is sine qua non for achieving and sustaining higher economic growth.

According to the Survey, the year 2015-16 is witnessing a tumultuous global economic environment with major economics showing signs of slowdown in growth. It further states that against this background, the fact that the Indian economy has emerged as the fastest growing economy with a high growth rate of over 7 per cent. The manufacturing sector has been a major contributor in sustaining this high growth rate. As per latest data released in January 2016 on revised estimates of national income the growth of Industrial sector broadly comprising mining, manufacturing, electricity and construction is 5.9 per cent during 2014-15, as against a growth of 5.0 per cent during 2013-14. The advance estimates of national income 2015-16 shows that the growth of industrial sector is estimated to be 7.3 per cent with manufacturing sector growing at 9.5 per cent.

Industrial Performance

As per IIP, the industrial sector broadly comprising mining, manufacturing and electricity attained 3.1 per cent growth during April- December 2015-16 as compared to 2.6 per cent during the same period of 2014-15 due to the higher growth in mining and manufacturing sector. The mining, manufacturing and electricity sectors grew by 2.3 per cent, 3.1 per cent, and 4.5 per cent respectively during April-December 2015-16, the Economic Survey observes.

MSME Sector

With 3.6 crore units spread across the country, that employ 8.05 crore people, Micro, Small and Medium Enterprises (MSME) have a contribution of 37.5 per cent to the country’s GDP. Realizing the important of the MSME sector, the Survey mention that the government has undertaken new initiatives like Udyog Aadhar Memorandum (UAM) scheme to promote ease of doing business for MSMEs, Employment Exchange for Industries for prospective job seekers and employers and Scheme for Promoting Innovation and Rural Entrepreneurs (ASPIRE) to promote start- ups for innovation and entrepreneurship in rural and agriculture- based industry.

Foreign Direct Investment (FDI)

Highlighting the role of Foreign direct investment (FDI) as an important driver of economic growth , the Survey states that the government has undertaken various reforms with a view to liberalizing and simplifying the FDI policy to provide ease of doing business climate in the country that will also lead to larger FDI inflows. More open FDI policy has been adopted with FDI allowed for Defence sector up to 49%; Railways 100%; Insurance and Pension 49% etc. Apart from this, a number of sectors like construction, broadcasting, civil aviation, plantation, trading, private sector banking, satellite establishment and operation and credit information companies etc. have been liberalized. After the launch of the Make In India initiative in September 2014, there is a nearly 40 % increase in FDI inflows during October 2014- June 2015 over the corresponding period of the previous year. The Survey further highlights that the various reforms in the FDI sector have led to a significant increase in FDI inflows into India. During April- November 2015, total FDI inflows were US$ 34.8 billion as compared to US$ 27.7 billion during April- November 2014, showing an increase of 26 per cent . FDI equity inflows also increased form US$ 18.9 billion during April- November 2014 to US$24.8 billion during April- November 2015, showing 31 per cent growth.

According the Economic Survey, the Government of India has taken a series of measures to improve Ease of doing Business in the country. Existing rules have been simplified and information technology introduced to make governance more efficient and effective. Reflecting the better economic performance and the commitment of the government to reforms, the global perception about India’s competitiveness has improved as per Global Competitiveness Index of the World Economic Forum. Significantly, at position 55, India went up 16 rungs in 2015-16, which is the largest gain among the major economies.

Performance of the Power Sector

In view of the growing need to the Indian economy, the Survey states that the government has embarked upon a massive programme to provide uninterrupted continuous access to power supply in the country. Several steps have been taken for increasing power generation, strengthening of transmission and distribution, separation of feeder and metering of power to consumers. In order to restructure the sector, various amendments are being brought in the Electricity Act, and tariff policy in collaboration with states. During 2014-15, the achievement in electricity generation exceeded the target. Against the target of 1023 BU, the achievement was 1048.4 BU, registering y-o-y growth of 8.4 per cent. Annual generation crossed 1 trillion units last year. In the current year (April- December 2015), generation registered a growth of 4.4 per cent. This is 97.6 per cent of the target of 849.9 BU during the year 2015-16 (April-December) .The survey further states that , as against the capacity addition target of 20037.1 MW set for 2015-16, 11,226 MW has been added till December 31, 2015. The cumulative capacity addition during the 12th Plan, as on December, 31, 2015, is 72,240 MW which constitutes 81.6 per cent of the plan target.

On distribution side, the Survey mentions several policy initiatives taken by the Government like Ujwal DISCOM Assurance Yojana (UDAY), Deen Dayal Upadhyaya Gram Jyoti Yojana (DDUGJY), Integrated Power Development Scheme (IPDS), Domestic Efficient Lighting Program (DELP), National Tariff Policy, 2016 and National Smart Grid Mission.

Performance of Coal Sector

The Economy Survey states that production of raw coal in India registered a growth of 4.7 per cent by producing 477.48 Mt during April – December 2015 as compared to the corresponding year to the previous year. The Annual target for coal production for 2015-16 have been fixed 700 Mt. The Survey further mentioned that due to higher domestic production, imports have been coming down since last year. The Government has taken initiatives by enacting the Coal Mines (Special Provisions) Act 2015 to enable the government to reallocate 204 coal blocks whose allocations were cancelled by the Supreme Court. Under the Act, the Centre government has successfully auctioned 31 coal mines and allotted 42 coal mines/blocks to the central/state governments companies.

Since the government has taken a number of policy initiatives, the Survey says that there have been notable turn around in the mining and quarrying sector. The Government recently amended Mines and Minerals (Development and Regulation) Act 1957 for promoting the mining sector. A total of 35 mineral block have been offered by the seven states as on 31 December, 2015.

In the Petroleum sector, the Economy Survey 2015-16 mentioned improvements in Policy for production sharing contracts under NELP and testing requirements along with a Uniform Licensing and Open Acreage Policy etc. has been taken up.

Regarding New & Renewable Energy Sector, the Survey observed that India is graduating from Magawatts to Gigawatts in generation of clean renewable energy. The target from various renewable energy sources have been increased to 1.75 GW by the year 2022. The government has taken several initiatives like solar rooftop, solar parks, solar projects under the National Solar Mission (NSM), solar pumps, solar cities and Surya Mitra schemes have been launched.

Concerning Road sector, the Survey mentioned that the government approved the scheme for the development of about 1177 kilometers of national highways and 4276 kilometers of state road in Left Wing Extremism affected areas as a special project with an estimated cost of about of Rs 7300 crore. Apart from this, Bharatmala Programme, an umbrella scheme is proposed at an estimated cost of 2,67, 200 crore. The programme is targeted for completion by 2022.

Recognizing the growth of telecommunications as one of the key drivers of socio-economic development, the Survey says the performance of the telecommunications sector during 2015-16 has been encouraging with approximately 33.4 million new telephone connection during April – October 2015. Overall Tele density in the country has been increased from 79.4 per cent as the beginning of the financial year to 81.5 per cent at the end of the October 2015. Under the Bharat Net Project 1,03, 643 Km of pipes and 79, 994 km of optical fibre cables (OFC) have been laid up to 30th November, 2015.

To improve urban infrastructure, the Government has taken various steps the government has launched a Mission of Smart Cities with the collaboration of states with UTs. The purpose of Smart Cities Mission is to drive the economic growth and improve the quality of life of people by enabling local area development and harassing technology. The Mission will cover 100 cities which have been distributed among the state and UTs on the basis of equitable criteria. In addition to above, new initiatives like Swachh Bharat Mission, National Heritage City Development and Augmentation Yojana (HRIDAY), Atal Mission for Rejuvenation and Urban Transformation (AMRUT)

The Survey observes that Startup India is a flagship initiative of the Government of India to build a strong ecosystem for nurturing innovation, driving sustainable economic growth and generating large-scale employment opportunities. Apart from the technology sector the start-up movement will extend to a wide array of other sectors including agriculture, manufacturing, healthcare and education, and from existing tier 1 cities will extend to tier 2 and tier 3 cities including semi-urban and rural areas.

The Survey says that supply side bottlenecks, infrastructural and structural constraints hindering the achievement of medium-term growth and job creation, are being addressed on priority basis. Programmes like Make in India, Ease of Doing Business, Skill India, Startup India and reforms in various industrial and infrastructure sectors are some of the major initiatives in the direction of attracting more investment to ensure high industrial growth. Make in India and Ease of doing business in India are focusing on more and faster industrial growth while Startup India aims at nurturing an entrepreneurial mind set among youth in an in inclusive manner.

*********

The Chakravyuha Challenge: Ease to enter, barriers to exit

Indian Economy making great strides in removing barriers to entry for firms, talent, and technology but less in relation to exit


The Economic Survey 2015-16 presented here today in the Parliament by the Union Finance Minister Shri Arun Jaitley invokes the legend of the Charkravyuha from the Mahabharata describing the ability to enter but not exit, with seriously adverse consequences. The Indian economy has made great strides in removing barriers to entry for firms, talent, and technology but less progress has been made in relation to exit. Thus, over the course of six decades, the Indian economy has moved from ‘socialism with limited entry to “marketism” without exit’.

 The Economic Survey 2015-16  states that the case studies suggest that the challenge is more a feature of the relatively traditional sectors of the economy. It is not restricted to the public sector but is increasingly being seen in the private sector. India seems to have a disproportionately large share of inefficient firms with very low productivity and with little exit.  This lack of exit generates externalities that hurt the economy.

Impeded exit has substantial fiscal, economic, and political costs.
·         Fiscal Costs: Inefficient firms often require government support in the form of explicit subsidies (for example bailouts) or implicit subsidies (tariffs, loans from state banks).
·         Economic Costs: Misallocation of scarce resources and factors of production in unproductive uses including overhang of stressed assets on corporate and bank balance sheets.
·         Political costs: Government support to “sick” firms can give the impression that government favors large corporates, which politically limits its ability to undertake measures that will benefit the economy but might be seen as further benefitting businesses.

