Economic Survey 2019-20 PDF out: Chief Economic Advisor (CEA) Krishnamurthy V Subramanian has finally presented the Economic Survey 2020 in both the houses of the Parliament. The Survey reviews and analyses the overall economic progress made in the last fiscal along with the key policy challenges. This annual document of the Union Finance Ministry focuses on the implementation of various Government Schemes and policies and their impact on the economy so far.
Besides talking about the macroeconomic and microeconomic factors, GDP growth rate, Inflation, the Economic Survey 2019-2020 throws a light upon the major impact of employment, agricultural policies and climate change on the Indian Economy. After presenting the Survey in the parliament, the CEA addressed a Press Conference to discuss the future economic roadmap.
On February 1, 2020, the Union Finance Minister Nirmala Sitharaman will be present the Union Budget 2020-21, which lays out finances of the Central Government and estimated revenue and expenditure for 2020-21. Here is the detailed analysis and brief summary of the Economic Survey 2020. Have a look:
Theme of Economic Survey 2020 – “Enable Markets, Promote ‘Pro-Business’ Policy & Strengthen ‘Trust’ in Economy”
Key Highlights of the Economic Budget 2020
10 New Ideas proposed by Economic Survey 2019-20
India’s Overall Economic Performance in 2019-20: GDP, Inflation, Fiscal Developments, GST
– India witnessed a GDP growth of 4.8% in the first half of 2019-20 amidst weakened global trade and demand
– Growth of Agriculture and allied activities & Public administration, defence, and other services’ was higher in the first half of 2019-20 in comparison to second half 2018-19.
– Current Account Deficit (CAD) contracted to 1.5% of GDP in H1 of 2019-20
– Remarkable Foreign Direct Investment (FDI) and increase of foreign exchange reserves
– Headline inflation mounted from 3.3% in the first half of 2019-20 to 7.35% in December 2019-20 due to food inflation rise
– Survey predicts 5% GDP growth for 2019-20 overall based on CSO’s first Advance Estimates
– Revenue Receipts registered higher growth in H1 of 2019-20
– Gross GST monthly collections crossed Rs 1 lakh crore for five times in 2019-20 till December 2019
Wealth Creation: Invisible Hand Supported by Hand of Trust
The Economic Survey talks about the need to bring openness in the market for the creation of wealth through increased investment. In light of this, the survey points towards an Invisible Hand that is supported by the Hand of Trust. It presents an amalgamation of old and new; old in terms of ancient Indian tradition and new suggests the use of FinTech in Indian Public Sector Banks. It calls for strengthening this invisible hand through:
– Equal opportunities for new entrants
– Fair competition & ease doing business
– Trade for job creation
– Scaling up of the banking sector
– Introduction of the idea of trust as a public good
Entrepreneurship and Wealth Creation
The Survey calls for the creation of wealth through:
– Entrepreneurship of the working class
– Pro-business policies to test the power of competitive markets
– Elimination of policies that weaken the markets
– Integration of Assemble in India into Make in India
– Scaling up of the banking sector
– Privatization to foster efficiency
Pro-business versus Pro-markets
The Economic Survey says that India needs more of pro-business policies and break away from pro-crony policies to become a USD 5 trillion economy. The Survey says that till 2011, several Pro-Crony policies were followed such as preferential allocation of natural resources. These pro-crony policies majorly led to willful defaults which drained off the banks.
Pro-Crony Meaning: In Favour of a close friend or companion
Undermining Markets: Is Government Intervention required?
The Survey suggests restricted government intervention in the markets. It lists out several instances where the intervention of Government has adversely affected the market such as imposing stock limits under Essential Commodities Act (ECA), 1955 that led to increase in onion prices in 2019; regulation of drug prices under ECA; intervention in the food grain market and so on. The government must analyse and then decide whether its intervention is even required in a particular market. This will directly benefit by encouraging investments and economic growth.
Creation of Jobs and Growth
The Economic Survey calls for the integration of “Assemble in India” with “Make in India” to create more jobs and accelerate growth. The survey seeks to:
– Increase export market share to 3.5% by 2025 and 6% by 2030
– Creation of over 4 crore rewarding jobs by 2025 and over 8 crore jobs by 2030
This can be achieved by adopting China-like policies such as export of goods majorly to rich markets.
Targeting Ease of Doing Business
India was ranked at 63rd position in World Bank’s Doing Business 2019 rankings, a jump of 79 positions from 142nd rank in 2014. However, the economy is still trailing in several parameters such as Ease of Starting Business, Paying Taxes, Registering Property and Enforcing Contracts.
The Economic Survey calls for close coordination between the Logistics Divisions of Union Ministry of Commerce and Industry, Union Ministry of Shipping, Central Board of Indirect Taxes and Customs and the port authorities. There are some sectors that require a more focused approach such as the tourism sector, manufacturing sector and others.
Golden jubilee of Bank Nationalisation
The year 2019 marked the golden jubilee year of Bank Nationalisation. The Survey points out that the growth of Indian Banking Sector has not been proportionate with the overall growth of the economy. So far, only one Indian bank has made it to the list of Global Top 100 Banks. In 2019, a Rupee investment in public sector banks (PSBs) led to a loss of 23 paise on an average. The Survey calls for making PSBs more efficient through:
– Employee Stock Ownership Plan (ESOP) for employees of banks
– Creation of an entity similar to that of GSTN to aggregate data from all PSBs and ensure better monitoring of borrowers through artificial intelligence and machine learning
Privatisation and Wealth Creation
The Economic Survey 2020 calls for privatization to boost job and wealth creation. It examines the before and after the performance of over 10 CPSEs that underwent strategic disinvestment. The Strategic disinvestment in BPCL has led to an increase of over Rs. 30,000 crore wealth in India. Collectively, the net profit, net worth, return on assets (ROA) & equity (ROE) have improved notably. The more aggressive disinvestment is suggested for higher profitability.
Thalinomics: Economics of Plate of Food in India
This year, the Survey throws a light upon the price paid by a person for a Thali in India anywhere. The prices of a vegetarian Thali have declined sharply since 2015-16; however, this price increased in 2019-20. During 2006 – 2020, the affordability of Indian vegetarian Thalis improved by 29% and affordability of non-vegetarian Indian Thali improved by 18%.
Economic Survey 2019-20 projects the GDP Growth of 6% – 6.5% in fiscal 2020-21.
Industrial growth is estimated at 2.5% of fiscal 2019-20.
Key points to note
The Economic Survey is tabled a day before the presentation of Union Budget.
The Survey is prepared by the Finance Ministry’s Department of Economic Affairs.
The Chief Economic Advisor (CEA) of India is the chief author of the Economic Survey.
It consists of Volume I, Volume II and Statistical Appendix.
It details the state of Indian Economy, future prospects and key challenges.
It reveals the true GDP growth achieved in the past fiscal and projects the further GDP growth.
It talks about the job growth & annual collection of the Goods and Services Tax (GST).
Economic Survey 2018-2019: A Summary
Theme: Shifting gears with Investment as a key driver
The Economic Survey 2019 was focused on achieving Prime Minister Narendra Modi’s vision of USD 5 Trillion Indian Economy. The last year survey called for the adoption of behavioural economics to “nudge” people towards expected behaviour. The Survey 2018-19 projected the GDP growth at 7% for 2019-20. To achieve this growth, the Survey depicted Private Investment as a key driver for the overall growth and job creation. For a detailed analysis of Economic Survey 2019, visit: