Volume 1

CONTENTS
Chapter Page Name of the Chapter
No. No.
1 What is Economic Survey?

1 2 State of the Economy: An Analytical Overview and Outlook for Policy

(Vol. I) and An Overview of India’s Economic Performance in 2017-18
(Vol. II)

2 6 A New, Exciting Bird’s-Eye View of the Indian Economy Through the

GST

3 8 Investment and Saving Slowdowns and Recoveries: Cross-Country

Insights for India
4 9 Reconciling Fiscal Federalism and Accountability: Is there a Low
Equilibrium Trap?
5 11 Is there a Late Converger Stall in Economic Development? Can India
Escape it?
6 14 Climate, Climate Change, and Agriculture
7 21 Gender and Son Meta-Preference: Is Development Itself an Antidote?

8 24 Transforming Science and Technology in India

9 25 Ease of Doing Business’ Next Frontier: Timely Justice

Volume 2
CONTENTS
Chapter No. Page No. Name of the Chapter
2 27 Review of Fiscal Developments
3 29 Monetary Management and Financial Intermediation
4 31 Prices and Inflation
5 35 Sustainable Development, Energy and Climate Change
6 37 External Sector
7 39 Agriculture and Food Management
8 42 Industry and Infrastructure
9 50 Services Sector
10 53 Social Infrastructure, Employment and Human Development

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What is Economic Survey?

The Finance Ministry of India presents the Economic Survey in the Parliament every year,
just before the Union Budget.It is the ministry s view on the annual economic development
of the country. The Economic Survey 2017-2018 is presented in the Parliament by Union
Finance Minister Arun Jaitely.

Economic survey reviews the developments in the Indian economy over the previous 12
months, summarizes the performance on major development programmes, and highlights
the policy initiatives of the government and the prospects of the economy in the short to
medium term. This document is presented to both the houses of Parliament during the
budget session.

The first draft of the economic survey is prepared by the Department of Economic Affairs in
the Finance Ministry. Then this draft is cleared by the Chief Economic Advisor and
Secretary of Economic Affairs. The final version is scrutinized by the Finance Secretary and
Finance Minister. Most of the data are given by CSO.

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Ten new facts on the Indian economy (incorporated under various chapters)

Chapter 1 of Volume I and II - Overview of India’s economy

GDP growth level

The real GDP growth is expected to reach 6.75 percent this fiscal and will rise to 7.0 to 7.5
percent in 2018-19, thereby re-instating India as the world s fastest growing major
economy.

What is special about India’s economic growth?

The survey points out that India can be rated as among the best performing economies in
the world as the average growth during last three years is around 4 percentage points
higher than global growth and nearly 3 percentage points higher than that of Emerging
Market and Developing Economies.

It points out that the GDP growth has averaged 7.3 per cent for the period from 2014-15 to
2017-18, which is the highest among the major economies of the world.

Gross Domestic Product

Gross domestic product (GDP) is the monetary value of all the finished goods and services
produced within a country s borders in a specific time period. Though GDP is usually
calculated on an annual basis, it can be calculated with reference to any time frame.

What is economic growth rate ?

An economic growth rate is a measure of economic growth from one period to another in
terms of percentage. In practice, it is a measure of the rate of change in a nation s GDP from
one year to another.

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The economic growth rate provides insight into the general direction and magnitude of
growth for the overall economy. It demonstrates the change in a nation s or economy s
income over a specified period of time. Most commonly, this is examined on a quarterly
basis, but economic growth rates can be observed across larger spans of time, such as year
over year (YOY) or decade over decade.

Economic growth refers to positive change in economic output, but changes in economic
output can be either positive or negative. If an economy experiences two consecutive
quarters with falling growth rates, it can be said that the associated economy is falling into
a recession. If the economy begins to shrink, the percentage rate can be expressed in
negative to demonstrate the income lost over the time period being examined.

Reforms which have helped India to attain higher GDP growth levels
1. Introduction of Goods and Services Tax (GST) reform on July 1, 2017
2. Introduction of Bankruptcy Code
3. Implementing a major recapitalization package to strengthen the public-sector banks
4. Further liberalization of FDI and the export uplift from the global recovery

Details of Economic growth

The Gross Value Added (GVA) at constant basic prices is expected to grow at the rate of 6.1
per cent in 2017-18 as compared to 6.6 per cent in 2016-17. Similarly, Agriculture, industry
and services sectors are expected to grow at the rate of 2.1 per cent, 4.4 per cent, and 8.3
per cent respectively in 2017-18.