The Economic Survey analyses this exit problem with the help of the three I’s:
·         Interests: The power of vested interests confers greater power on concentrated producer interests in relation to diffused consumer interests. As a result it becomes difficult to phase out schemes and they become instruments of granting favors. For example, 50 percent of Central Sector Schemes that were allocated money in the Union Budget 2015-16 were 25 years old. Thus, extra vigilance is required to ensure that schemes remain relevant and useful over time.
·         Institutions: Weak institutions increase the time and financial costs of exit. For example, with rising non-performing assets, recourse to debt recovery tribunals (DRTs) has increased. The share of settled cases is becoming small and declining and the accumulated backlog of unsettled cases has increased manifold. Furthermore, inability to punish wilful defaulters questions the legitimacy of all institutions.

Debt.jpg

On the other hand, strong but inflexible institutions are unable to make risky decisions when departures from strict principles may be necessary for the economy.
·         Ideas/Ideology: The founding ideology of state-led development and socialism makes it difficult to phase out entitlements even as those intended for the poor end up accruing to the relatively better off.

The Economic Survey 2015-16 suggests five possible ways to address this problem. The first is promoting competition via private sector entry rather than change of ownership from public to private. Secondly, direct policy action through better laws like the Insolvency and Bankruptcy Code 2015 will expedite exit. Also institutions need to be made stronger but flexible by empowering bureaucrats and reducing their vulnerability.  Thirdly, increase the use of technology to remove persistent distortions by bringing down human discretion and layers of intermediaries. The fourth is increasing transparency and highlighting social costs and benefits of various schemes and entitlements. Finally, showcasing exit as an opportunity towards a newer and better tomorrow.

***************
Positive Changes Sweeping Power Sector

Survey Suggests Possibility of Achieving Reasonably Greater Progressivity in Tariff Structures with Lower Tariffs for the Poor

New Paradigm of Surplus Power Sets Stage for Continuing Reforms for Powering “One India”

Since the present government came to the power , the Economic Survey 2015-16 tabled in the Parliament here today by the Finance Minister Shri Arun Jaitley states that the several sweeping changes have taken place in the power sector which are as follows:-

·         There has been record addition to generation capacity. 2014-15 marked the highest ever increase in generation capacity: 26.5 GW, much higher than the average annual addition of around 19 GW over the previous five years.
·         Capacity enhancements in the power sector are unprecedented. These measures have helped to reduce India’s peak electricity deficit to 2.4 per cent, the lowest ever.
·         There has been a comprehensive initiative to improve the health and performance of power distribution companies—UDAY, the Ujwal DISCOM Assurance Yojana
·         Indian Railways is attempting to shift to open access for power purchase.
·         Renewables have received a major policy push. Targets have been revised from 32 Gigawatts to 175 Gigawatts by 2022. In the latest round of auction under the National Solar Mission, tariff reached an all time low of Rs. 4.34 /KWh.
·         Tantalising signs of moving to One Market in Power are becoming evident.

 Notwithstanding these major successes, the Economy Survey observes that the complexity of the Power Sector is such that daunting challenges remain. In particular :
·         Complexity of tariff schedules prevents economic actors from responding sufficiently to price signals.
·         Average tariffs in some cases are set below the average cost of supplying electricity.
·         High industrial tariffs and variable quality of electricity adversely affects “Make in India”
·         Price and non-price barriers come in the way of single-nationwide electricity prices through open access.
·         Determination of progressive tariff schedules for domestic consumers.

 The Survey discussed some longer term policy issues for the power sector which are as follows:-
·         Power tariff schedules are currently complex. For example, in certain states there are separate tariffs for poultry farms, pisciculture, wetland farms (above and below a certain size), mushroom and rabbit farms, etc. By contrast, other energy products are characterised by a single price—or at most a few prices—across end users.
·         Given high tariffs on industry, firms may be shifting from purchasing electricity from utilities to generating their own power.

o   47 per cent of firms report using a diesel generator

o   Between 2006-07 and 2014-15, electricity procurement from utilities grew by 4.6 per cent annually, slower than the 9.3 per cent growth in self-generation.

·         Cross-subsidy surcharges and non-price regulatory measures are key tools for balancing DISCOMS’ equity and access considerations, but they may also hinder the creation of a nationwide electricity market.
·         Compared to other developing countries, India’s domestic power tariff schedules have greater scope for progressivity. Increases in tariffs for rich households can be achieved while maintaining or reducing tariffs for the poor.

The Economic Survey 2015-16 suggests that the new paradigm of surplus power sets the stage for continuing these reforms so that India can become ‘one market’ in power; the burden on industry can be relieved, allowing it to become internationally competitive as envisaged in “Make in India”; tariffs can be made simple and transparent, avoiding proliferating end-use charges; and by taking advantage of the possibility of greater progressivity in rate-setting, charges for the poor could be reduced while generating more revenues.

In all of this, State Governments and State Regulators will have a key role to play, with helpful facilitation from the centre. The power sector is a perfect crucible for making effective the cooperative-competitive federalism experiment that is now India, the Survey adds.

***********


Econmy Survey 2015-16: Indian economy stands out as a haven of macroeconomic stability, resilience and optimism and can be expected to register GDP growth that could be in the range of 7.0 per cent to 7.75 per cent in the coming year; 

Survey predicts over 8 per cent growth in next couple of years.

Despite the global meltdown, Indian economy will continue to grow more than 7 percent for the third year in succession in 2016-17 helped by a normal monsoon,. The Economic Survey (2015-16) presented in Parliament today by the Finance Minister Shru Arun Jaitley states that due to Government’s commitment to carry the reform process forward, conditions do exist for raising the economy’s growth momentum to 8 percent or more in the next couple of years. The survey underlines that despite global headwinds and a truant monsoon, India registered 7.2 per cent growth in 2014-15 and 7.6 per cent in 2015-16, thus becoming the fastest growing major economy in the world.

The survey points-out that the growth in agriculture sector in 2015-16 has continued to be lower than the average of last decade, mainly on account of it being the second successive year of lower-than-normal monsoon rains. As per the information of the Department of Agriculture and Cooperation and Farmers Welfare for 2015-16, the production of foodgrains and oil-seeds is estimated to decline by 0.5 per cent and 4.1 per cent respectively, while the production of fruits and vegetables is likely to increase marginally. A brighter picture is expected to emerge from the allied sectors consisting of livestock products, forestry and fisheries with a growth exceeding 5 per cent in 2015-16, which will provide some impetus to rural incomes.
Growth in industry is estimated to have accelerated during the current year on the strength of improving manufacturing activity. The private corporate sector, with an around 69 per cent share of the manufacturing sector, is estimated to grow by 9.9 per cent at current prices in April-December 2015-16. The Index of Industrial Production (IIP) showed that manufacturing production grew by 3.1 per cent during April-December 2015-16, vis-à-vis a growth of 1.8 per cent in the corresponding period of the previous year. The ongoing manufacturing recovery is  aided by robust growth in petroleum refining, automobiles, wearing apparels, chemicals, electrical machinery and wood products including furniture. Apart from manufacturing, the other three segments of the industry sector- electricity, gas, water supply and related utilities, mining and quarrying and construction activities are witnessing a deceleration in growth.
The survey underlines that the growth in the services sector moderated slightly, but still remains robust. Being the main driver of the economy, the sector contributed about 69 per cent of the total growth during 2011-12 to 2015-16 and in the process expanding its share in the economy by 4 percentage points from 49 to 53 per cent.
The survey in its outlook clearly points out though the emerging market economies have clearly slowed down, the Indian economy stands out as a haven of macroeconomic stability, resilience and optimism and can be expected to register GDP growth that could be in the range of 7.0 per cent to 7.75 per cent in the coming year.
*************

Despite Difficult Global Environment, India is Likely to be the Fastest Growing Major Economy in the World in 2016, says Economic Survey 2015-16
Addressing the Twin Balance Sheet Challenge,
Economic Survey Emphasizes on Recalibration of Growth Expectations;
La Nina To Positively Impact the Agriculture

Economic Survey 2015-16 tabled in Parliament here today by the Union Finance Minister Shri Arun Jaitley stresses that India’s economy is stable and it continues to be the land of opportunity.  Economic Survey states that India’s macro-economy is robust, and it is likely to be the fastest growing major economy in the world in 2016. This performance reflects the implementation of meaningful reforms like bringing transparency in regulatory decisions, liberalizing FDI, major crop insurance programmes, financial inclusion via Jan Dhan Yojana, JAM and power sector reforms. At the same time India also faces huge challenges such as exploiting demographic dividend through major investments in health and education, addressing the challenges of climate change and agriculture.

Review of major developments-
1.                                                                   The growth rate of GDP at constant market prices is projected to increase to 7.6% in 2015-16 from 7.2% in ­2014-15(CSO)
2.                                                                   The CPI- New series inflation has fluctuated around 5.5% while the WPI has been in negative territory since November 2014.

3.                                                                   Foreign exchange reserves have risen to US $ 351.5 (Feb-2016)
4.                                                                   Net FDI inflows have risen to US $ 27.7 Billion (April-December2015-16)
The fiscal sector registered three striking successes: ongoing fiscal consolidation, improved indirect tax collection and improved quality of spending at all levels of government. The government will be able to meet its fiscal deficit target of 3.9% of GDP. Direct tax revenue grew by 10.7%, while indirect tax revenue showed the growth by 10.7% (without Additional Revenue Measures).  Also, a shift in the quality of spending from revenue to investment and towards social sectors has been observed.
India stands out internationally as an investment proposition. India’s Rational Investor Ratings Index (RIRI) shows that India compares favorably with peer countries in the BBB investment grade and almost matches the performance of A-grade countries.
External Challenges
As per Economic Survey India is facing an unusually challenging and weak external environment. India needs to prepare itself for a major currency readjustment in Asia in the wake of a similar adjustment in China. Also it needs to address low growth in emerging markets due to capital controls to curb outflows of capital. In order to balance weak foreign demand, India needs to activate its domestic sources of demand to maintain growth momentum.
The Twin Balance Sheet Problem
The Twin Balance Sheet (TBS) problem implies the impaired financial positions of the public sector banks along with some large corporate houses. It is a major impediment to private investment and so to a full-fledged economic recovery.  As per economic Survey, Non performing assets (NPA) has been rising since 2010. The situation is not sustainable; a decisive solution is needed.
Economic survey points out that resolving the TBS challenge comprehensively would require 4R’s: recognition, recapitalization, resolution and reform. Banks must value their assets close to true value (recognition). Their capital position must be safeguarded via infusions of equity (recapitalization). The NPA’s in the corporate sector must be sold (resolution). And future incentives for the private sector and corporate must be set right to avoid repetition of the problem (reform).
Some steps have already been taken. The government launched the Indradhanush scheme for phased recapitalization of banks. The RBI also initiated the 5:25 and SDR schemes to incentivize banks to rehabilitate stressed assets. Most importantly, such moves need to be initiated jointly and cooperatively between the government and the RBI.
Recalibrating Growth Expectations
India’s long run potential GDP growth is substantial, about 8 to 10%. Since india’s exports of manufactured goods and services now constitute about 18% of GDP, its actual growth will depend upon global growth and demand. Reflecting India’s growing globalization, a 1 percentage point decrease in the world growth rate is now  associated with a 0.42 percentage point decrease in Indian growth rates. So, if the world economy remains weak, India’s growth will face considerable headwinds. Hence Economic survey points out that in the current global environment, there needs to be a recalibration of growth expectations and consequently of the standards of assessment.
Positive Impact of La-Nina
El Nino, an abnormal warming of the Pacific waters near Ecuador and Peru affects agricultural production in India. The 2015 El Nino has been the strongest since 1997. But if it is followed by a strong La Nina, there could be a much better harvest in 2016-17.An extended and strong El Nino explains why India had a deficient south monsoon and dry winters impacting both Kharif and Rabi crops. As per the data given in Economic Survey, some of the strongest El Nino years were followed by La Nina episodes resulting in bumper harvests. This kind of possibility cannot be ruled out in 2016 as well. La Nina conditions are expected to develop before June- September. So La Nina is unlikely to deliver its full bounty until late in Kharif season.










************
Reform Package of the Fertilizer Sector 

The Economic Survey 2015-16 presented here today in the Parliament by the Union Finance Minister Shri Arun Jaitley emphasizes that the Government budgeted Rs. 73,000 crore- about 0.5 per cent of GDP- on fertilizer subsidies in 2015-16. Nearly 70 per cent of this amount was allocated to urea, the most commonly used fertilizer, making it the largest subsidy after food. 

Distortions in urea are the result of multiple regulations. These distortions feed upon each other, and together create an environment that leads to a series of adverse outcomes. 

Firstly, urea is only subsidized for agricultural uses. Subsidies like this violate what we call the One Product- One Price principle. Black market effects are aggravated by further regulation- canalization. 

Secondly, the black market hurts small and marginal farmers more than large farmers since a higher percentage of them are forced to buy urea from the black market. 

Thirdly, some of the urea subsidy goes to sustaining inefficient domestic production instead of going to the small farmer. 

A reform package would address each of the problems identified above- the three leakages and skewed mix of fertilizer use- with the primary aim of benefiting the small farmer. 

First, decimalizing urea imports- which would increase the number of importers and allow greater freedom in import decision- would allow fertilizer supply to respond flexibly and quickly to changes in demand. This would be timely as climatic fluctuations are making it much more difficult for governments to forecast agriculture conditions and centrally manage supply. 

Second, bringing urea under the Nutrient Based Subsidy program currently in place for DAP (Diammonium Phosphate) and MOP (Muriate of Potash) would allow domestic producers to continue receiving fixed subsidies based on the nutritional content of their fertilizer, while deregulating the market would allow domestic producers to charge market prices. This would encourage fertilizer manufactures to be efficient, as they could then earn greater profits by reducing costs and improving urea quality. And this in turn would benefit farmer. 

Economic Survey 2015-16 states that the case for implementing direct transfers in fertilizers is to reduce leakages to the black market. The government’s policy of neem-coating urea is a step in exactly this direction. Neem-coating makes it more difficult for black marketers to divert urea to industrial consumers. Technology could be further used to curtail leakages and improve targeting of fertililzer subsidies. Fertilizer is a good sector to pursue JAM (Jan Dhan, Aadhaar, Mobile) because of a key similarity with the successful LPG experience: the centre controls the fertilizer supply chain. 

The relatively low levels of last-mile financial inclusion in much of rural India also suggest that it would be risky to replace subsidized fertilizer with cash, due to beneficiaries’ weak connection to the banking system. 

Universal subsidy with cap on number of bags 

A preferred option would be to set a cap on the number of subsidized bags each household can purchase and require biometric authentication at the point of sale (POS). Requiring biometric authentication would make it harder to conduct large-scale diversion. Imposing a cap on the total number of subsidized bags each farmer can purchase would improve targeting. Small farmers would still be able to get all their urea at subsidized prices but large farmers may have to pay market prices for some f of the urea the buy. 

Economic Survey 2015-16 further states that the Fertilizer subsidies are very costly, accounting for about 0.8 per cent of GDP. They encourage urea overuse, which damages the soil, undermining rural incomes, agricultural productivity, and thereby economic growth. Reform of the fertilizer sector would not only help farmers and improve efficiency in the sector. Decimalizing imports will ensure timely availability of fertilizes, and universal Direct Benefit Transfer (DBT) to farmers based on biometric identification with physical off take can reduce diversion of urea. 

*****
Reform Package of the Fertilizer Sector 

The Economic Survey 2015-16 presented here today in the Parliament by the Union Finance Minister Shri Arun Jaitley emphasizes that the Government budgeted Rs. 73,000 crore- about 0.5 per cent of GDP- on fertilizer subsidies in 2015-16. Nearly 70 per cent of this amount was allocated to urea, the most commonly used fertilizer, making it the largest subsidy after food. 

Distortions in urea are the result of multiple regulations. These distortions feed upon each other, and together create an environment that leads to a series of adverse outcomes. 

Firstly, urea is only subsidized for agricultural uses. Subsidies like this violate what we call the One Product- One Price principle. Black market effects are aggravated by further regulation- canalization. 

Secondly, the black market hurts small and marginal farmers more than large farmers since a higher percentage of them are forced to buy urea from the black market. 

Thirdly, some of the urea subsidy goes to sustaining inefficient domestic production instead of going to the small farmer. 

A reform package would address each of the problems identified above- the three leakages and skewed mix of fertilizer use- with the primary aim of benefiting the small farmer. 

First, decimalizing urea imports- which would increase the number of importers and allow greater freedom in import decision- would allow fertilizer supply to respond flexibly and quickly to changes in demand. This would be timely as climatic fluctuations are making it much more difficult for governments to forecast agriculture conditions and centrally manage supply. 

Second, bringing urea under the Nutrient Based Subsidy program currently in place for DAP (Diammonium Phosphate) and MOP (Muriate of Potash) would allow domestic producers to continue receiving fixed subsidies based on the nutritional content of their fertilizer, while deregulating the market would allow domestic producers to charge market prices. This would encourage fertilizer manufactures to be efficient, as they could then earn greater profits by reducing costs and improving urea quality. And this in turn would benefit farmer. 

Economic Survey 2015-16 states that the case for implementing direct transfers in fertilizers is to reduce leakages to the black market. The government’s policy of neem-coating urea is a step in exactly this direction. Neem-coating makes it more difficult for black marketers to divert urea to industrial consumers. Technology could be further used to curtail leakages and improve targeting of fertililzer subsidies. Fertilizer is a good sector to pursue JAM (Jan Dhan, Aadhaar, Mobile) because of a key similarity with the successful LPG experience: the centre controls the fertilizer supply chain. 

The relatively low levels of last-mile financial inclusion in much of rural India also suggest that it would be risky to replace subsidized fertilizer with cash, due to beneficiaries’ weak connection to the banking system. 

Universal subsidy with cap on number of bags 

A preferred option would be to set a cap on the number of subsidized bags each household can purchase and require biometric authentication at the point of sale (POS). Requiring biometric authentication would make it harder to conduct large-scale diversion. Imposing a cap on the total number of subsidized bags each farmer can purchase would improve targeting. Small farmers would still be able to get all their urea at subsidized prices but large farmers may have to pay market prices for some f of the urea the buy. 

Economic Survey 2015-16 further states that the Fertilizer subsidies are very costly, accounting for about 0.8 per cent of GDP. They encourage urea overuse, which damages the soil, undermining rural incomes, agricultural productivity, and thereby economic growth. Reform of the fertilizer sector would not only help farmers and improve efficiency in the sector. Decimalizing imports will ensure timely availability of fertilizes, and universal Direct Benefit Transfer (DBT) to farmers based on biometric identification with physical off take can reduce diversion of urea. 