Gross Value Added or GDP (FC)

Gross value added (GVA) is the measure of the value of goods and services produced in an
area, industry, or sector of economy.

Relationship to GDP
GVA is linked to GDP, as both are measures of output. The relationship is defined as follows:
GVA + Taxes on products − Subsidies on products = GDP

Why GVA Is Calculated?

1. GVA and GDP give a picture of economic activity from producers (supply side) and
consumers (demand side) perspective, respectively, because GVA is the net receipt of the
producers and GDP is the expenditure incurred by the consumers.

2. Both these measures need not match and there could be a sharp divergence due to net
indirect taxes . NIT = indirect taxes − subsidies , which are counted in GDP calculations
(GDP is the sum of GVA and NIT).

3. GVA provides a better measure of economic activity because GDP can record a sharp
increase just on account of increased tax collections due to better compliance/coverage
and not necessarily due to increase in output.

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4. GVA is a better reflection of the productivity of the producers as it excludes the indirect
taxes, which could distort the production process.

A sector-wise breakdown provided by the GVA measure can better help policymakers to
decide which sectors need incentives/stimulus or vice versa.

Position of exports
The survey adds that after remaining in negative territory for a couple of years, growth of
exports rebounded into positive one during 2016-17 and expected to grow faster in 2017-
18.
However, due to higher expected increase in imports, net exports of goods and services are
slated to decline in 2017-18.

Concerns on economic growth front in future

1. The possibility of an increase in crude oil prices in the international market.
2. Possibility of correction in elevated stock prices provoking a sudden stall in capital
flows.
3. Over the medium term, three areas of policy focus stand out: Employment: finding good
jobs for the young and burgeoning workforce, especially for women. Education: creating
an educated and healthy labor force. Agriculture: raising farm productivity while
strengthening agricultural resilience.
4. Above all, India must continue improving the climate for rapid economic growth on the
strength of the only two truly sustainable engines—private investment and exports.
5. Despite the robust economic growth, the savings and investment as a ratio of GDP
generally declined. The major reduction in investment rate occurred in 2013-14,
although it declined in 2015-16 too. Within this the share of household sector declined,
while that of private corporate sector increased.

Overview of other indicators

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Summary of Chapter 2 of Volume I - Bird’s eye- view of Indian economy

through GST

Important facts
1. GST data reveals 50% increase in number of Indirect Taxpayers
2. Economic Survey says-Maharashtra, Gujarat, Karnataka, Tamil Nadu & Telangana
account for 70% of India s exports
3. India s internal trade in goods and services is 60 percent of GDP.

Increase in tax base

A preliminary analysis of the Goods and Services Tax (GST) data reveals that there has been
a 50% increase in the number of indirect taxpayers.

As on December 2017, there were 9.8 million unique GST registrants. The GST has
increased the number of unique indirect taxpayers by more than 50 percent –a substantial
3.4 million.
It also underlines that the distribution of the GST base among the States is closely linked to
the size of their economies, allaying fears of major producing States that the shift to the
new system would undermine their tax collections.

Goods and Services Tax (GST): Change in Indirect Taxation System

Goods and Service Tax or GST is a tax levied on the supply of goods and services. It has
replaced various taxes from 1 July 2017 and brought them under one umbrella to make tax
compliance easier.

1. Taxes previously levied and collected by the Centre:

(i) Central Excise duty
(ii) Additional Duties of Customs (commonly known as Counter Veiling Duty)
(iii) Service Tax
(iv) Central Sales Tax

2. Taxes previously levied and collected by the State:

(i) State VAT
(ii) Entertainment and Amusement Tax
(iii) Taxes on lotteries, betting, and gambling
(iv) Luxury Tax
(v) Octroi

Input Credit Under GST

Input credit means at the time of paying tax on output, one can deduct the tax already paid
on inputs.

Let us suppose a service provider delivers services on which the tax payable is Rs. 500 and
consumes goods and services on which he has already paid tax of Rs. 370. Therefore,

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Tax payable on output is Rs. 500

Tax paid on input (purchases) is Rs. 370

The service provider can claim input credit of Rs. 370 and is required to deposit only Rs.
130 in taxes.