*****
Trade deficit declines to 106.8 billion US dollars in April-January 2015-16 from 119.6 billion US dollars in corresponding period 2014-15

Current Account Deficit (CAD) limits at 1.4 percent of Gross Domestic Product during April-September, 2015-16

Foreign Exchange Reserves stand at 351.5 billion US dollars as on 5th February, 2016

  
            The Economic Survey 2015-16 presented to the Parliament today by the Finance Minister Shri Arun Jately testifies a strong macroeconomic outlook for the country.  The Survey shows that a pick-up in growth in some large advanced economies along with lower global commodity prices and relative financial stability amidst periodic turbulence marked the external sector environment in 2015-16.  The Survey says that during the current financial year (April-January), the growth in India’s exports declined year on year by 17.6% and they stood at 217.7 billion US dollars.  The imports have also declined by 15.5% in the current financial year (April-January) to 324.5 billion US dollars.  Lower levels of Petroleum Oil Lubricants (POL) imports were the main reason for the decline in total imports this year so far.  As a result, during 2015-16 (April-January) trade deficit decreased to 106.8 billion US dollars as compared to 119.6 billion US dollars in the corresponding period of 2014-15.   


            The Economic Survey further says that while exports slow down may continue for a while before picking up in the next fiscal, continuance of low commodity prices globally augurs well for sustaining low trade and current account deficit.  As a portion of GDP, the Current Account Deficit (CAD) is likely to be in the low range of One to One Point Five percent.  Moderate growth in the invisibles surplus, coupled with lower trade deficit, resulted in lower CAD of  US $ 26.8 billion (1.3 per cent of GDP) in  2014-15 and US $ 14.4 billion (1.4 per cent of GDP) in H1 of 2015-16.

            India’s Balance of Payments (BoP) position remained comfortable during the first half of 2015-16.  Low levels of CAD coupled with moderate rise in capital inflows resulted in rise in foreign exchange reserves of 10.6 billion US dollars in first half of 2015-16.  India’s foreign exchange reserves at 351.5 billion US dollars as on 5th February, 2016 mainly comprised foreign currency assets equal to 328.4 billion US dollars (93.4% of the total) and Gold at 17.7 billion US dollars.  With increase in reserves in 2015-16 (H1), all traditional reserve-based external sector vulnerability indicators have improved.  The reserves cover for imports increased from 8.9 months at end-March 2015 to 9.8 months at end-September 2015. 

            During 2015-16 (April-January), the average exchange rate of the rupee depreciated to Rs. 65.04 per US dollar as compared to Rs. 60.92 per US dollar in 2014-15 (April- January). 

India’s external debt has remained in safe limits as shown by the external debt to GDP ratio of 23.7% and debt service ratio of 7.5% in 2014-15.  The prudent external debt policy of the Government of India has resulted in external debt remaining within safe and comfortable limits and in containing its rise. 



***************
Economic Survey 2015-16: Services Sector remains the Key Driver of Economic Growth contributing almost 66.1% in 2015-16

The services sector in India has remained the most vibrant sector in terms of contribution to national and state incomes, trade flows, FDI inflows, and employment.  According to the Economic Survey 2015-16 tabled in Parliament today, the services sector contributed almost 66.1% of its gross value added growth in 2015-16 becoming the important net foreign exchange earner and the most attractive sector for FDI (Foreign Direct Investment) inflows.  Despite the slow down in the post crisis period (2010-14) India showed the fastest service sector growth with a CAGR (Compound Annual Growth Rate) of 8.6% followed by China at 8.4%. In 2014 India’s services sector growth at 10.3% was noticeably higher than China at 8.0%.  As per the ILO (International Labour Organisation) report on “Global Employment and Social Outlook : Trends 2015” job creation in the coming years will be mainly in the service sector.

FDI

In 2014, FDI in India at 34billion US$ increased by 22% over 2013.  There has been a significant growth in FDI inflows in 2014-15 and 2015-16(April – October) in general and in Services Sector in particular. In 2014-15, FDI inflows to the Services Sector grew by a whopping 70.4% to 16.4 billion US$.  This rising trend is continuing in the first seven months of 2015-16 with the FDI equity inflows in the services sector growing by 74.7% to 14.8 billion US$.  Significant FDI related liberalization has taken place in a number of sectors to ensure that India remains a increasingly attractive investment destination. 

India’s Services Trade

Services exports have been a dynamic element of India’s trade and globalization in recent years.  India’s services export grew from 16.8 billion US$ in 2001 to 155.6 billion US $ in 2014 which constitutes 7.5% of the GDP making the country the 8th largest services exporter in the world.   The overall openness of the economy reflected by total trade including services as a percentage of GDP shows a higher degree of openness at 50% in 2014-15 compared to 38% in 2004-05.

India’s Services Import at 81.1 billion US$ grew by 3.3% in 2014-15 . The Government has taken policy initiatives to promote services exports which include the Service Export from India Scheme (SEIS) and organizing Global Exhibition on Services (GES).

Tourism

Tourism is a major engine of economic growth, and a generator of employment of diverse kinds.  According to Economic Survey India’s tourism growth which was 10.2% in terms of foreign Tourist Arrival (FTA) and 9.7% in terms of foreign exchange Earnings(FEE) in 2014 decelerated to 4.5% in terms of FTAs and fell by 2.8% in terms of FEEs in 2015.  The lower growth in FTAs and fall in FEEs in 2015 is due to negative or low growth in FTAs from high spending tourists originating  from European countries like France, Germany and UK.  However, domestic tourism continues to be an important contributor to the sector providing much needed resilience  In 2014 it grew by 12.9%. The top five states in domestic tourist visits in 2014 are Tamil Nadu, Uttar Pradesh, Karnataka, Maharashtra and Andhra Pradesh. In 2014-15, Government has launched two schemes for thematic development of tourism, these are Swadesh Darshan and National Mission on Pilgrimage Rejuvenation and Spiritual Augmentation Drive (PRASAD).  To promote medical tourism, the Government has launched India’s Healthcare Portal and Advantage Health Care India.

Shipping & Port Services

Around 95% of India’s trade by volume and 68% in terms of value is transported by sea.  As per UNCTAD, India with 11.7 million twenty-foot equivalent units of container (TEUs) and a  world share of 1.7%, ranked ninth in 2014 among developing countries in terms of containership operations.  A vision for coastal shipping tourism and regional development has been prepared with a view to increasing the share of the coastal/inland water-ways transport mode from 7% to 10% by 2019-20.   The cargo traffic of India ports increased by 8.2% to 1052.21 million tonnes in 2014-15.  In India’s Maritime Agenda, the target for the year 2020 is 3130 million tonnes of port capacity with an investment of approximately Rs. 2,96,000/- crores.

IT-BPM Services

The IT-BPM sector has demonstrated flexibility and as per the Economic Survey is expected to touch an estimated share of 9.5% of GDP and more than 45% in total services export in 2015-16.  E-commerce is expected to grow at 21.4% in 2015-16 to reach 17 billion US$.  India home to a new breed of young start ups has clearly evolved to become the third largest base of technology start ups in the world.  Within one year the number of start ups have grown by 40% creating 80,000-85,000 jobs in 2015.   This emerging sector is set  to get up a fillip with the Startup India programme.

Research and Development Services

As per the CSO’s(Central Statistical Organization) new method there is no separate head for R&D, it is a part of the professional scientific & technical activities including R&D which grew at 3.8% and 25.5 respectively in 2013-14 and 2014-15.  According to the Survey, India’s R&D globalization and services market is set to almost double by 2020 to 38 billion US$.  

Consultancy Services

According to the Survey Consultancy Services is emerging as one of the fastest growing service segments in India.  Government has taken several initiatives like the Marketing Development Assistance and Market Access Initiative Scheme among others for capacity development of domestic consultants.

Real Estate and Housing

This sector constituted 8.0% of the India’s GVA (Gross Value Added) in 2014-15 and grew by 9.1%.  The sector has grown at a CAGR of 8.1% since 2011-12.  However, the construction sector has witnessed a slowdown in last few years due to weakening of both domestic and global growth.  The Government has announced plans to build six crore houses by the year 2022 under the Housing for All scheme.

Internal Trade

According to the Survey, Rs. 12,31,073 crore trade and repair services sector, with a 10.7% share in GVA, grew by 10.8% in 2014-15.     India’s retail market is expected to grow to 1.3 trillion US$ by 2020 making India the world’s fastest growing major developing market.  The E-commerce market in India is expected to reach 16 billion US$ by the end of 2015 on the back of growing internet population and increased online shoppers.

Media and Entertainment Services

According to the Economic Survey, the industry has recorded unprecedented growth over the last two decades making it one of the fastest growing industries in India. It is projected to grow at a CAGR of 13.9% to reach 1964 billion rupees by 2019.  Digital advertising and gaming, which grew by 44.5% and 22.4% respectively in 2014, are projected to drive the growth of this sector in the coming years.

Postal Services

India Posts is the largest Postal network in world.   Towards financial inclusion, the number of post office savings bank (POSB) accounts has increased from 30.86 crore to 33.97 crore and total deposits in POSB accounts and cash certificate to Rs. 6.53 lakhs crore in the last one year.  More than 80 lakh Sukanya Samridhi Yojna accounts have been opened.  The IT Modernization Project of the Department of Posts, with a total outlay of Rs. 4909 crore, involves computerization and networking of all the post offices.

*************
Economic Survey 2015-16: Better off taking the benefit of subsidies; recommends interventions and rectification of anomalies 

Economic Survey 2015-16 finds uneven distribution of Rs. 100,000 crore subsidies going to the better-off merely on account of 6 commodities like gold, LPG, Kerosene, Electricity, railway fares, aviation and turbine fuel (ATF) plus the Small Savings Scheme. The total amount given as subsidy is no less than Rs. 91,350 crore not to forget that this is an underestimate of the actual subsidy to the better-off because of the underestimation of the consumption by the rich in the NSS. If we add the subsidies inherent in just the PPF schemes, the total subsidy to the well-off amounts to above Rs. 1 lakh crore. This represents substantial leakage from the Government’s kitty, and an opportunity foregone to help the truly deserving. 

Addressing the interventions and rectifying these anomalies may be good not only from a fiscal and welfare perspective, but also from a political economy welfare perspective, lending credibility to other market-oriented reforms. 

***************

Fiscal Deficit target of 3.9% for 2015-16 seems Achievable, says the Economic Survey 

Coming Year expected to be a Challenging one from the Fiscal point of view 

The Economic survey 2015-16 states that the fiscal deficit target of 3.9 per cent for the year 2015-16 seems achievable. This assessment is based on pattern of revenue and expenditure in the first 9 months of the current financial year, inspite of the challenges posed by a lower than projected nominal GDP growth. Significant increase in revenue receipts, led by buoyant indirect tax collection, higher level of capital expenditure on the plan side, lower level of subsidies and enhanced untied resources transferred to the states following the acceptance of recommendations of the 14th Finance Commission, are some of the salient developments of the fiscal performance in 2015-16 so far. 

The performance of indirect taxes in the first 9 months indicates that the budget estimates are likely to be achieved and possibly exceeded, partly on account of measures taken by the government to enhance revenue by raising excise duty on petroleum product. Besides, severd major measures were initiated on both indirect and direct taxes in 2015-16. 

On the issue of the subsidies, the Economic Survey states that the rationalization and reprioritization of subsidies through better targeting would play a vital role in fiscal consolidation and in targeting expenditure more towards inclusive development. The total subsidy bill as a proportion of GDP is expected to be below 2% of GDP as per budget estimates for 2015-16. The 1.7% decline in majors subsidies was due to a near 44.7% decline in petroleum subsidy during April – December 2015 while other major subsidies- Food and Fertilizer-increased by 10.4% and 13.7% respectably during the period. 

Quoting the data released by the Controller General of Accounts, the Economic Survey states that the fiscal deficit of the Union Government at end –December 2015, as percentage of Budget Estimate is lower than in the corresponding period of the last year. The benign fiscal outcome so far in the year has been due to improved tax buoyancy and prudent expenditure management with assistance from the decline in oil price. The other notable highlights of the current year have been increased tax devolution to the states, achieving the highest increase in capital expenditure in the last six year and decline in majors subsidies. 

The robust growth in gross tax revenue in the first three quarter of the year was aided by the 34.8% growth in indirect taxes, with union excise duties growing by about 68%. Direct Taxes – both on personal income and corporate income- grew by more than 10% during the period. Disinvestment receipts at end – December 2015, though higher than in the previous year, stood only at 18.5% of the BE. Most of the 33.5% increase in capital expenditure was on the plan side. Revenue expenditure in April to December 2015 was only modestly higher by 9%. 

The Economic Survey says that the robust GDP growth has kept the increasing debt of the Central Government at sustainable levels, relative to the size of the economy. It says that the outstanding external debt which is 1.5% of GDP, is only small fraction of the total liability of the centre and is a declining proportion of GDP. 

On the issue of fiscal performance of the general government (Center plus States), the survey says that performance has been of fiscal consolidation and fiscal discipline. Based on the first 8 months’ data of the current year, it is observed that the both the centre and the states have stuck to the plan of ensuring quality of expenditure and boosting public investment. 

The survey says that the coming year is expected to be a challenging one from the fiscal point of view. The chances of India’s growth rate in 2016-17 increasing significantly beyond 2015-16 levels are not very high, due to likelihood of persistence of Global slowdown. Further the implementation of the Pay Commission recommendations and the One Rank One Pay (OROP) scheme will put additional burden on expenditure. Improving tax compliance through better tax administration, tapping new resources etc. could help raise more revenue and keep the fiscal deficit at levels projected in the revised fiscal roadmap. Improving the quality of expenditure has been indicated as important for achieving sustained fiscal consolidation. 

*******
Spreading Jam across India’s Economy

The Economic Survey 2015-16 presented here today in the Parliament by the Union Finance Minister Shri Arun Jaitley emphasizes that JAM Trinity –Jan dhan, Aadhaar, Mobile- can help government to implement large-scale, technology-enabled and real-time Direct Benefit Transfers (DBTs) to improve economic lives of India’s poor. First variety of JAM- PAHAL scheme of transferring LPG subsidies via DBT -has reduced leakages by 24 per cent. Economic Survey suggests that while deciding where next to spread JAM, policymakers should consider the challenges of beneficiary identification, distributor opposition and beneficiary financial inclusion. Spreading JAM to other areas will reduce leakages and provide more fiscal space to the Government.
JAM Components:
Economic Survey divides JAM into three components-
1.      Identification or First-Mile:  Identification of beneficiaries by government
2.      Transfer or Middle-Mile: Transfer of fund to beneficiaries by government
3.      Access or Last-Mile: Access of fund by beneficiaries
                                                                            
Identification:
First-mile deals with identification of beneficiary. This layer has issues of ghost and duplicate names due to administrative and political discretion and use of pre-Aadhaar database.  It is easier to implement the JAM for universal scheme than targeted one as identification will be easier. Identification of household-individual connection is important to note here as some schemes target at household level like JDY and some at individual level like Aadhaar. Aadhaar can help in better identification of the beneficiaries.
Transfer:
Middle-mile deals with the challenges of payment where government transfer benefits to the banks. But lack of bank accounts and its information with government put hindrances in the middle-layer connectivity. Main issue in this layer is of within-government coordination and dealing with supply chain interest groups.  Jan Dhan can help beneficiaries to have bank accounts.
Access:
Last-mile layer faces issues of lesser Bank penetration, mostly in rural areas. It deals with actual transfer of money from Bank to Beneficiary accounts. It also deals with issues of exclusion of genuine beneficiaries. Mobile can inform about benefits and also allow easier fund transfer.
Where next to spread JAM?
Economic Survey argues that policymakers should decide where to apply JAM based on two considerations of-
1.      Amount of leakages and,  
2.      Control of the central government.
If amount of the leakages in a given scheme/area is huge then it can be next target for introduction of JAM as subsidies with higher leakages will have larger returns from introducing JAM. Similarly control of central government will reduce administrative challenges of co-ordination and political challenges of opposition by interest groups.
Based on these two criteria- leakages and central government control-Survey suggests fertilizer subsidies and within-government transfers as two most promising areas for introduction of the JAM.
                          
JAM Preparedness Index:
Further economic survey has formulated JAM-Preparedness Indices for Urban and Rural areas in each state. It uses Aadhaar penetration, basic bank account penetration and Banking Correspondents (BC) density as indicators for the indices. It has also prepared Biometrically Authenticated Physical Update or BAPU-Preparedness Index, using Aadhaar penetration and Point of Sale machines as indicators, for each state and has compared Rural-JAM Preparedness Index with BAPU-Preparedness Index. It has found that many states are having higher scores in BAPU-Preparedness Index as compared to Rural JAM-Preparedness Index. Thus it suggests use of BAPU as short-term solution to reduce the leakages in these states, till states are well prepared for introduction of the JAM.
Conclusion:
Introduction of DBT in LPG and MGNREGS have proved that use of JAM can considerably reduce leakages, reduce idle funds, lower corruption and improve ease of doing business with the government. Despite huge improvements in financial inclusion due to Jan Dhan, JAM Preparedness indicators suggest that there is still long way to go. Center can invest in last-mile financial inclusion via further improving BC networks and promoting the spread of the mobile money.  In the meantime models like BAPU can be used as an alternative to reduce the leakages.

***************

Indian Equity Market Relatively Resilient Compared to Other Major Emerging Market Economies, says the Economy Survey 

Financial Inclusion Proceeding Apace under PMJD Yojana 

The Economic Survey 2015-16 presented today in the Parliament by the Union Finance Minister Shri Arun Jaitley states that despite volatility in global financial markets, the Indian equity market has been relatively resiliant during this period compared to the other major emerging market economies. The market has rebounded time and time again, and it is hoped that as the global financial market settle down, India can become the leading investment destination owing to its robust macroeconomic fundamentals. Banking sector gross credit deployment has been sluggish duirng the financial year. Increasing levels of gross Non Performing Assets (NPA) have reduced the banking sector’s capacity to lend. Sluggish growth and increasing indebtedness in some sectors of the economy have impacted the assets quality of banks and this is a cause of concern. Financial inclusion is proceeding apace under the Pradhan Mantri Jan Dhan Yojana while the Atal Pension Yojana is extending the reach of the New Pension Scheme. 

The Economic Survey 2015-16 states that the agreement on monetary policy frameswork signed between the Government and the Reserve Bank of India in February 2015 shape the monetary policy stance in 2015-16. Liquidity conditions were generally tight during the first quarter of 2015-16, mainly due to slow government spending in the beginning of the year. In the second quarter, liquidity conditions eased significantly but in the third quarter again the liquidity conditions tightened mainly due to festive season currency demand. The RBI anchored its policy rate to achieve the domestic inflation targets consistant with growth. The value of rupee also remained comparatively stable during this period. Average borrowings by banks have increased significantly in the immediate aftermath of US fed rate hike, resulting in appreciation of the rupee. However, subsequent to easing of liquidity conditions, the rupee started depreciating. 

Economic Survey 2015-16 states that during the current financial year, year on year growth in gross bank credit outstanding has remained around 10%. The sluggish growth can be attributed to incomplete transmission of the monitory policy, unwillingness of banks to lend credit on account of rising NPAs, and more attractive interest rates for borrowers in the bond markets. The year on year growth in time deposits fell to 10.6% in December 2016. This is because household saving are channelized to other areas like gold and real estate. The slowdown in time deposits has been slowing the growth of bank credit as time deposits remain the most important and cheaper source of banks funding. 

The credit off take by the industry sector for the bank has been slowing. The deployment of gross bank credit to industry grew at 5.3% year on year in December 2015. Gross bank credit to the services sector grew at sub 7% in May – November 2015 though it increased to 9.2% in December 2015. The agriculture sector too saw a downturn from November 2014. Only the personal loans segment, which benefited from the repo rate cut, has been showing accelerating growth from January 2015. The analysis of non food credit shows that consumption expenditure has been the key driver for the economy during the current financial year. The Economic Survey expresses concern that the share of industry has come down significantly. The decline reflects the muted markets sentiments leading to slowdown in private investment demand and industrial growth, poor earnings growth of the corporate sector, and risk aversion on the part of the banks. 

On the performance of the Scheduled Commercial Banks (SCBs), the Survey says that the slowdown in growth in the balance sheets of banks witnessed since 2011-12 continued in 2015-16. The moderation in growth of assets of SCBs can mainly be attributed to tepid growth in loans and advances. Growth in investments also slowed down marginally. The survey recommends that given the deterioration in asset quality and gradual implementation of Basel III, banks will have to improve their capital positions to meet unforeseen losses in future. The estimated capital requirement is likely to be about Rs 1,80,000 crore by 2018-19. Of this total requirement, the government of India proposes to make Rs 70,000 crore available out of budgetary allocations during the current and succeeding years. 

Economic Survey 2015-16 states that the asset quality of SCBs has come under stress during the recent times. Gross NPAs of SCBs as a proportion of gross advances increased to 5.1% from 4.6% between March and September 2015. Mining, Iron and Steel, textiles, infrastructure and aviation sectors contributed 53% of the total stressed advances. 

Economic Survey 2015-16 mentions that the number of new basic saving bank deposit accounts rose considerably during the year on account of the government’s initiative under Pradhan Mantri Jan Dhan Yojna. The number of such account increased to 44.1 crore for the period ending September 2015 and total number of banking outlets went up to 5.67 lakhs. 

In 2015-16 (April-December), resource mobilization through the public and right issues has surged rapidly as compared to the last financial year. During this period, 71 companies raised Rs 51,311 crore from the capital market compared to Rs 11,581 crore during the corresponding period of 2014-15. Resources mobilized by Mutual Funds also increased substantially to Rs 1,61,696 crore from Rs 87,942 crore mobilized during the same period of the previous year. During 2015-16 so far, the Indian Securities Market has remained subdued. The Bombay Stock Exchange Sensex declined by 8.5% (Up to January 5, 2016) over March 2015, mainly on account of turmoil in Global Equity Markets. 

The net investment by Foreign Institutional Investors/FPIs in the Indian market has been Rs 63,663 crore in 2015 as compared to Rs 2,56,213 crore in 2014. 

The total insurance premium generated by the insurance sector increased from Rs. 3,94,235 crore in 2013-14 to Rs 4,15,252 crore in 2014-15. During the period, Life Insurance premium registered a growth of 4.4% whereas the General Insurance business grew by 9%. Till December 2015, a total of 112.82 lakh members/subscribers have been enrolled under the National Pension Scheme. Three schemes – Pradhan Mantri Suraksha Bima Yojana (PMSBY), Pradhan Mantri Jivan Jyoti Bima Yojana (PMJJBY), and the Atal Pension Yojana(APY), - were launched in 2015 in the insurance and pension sectors for creating a universal social security system for all Indians, especially for the poor and the underpreviledged. 

**********

Labour Force participation Rate higher in Rural Areas than Urban Areas, significantly lower for females than males: Economic Survey

Women account for 57% of employment given under MGNREGA in the Current Financial Year

1.75 lakh Rural Youth trained under Deen Dayal Upadhyaya Grameen Kaushalya Yojana during 2015-16

The Economic Survey (2015-16) states that the proportion of economically active population (15-59 years) has increased from 57.7 per cent to 63.3 per cent during 1991 to 2013, as per Sample Registration System (SRS) data for 2013.
 As per the Economic Survey, the employment growth in the organized sector (Public and Private combined) increased by 2% in 2012 over 2011, while it increased by only 1% in 2011 over 2010. The annual growth rate of employment for the private sector was 4.5 % in 2012 over 2011 whereas the public sector registered a marginal growth of 0.4 % in the same year.
The Fourth Annual Employment-Unemployment Survey conducted by the Labour Bureau during the period January 2014 to July 2014 has shown that the Labour Force Participation Rate (LFPR) is 52.5 % for all persons. However, the LFPR for rural areas stands at 54.7% which is much greater than that for rural areas i.e. 47.2 %. The LFPR for women is significantly lower than that for males in both rural and urban areas. As per the Survey, the Unemployment Rate is 4.7 % in rural areas and 5.5% in urban areas. The total unemployment rate reported is 4.9% as per the Labour Bureau Survey. These figures are much higher than the all India unemployment rates of the National Sample Survey Office (NSSO, 2012-11) which reported unemployment rate of 2.3% for rural areas, 3.8% for Urban Areas and 2.7% for India as a whole.

The Government has taken several measures including Labour reforms to improve the employment situation in the country as well as employment conditions for women. Some of the recent Labour reforms include the Payment of Bonus (Amendment) Act 2015, National Career Services Portal, Shram Suvidha Portal and Universal Account Number Facility.
The National Policy on Skill Development and Entrepreneurship 2015 aims to ensure ‘Skilling on a large Scale at a Speed with high Standards and promote a culture of innovation based entrepreneurship to ensure sustainable livelihoods’. The Pradhan Mantri Kaushal Vikas Yojana (PMKVY) proposes to cover 24 lakh Indian youth with meaningful, industry relevant, Skill Based Training under which 5.32 lakh persons have already been enrolled. Of this number, 4.38 lakh have successfully completed training throughout India.
In addition, the Deen Dayal Upadhyaya Grameen Kaushalya Yojana (DDU-GKY), a placement-linked skill development scheme for rural youth who are poor, as a skilling component of the National Rural Livelihood Mission (NRLM) has also been launched. During 2015-16, against a target of skilling 1.78 lakhs candidates under the DDU-GKY, a total of 1.75 lakh have already been trained and 0.60 lakh placed till November 2015.
With a view to increasing the scope of employability among differently-abled persons, the Government has launched a National Action Plan (NAP) for skill training. The plan has target of skilling 5 lakh differently-abled persons in next three years. Plans are also on the anvil to extend the NAP with an online skill-training platform with a target of 5 lakh every year.
Under Mahatma Gandhi National Rural Employment Guarantee Scheme, about 3.63 crore households have been provided employment of 134.96 crore person days during the Current Financial Year (as on 01.01.2016). Of this, 76.81 crore person days or 57% were availed of by women.
The Survey has expressed concern at the reported low rates of workforce participation for females. The level of financial inclusion of women in terms of number of women with bank accounts still remains low in India. However, it is noteworthy that there are women achievers in the financial sector, with leading nationalized banks and financial institutions headed by women, says the Economic Survey.
 The Time Use Survey (TUS) being conducted in select states on a pilot basis has revealed the hidden contribution of women to the economy in the form of unpaid work. PUS is proposed to be extended to all states to design gender sensitive policies for employment and to make women’s work visible, says the Survey.


***************
Economic Survey 2015-16 highlights need for more investment in Human Capital, expresses concern at declining educational outcomes, emphasizes importance of improving efficiency in delivery of services in the health sector. 

The Economic Survey 2015-16, presented in the Parliament today by the Union Finance Minister Shri Arun Jaitley, states that the social infrastructure scenario in the country reflects gaps in access to education, health and housing amenities. Inclusive growth in India requires bridging gaps in educational outcomes and improved health attainments across the population. 

As India capitalizes on the ‘demographic dividend,’ Economic Survey 2015-16 states that increasing investment in human capital is a key requirement to improve productivity of the population says the Economic Survey. The Economic Survey 2015-16 states that the total expenditure on Social Services including Education, Health, Social Security, Nutrition, Welfare of SC/ST/OBC etc. during 2014-15 (RE) was 7 % of GDP while it was 6.5% during 2013-14. 

On the education front, the declining educational outcomes reflected in lower reading levels in both public and private sector schools are areas of concern. According to Annual Status of Education Report (ASER) 2014, there is sharp decline between 2007 to 2014 in the number of children in Standard V who can read a textbook of Standard II, in both government and private schools. 

Economic Survey 2015-16 states that the Gender Parity Index (2013-14 Provisional) however, shows an improvement in girls’ education, with parity having been achieved between girls and boys at almost all levels of education. The Government has taken several steps to provide education to underprivileged, vulnerable and marginalized people such as SCs, STs, other Backward Classes (OBC) including Minorities and other Economically Backward Classes through various programmes of education. ‘Digital Gender Atlas for Advancing Girl’s Education in India’ was launched last year to help identify low-performing geographic pockets for girls, particularly from marginalized groups. A number of scholarship schemes to encourage enrolment and learning levels among different groups are in operation. National Scholarship Portal, a single window system for various types of scholarship schemes administered by different Ministries/Departments has been introduced under Direct Benefit Transfer (DBT) mode. During 2015-16, about 90 lakh Minority students are to be benefited under the Pre-matric, Post-matric and Merit-cum-Means scholarship schemes, while about 23.21 lakh SC students benefited under Pre-matric, 56.30 lakh under Post-matric and 3354 under the Rajiv Gandhi National Fellowship including the Top Class Education scholarship scheme are to be assisted. 

Another aspect of human capital is the health attainments of the population. The expenditure on health as a percentage of total expenditure on social services increased from 18.6% in 2013-14 to 19.3% in 2014-15 (RE) and 19.5% in 2015-16 (BE). 

The Economic Survey reports that the ‘under five mortality’ has declined from 126 in 1990 to 49 in 2013. As per NFHS-4, the percentage of children fully immunized in the age group (12-23 months) is above 80 per cent in Sikkim and West Bengal. All the 12 states surveyed have more than 50 per cent children fully immunized. Similarly under Mission Indradhanush, 352 districts of the country have been covered with 20.8 lakh children and 5.8 lakh pregnant women immunized in the first phase. 17.2 lakh children and 5.1 lakh pregnant women have been immunized in the second phase and 17 lakh children and 4.8 lakh pregnant women immunized in the third phase of the Mission Indradhanush. 

Besides continuing support to existing interventions, initiatives such as Rashtriya Bal Swasthya Karyakram (RBSK) and Rashtriya Kishor Swasthya Karyakram’ (RKSK) have been launched in 2013 and 2014 respectively under the NHM to provide comprehensive health care. Considering the rising incidence of Non-Communicable Diseases (NCSs), the Government of India has initiated an integrated National Programme for Prevention and Control of Cancers, Diabetes, Cardiovascular Diseases and Stroke (NPCDCS) jointly by the Ministry of Health and Family Welfare and Ministry of AYUSH (Ayurveda, Yoga, Unani, Siddha and Homeopathy) on pilot basis in six districts. 

Economic Survey 2015-16 states that the immunization coverage of children, health of pregnant women, declining role of public health delivery systems and the lack of adequate skilled personnel are the main challenges in the health sector at present. Health and access to sanitation/housing amenities are closely related issues which can improve the productivity and living environment of the population to a great extent. There are persistent regional disparities in access to housing and sanitation facilities with some States lagging behind with less than 25 per cent coverage in sanitation facilities. 

The Way Forward 

The Economic Survey 2015-16 points out the need to focus on the quality of education in both the public and private sectors. There is need for professionally qualified and trained teachers to improve educational outcomes. To strengthen the delivery of public health services and infrastructure facilities, both public investments and leveraging of private investments are necessary. The adoption of technology platforms and innovative models by leveraging Jan-Dhan-Aadhaar-Mobile (JAM) scheme can improve the efficiency in delivery of services. 

***************


2015 - Landmark Year for India in Climate Change Initiatives: Economic Survey 2015-16; 

India plays important role in adoption of Paris Agreement and Launch of International Solar Alliance 

Economic Survey 2015-16 tabled in Parliament here today by the Union Finance Minister Shri Arun Jaitley states that the year 2015 has been a landmark year for India in terms of climate change initiatives both nationally and internationally. At the International level, India played a crucial role in the climate change talks and agreement under United Nations Framework Convention on Climate (UNFCCC) in Paris in December 2015, and the launch of International Solar Alliance. India also submitted its ambitious Intended Nationally Determined Contributions (INDC) to the UNFCCC on 2nd October 2015. The Economic Survey which was tabled today in the Parliament by the Union Finance Minister Shri Arun Jaitley has listed down, along with these achievements, the various other contributions and initiatives taken by India in dealing with climate change and promoting sustainable development. 

Economic Survey 2015-16 further states that India has played an important role in the 21st Conference of Parties (COP 21) under the UNFCCC and adoption of the Paris Agreement in December 2015. The Paris Agreement sets a roadmap for all nations in the world to take actions against climate change in the post-2020 period. Also, Prime Minister Shri Narendra Modi played a leading role at COP 21 in the launch of the International Solar Alliance (ISA), and also volunteered to host its Secretariat. ISA will provide a special platform for mutual cooperation among 121 solar-resource-rich countries in the world. 

Economic Survey highlights that as on 4 January 2016, with 1593 out of 7685 projects registered under Clean Development Mechanism (CDM) of UNFCCC, India has the second highest number of projects registered under CDM which further shows its commitment to fighting climate change. 

Economic Survey notes that in the domestic front, India has continued to take ambitious targets in its actions against climate change. As a part of its contributions to global climate change mitigation efforts, India announced its Intended Nationally Determined Contributions (INDC) which including other efforts has set itself an ambitious target of reducing its emissions intensity of its GDP by 33-35 percent by 2030, compared to 2005 levels, and of achieving 40 percent cumulative electric installed capacity from non-fossil fuel-based energy resources by 2030. 

Apart from the National Action on Climate Change (NAPCC), a new mission on Climate Change and Health is currently under formulation and a National Expert Group on Climate Change and Health has been constituted. The Economic Survey also talks about the National Mission on Coastal Areas (NMCA) for integrated coastal resource management and the proposed waste-to energy mission which are the other major components of India’s domestic actions against climate change. 

Economic Survey also talks about the National Adaptation Fund for Climate Change (NAFCC) which has been established with a budget provision of Rs 350 crore for the year 2015-16 and 2016-17, and the National Clean Energy Fund (NCEF) which is supported by the cess on coal. The Survey notes that India is one of the few countries around the world to have a carbon tax in the form of a cess on coal. 

Economic Survey 2015-16 further points out the progress on the renewable energy front in India by highlighting the ambitious targets of achieving 40 percent cumulative electric capacity from non-fossil fuel-based energy resources by 2030. Underlining India’s commitment to clean energy the first Renewable Energy Global Investment Meet and Expo (RE-INVEST) was organized in Feb 2015 to provide a platform for the global investment community to connect with stakeholders in India. 

Another ambitious program of the government is the Development of Solar cities Program under which 56 solar cities projects have been approved. The Economic Survey further lists the National Offshore Wind Energy Policy 2015 to help in offshore wind energy development, as yet another major renewable energy policy. 

***************

FTAs leading to increased Imports and Exports 

Since the mid- 2000s India’s Free Trade Agreements have doubled to about 42 today. They have increased trade with FTA countries more than would have happened otherwise. Increased trade has been more on the import than export side, because India maintains relatively high tariffs and hence had larger tariff reductions than its FTA partners. 

In case of the ASEAN FTA, the country has benefitted on both sides of trade flows with a statistically significant 33 per cent increase in exports and 79 per cent increase in imports. 

The trade increases have been much greater with the ASEAN than other FTAs and they have been greater in certain industries, such as metals on the import side. On the export side, FTAs have led to increased dynamism in apparels, especially in ASEAN markets. 

The overall effect on trade of an FTA is positive and statistically significant. The cumulative effect between the year of the FTA and 2013 on trade with ASEAN, Japan, and Korea is approximately equal to 50 per cent. India’s increased trade with FTA countries is not due to diversion of imports from more efficient non- FTA countries. 

On the import side, a ten per cent reduction in FTA tariffs for metals and machinery increased imports by 1.4 per cent and 2.1 per cent respectively, compared to other products from FTAs or all products from Non-FTA countries. 

In the current contest of slowing demand and excess capacity with threats of circumvention of trade rules, progress on FTAs, if pursues, must be combined with strengthening India’s ability to respond with WTO-consistent measures such as anti-dumping and conventional duties and safeguard measures. Analytical and other preparatory work must begin in earnest to prepare India for a mega-regional world. 

*****

GST rollout to mark an unprecedented reforms measure in the modern global tax history 

Economic Survey 2015-16 proposes widening tax net from 5.5 percent of earning individuals to more than 20 percent, reasonable taxation of the better-off individuals with income from Real Estate and Agriculture, phasing out of the tax exemption Raj 


Higher Property Tax Rates to check speculation in real estate  


The Economic Survey terms the proposed Goods and Services Tax (GST)  as a reforms measure perhaps unprecedented in the modern global tax history.    The GST, to be implemented by the Centre, 28 States and 7 Union Territories, awaits a Constitutional amendment requiring broad political consensus. Estimated to affect between 2 to 2.5 million Excise and Service Tax payers, the survey says  the GST would impact dramatic changes in  the Indian tax system.
                                                                     
Laying out the fiscal capacity roadmap for the 21st Century, the Survey calls for widening of the individual tax payers’ base. Despite the number of tax returns filed picking up from mid-1980 onwards, nearly 85 percent of the economy remains outside the tax net.  Pointing out that  just 5.5 percent  of earning individuals are in the tax net, translating to a ratio of about 4 percent of tax payers to voters, the Survey says this ratio should be raised to a desirable estimate of about 23 percent. It says that tax paying and political participation are the two important accountability mechanisms  wielded by citizens. This difference in taxpaying and voting results in contrasting phenomena such as the Indian state being able to avert famines while chronic malnutrition remains a challenge, organizing mega events but routine safety for women being more difficult to achieve, and effective state response to floods and tsunami while water and power metering remain more challenging. 

As a steps towards building fiscal capacity, the Survey suggests that the easiest way to widen the tax base would be not to raise exemption thresholds.  Making a study of the data since Independence, the document points out that the exemption thresholds have been raised much more rapidly than underlying income growth resulting in a widening of the wedge between average income and threshold limit. Bringing more and more people into the tax net via some form of direct taxation will help in realizing the promise of Indian democracy, it notes.

The  Economic Survey also calls for a review and phasing out of the tax exemption Raj that benefited the richer private sector. The Survey recalls the promise to bring down Corporate Taxes from 30 percent to 25 percent while proposing the phasing out of exemptions in an orderly manner.  It also calls for reasonable taxation of the better-off individuals regardless of where their income comes from, - Industry, Services, Real Estate  or Agriculture.

The Survey identifies Property Taxation as an area calling for urgent attention.  Higher Property Tax Rates with periodic updation will improve local government finances, discourage speculation in real estate sector and pave the way for Smart Cities.

Another alternative to fiscal consolidation would be to reduce subsidies to the well-off amounting to about Rs. 1 lakh crore by  better targeting subsides to the  poor. 




***************

Indian Economy needs to create enough “good” Safe Productive well-paying Jobs 

The Economic Survey 2015-2016 stresses that India being in the midway through its demographic dividend is providing an economic growth in terms of the working age share of the population. Hence to exploit this dividend and meet the growing aspiration of those entering the labor force, India’s Economy needs to create enough “good jobs”- jobs that are safe and pay well, and encourage firms and workers to improve skills and productivity. It may be noted that of the 10.5 million new jobs creative between 1989 and 2010, only 3.7 million-about 35 percent – were in the formal sector. In this period total establishments were increased by 4.2 million. However jobs informal sector have come down possibly due to increased use of contract labour. Thus, the challenge of creating the good jobs of India could be seen as a challenge of creating more formal sector jobs which also guarantee workers protection. 

Though, in the survey, medium sized formal sector manufacturing firms have reported labour regulations to be a significant barrier to growth and specifically “dismissal norm under the Industrial Disputes Act” and “the cumbersome nature of compliance with labour regulations in general” 

Contract workers has increased from 12 per cent of all registered manufacturing workers in 1999 to over 25 per cent 2010 on account of firms attitude to negotiate with labour regulations just to boost their production without facing any kind of labours unrest. 

The survey has suggested that productivity in the apparel sector can be substantially improved by relocating capital from less productive to more productive firms. Incidentally formal apparel sector firms in India are about 15 times more productive than there informal sector counterparts. However, India’s apparel sector is dominated by informal firms where approximately 2.0 million establishments employing about 3.3 million workers, dwarfing the formal apparel sector’s 2800 firms which employ 330,000 workers. Apparently this sector is now in process of relocating its units in second and third tier towns and cities. This business model of moving factories to workers has a number of commercial and social advantages-it involves spreading economic development to underdeveloped areas, reduces spatial mismatch in the labour market and can improve competitiveness by raising firms’ access to lower cost labour. Moreover, about 70 per cent of the employees of India’s larges apparel exporter are women. 

Recent studies have estimated that India’s GDP would grow by an additional 1.4 per cent every year if women were to participate as much as men in the economy. 

To boost economy the centre has to ensure that labour regulation is worker-centric, by expanding workers choice and reducing mandatory taxes on formal sector employment. 

The survey has also suggested to improve the function of EPFO (Employees Provident Fund Organization). Policymaker should consider whether lower earners should be offered the same choice- of whether to contribute part of their salaries to the EPF- which the rich have. This would both introduce competition in the market for savings, which may improve EPFO’s service standards, and allow the poor-some of whom may be liquidity constrained- to optimize as per their own personal requirements. To be clear, the employer’s 12 per cent contribution to EPF/EPS would be unaffected. The only difference would be that employees could choose whether or not to save 12 per cent of their salary into EPF or keep it as take home pay. Such a change would effectively reduce the tax on formal sector labour while leaving informal sector labour costs unchanged. In a relative sense, it would therefore reduce the cost of hiring workers in the formal sector and incentivize more people into formality, where productivity levels and growth are higher. 

In a nutshell, India’s most pressing labour market challenge going forward will be to generate a large number of good jobs. These jobs tend to be formal sector jobs. Two obstacles to formal sector job creation are regulation- induced taxes on formal workers and spatial mismatch between workers and jobs. Encouragingly, firms and workers are finding solution to deal with these obstacles that are even more varied than the obstacles themselves. Meeting the challenge ahead will require more of such ingenuity, and the private sector, state governments and the Centre will all have important roles to play. 

***************

Lending Rate Based Interest Rates 

Reserve Bank of India (RBI) has issued guidelines on computing interest rates on advances based on the Marginal Cost of Funds based Lending Rate (MCLR) to banks vide circular DBR No. Dir.BC.67/13.03.00/2015-16 dated December 17, 2015 which will be effective from April 1, 2016. Apart from helping improve the transmission of policy rates into the lending rates of banks, these guidelines are expected to improve transparency in the methodology followed by banks for determining interest rates on advances. These guidelines are also expected to ensure availability of bank credit at interest rates which are fair to the borrowers as well as the banks. Further, marginal cost of pricing of loans will help the banks to become more competitive and enhance their long run value and contribution to economic growth. 

This was stated by Shri Jayant Sinha, Minister of State in the Ministry of Finance in written reply to a question in Lok Sabha today. 

*****

Renaming of MUDRA Bank 

The Union Cabinet has approved the conversion of MUDRA Ltd into MUDRA (SIDBI) Bank as, a wholly owned subsidiary of SIDBI to carry out the following functions: 

i) Refinance operations, 

ii) Support services with focus on portal management, data analysis etc, 

iii) Any activity entrusted/advised by Government of India

MUDRA Ltd, has been functional since April 8, 2015. It has written to Reserve Bank of India for conveying concurrence for the conversion of the Company to MUDRA (SIDBI) Bank Ltd. 

This was stated by Shri Jayant Sinha, Minister of State in the Ministry of Finance in written reply to a question in Lok Sabha today. 

*****
Custom Duty on Life Saving Drugs 

Representations have been received from domestic industry stating, inter alia that the exemption/concessional customs duties on drugs including life saving drugs deters domestic manufacture of these life saving drugs. Accordingly, in consultation with the stakeholders including Ministry of Health and Family Welfare and the Department of Pharmaceuticals, (a) Representations were received from domestic industry stating, inter alia that the exemption/concessional customs duties on drugs including life saving drugs deters domestic manufacture of these life saving drugs. Accordingly, in consultation with the stakeholders including Ministry of Health and Family Welfare and the Department of Pharmaceuticals, exemption/concessional customs duties on 76 specified drugs was withdrawn, vide notification of the Government of India, Ministry of Finance (Department of Revenue) No. 6/2016-Customs, dated the 28th February, 2016 [G.S.R. No. 124 (E) dated 28th January, 2016] so as to eliminate the disadvantage to the domestic manufacturers of such drugs. Following the withdrawal of exemptions/concessions, these 76 imported drugs (including those cleared from SEZ to domestic tariff area) would attract applicable customs duties. 

Subsequent to the withdrawal of the exemption/concessional customs duties, a Committee comprising of representatives of the Ministry of Health and Family Welfare, Department of Pharmaceuticals, Director General of Health Services, Department of Revenue, National Pharmaceutical Pricing Authority, Central Drugs Standards Control Organization, National AIDS Control Programme and experts from All India Institute of Medical Sciences, Safdarjung Hospital and Ram Manohar Lohia Hospital, was constituted in the Ministry of Health and Family Welfare to assess the impact of withdrawal of customs duties exemption/concession on the 76 drugs. Keeping in view the likely impact on the prices and availability of these drugs, Ministry of Health and Family Welfare recommended to restore exemption/concession of customs duties on three drugs, namely Octreotide; Somatropin; and Anti-Haemophilic factor concentrate VIII & IX. Accordingly, the exemption/concessional customs duties has been restored on these 3 drugs vide notification of the Government of India Ministry of Finance (Department of Revenue) No. 10/2016-Customs, dated the 17th February, 2016 [G.S.R. No. 177 (E) dated 17th February, 2016]. 

This was stated by Shri Jayant Sinha, Minister of State in the Ministry of Finance in written reply to a question in Lok Sabha today. 

*****

Action Against Tax Evaders 

Appropriate action under relevant laws against tax evaders is an on-going process. Such action under direct tax laws includes searches, surveys, enquiries, assessment of income, levy of tax, interest, penalties, etc and filing of prosecution complaints in criminal courts, wherever applicable. The tax, interest and penalties, forming part of the total liability fo each assesseee, are enforced as per law. 

Regional Direct Taxes Advisory Committees have already been constituted by the Government for 64 stations in the country. 

As submitted in reply to part (a) of the question, appropriate action against tax evaders under direct tax laws is an on-going process. However, disclosure of information regarding specific taxpayers is prohibited except as provided under section 138 of the Income-tax Act, 1961. 

This was stated by Shri Jayant Sinha, Minister of State in the Ministry of Finance in written reply to a question in Lok Sabha today. 

*****

White Label ATMs 

The Reserve Bank of India (RBI) has issued guidelines regarding setting up of White Label ATMs by non-bank entities. Non-bank entities that intend setting up, owning and operating ATMs, are christened “White Label ATM Operators” (WLAO) and such ATMs are called “While Label ATMs” (WLAs). Three different schemes are available to WLAOs for setting of WLAs which incentivize setting up of WLAs in Tier III to Tier VI centres (population less than 50000). As on 31.12.2015, 11706 WLAs have been set up. 

There are 1.26 lakh Bank Mitras in rural areas of the country who are equipped with either fixed points kiosks or micro ATMs which can be conveniently carried from place to place. 

This was stated by Shri Jayant Sinha, Minister of State in the Ministry of Finance in written reply to a question in Lok Sabha today. 

*****

Pan Card Mandatory for all Transactions 

The Government vide notification S.O. (3545)(E) dated 30.12.2015, has made quoting of Permanent Account Number (PAN) mandatory for all transactions (irrespective of the mode of payment) of sale or purchase of goods or services of any nature exceeding rupees 2 lakh and for other specified transactions with effect from the 1st day of January, 2016. A person not having PAN can, however, undertake such transactions by making a declaration in Form No. 60 as prescribed. 

This was stated by Shri Jayant Sinha, Minister of State in the Ministry of Finance in written reply to a question in Lok Sabha today. 

*****

No comments

Powered by Blogger.