Export performance of States

Five States-Maharashtra, Gujarat, Karnataka, Tamil Nadu and Telangana account for 70% of
India s exports.

Relation between export performance and Standard of living

New data on the international exports of States suggests a strong correlation between
export performance and States standard of living.

Level of inter-state trade

Last year Survey had estimated that India s Inter-State trade in goods was between 30 and
50 percent of GDP. But the GST data suggests that India s internal trade in goods and
services (excludes non-GST goods and services) is actually even higher and is about 60
percent of GDP.

Lower exports by large firms

The survey based on new GST data also provides a close look at the firm-level exports and
states that India s exports are unusual in that the largest firms account for a much smaller
share of exports than in other comparable countries. Export concentration by firms is much
lower in India than in the US, Germany, Brazil, or Mexico. The top one percent of firms
accounted for 72, 68, 67 and 55 percent of exports in Brazil, Germany, Mexico, and USA
respectively but only 38 percent in the case of India.

Similarly, the top 5 percent accounted for 91, 86, 91 and 74 percent in those countries,
compared with 59 percent in India and the top 25 percent of firms accounted for 99, 98, 99
and 93 percent in those countries, as opposed to 82 percent in India.

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Summary of Chapter 3, Volume I – Investment and Saving Slowdowns and

Recoveries: Cross-Country Insights for India

Investment and Savings situation

The highlights of the Investment and Savings situation are as follows:-

India s unprecedented climb to historic high levels of investment and saving rates in the
mid-2000s has been followed by a pronounced, albeit gradual, decline. This current
episode of investment and saving slowdown is still ongoing.

• The ratio of domestic saving to GDP reached 29.2 per cent in 2013 to a peak of 38.3 per
cent in 2007, before falling back to 29 per cent in 2016.
• The cumulative fall over and has been milder for investment than saving, but
investment has fallen to a lower level.

Based on the break-up of investment and saving, that is available up to 2015-16, private
investment accounts for 5 percentage points out of the 6.3 percentage point overall
investment decline over 2007-08 and 2015-16.

Asian countries faced the largest number of slowdown episodes following 1997. Currently
(after 2008), these economies are in the era of saving slowdowns. In India, the investment
slowdown started in 2012, subsequently intensified and was apparently still continuing as
of the latest date, that for 2016.

Since investment slowdowns are more detrimental to growth than savings slowdown, so,
policy priorities over the short run have focused on reviving investment by mobilizing
saving, via attempts to unearth black money and encouraging the conversion of gold into
financial saving. The share of financial saving is already rising in aggregate household
saving - with a clear shift visible towards market instruments – a phenomenon that has
been helped by demonetization.

The cross-country experience to study the pattern of investment and saving slowdowns has
revealed that the investment slowdowns have an impact on growth but not necessarily
saving. The policy conclusion is urgent prioritization of investment revival to arrest more
lasting growth impacts, as the government has done with plans for resolution of bad debts
and recapitalization of public sector banks.

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Summary of Chapter 4, Volume I – Reconciling Fiscal Federalism and

Accountability: Is there a Low Equilibrium Trap

Need for Fiscal Federalism and accountability to avoid low equilibrium trap
Is there a low equilibrium trap if fiscal federalism is not achieved? This was the question
posed by the Economic Survey 2017-18.

Lower tax collections by rural local governments

The Survey pointed out that low level of tax collections by the local Governments in rural
areas is posing challenge in reconciling fiscal federalism and accountability.

Panchayats received 95 per cent of their revenues from the devolved funds from the
Centre/State while generating only 5 per cent from own resources.

Reasons
This is because some State Governments have not devolved enough taxation powers to the
Panchayats- permissible taxes for Panchayats include Property and Entertainment Taxes
but not Land Taxes or Tolls on roads.

In some other instances, even though the rural local governments have been given powers
to tax, land revenue collection remained low between 7 to 19 per cent due to low base
values applied to properties and low rates of taxes levied.

Share of direct taxes

The Survey pointed out that economic and political development has been associated with
a rising share of direct taxes in total taxes. Direct Taxes account for about 70 per cent of
total taxes in Europe while in India the figure remained around 35 per cent. Unlike in other
countries, reliance on direct taxes in India seems to be declining, a trend that will be
reinforced if the Goods and Services Tax (GST) proves to be a buoyant source of revenue.

Direct tax collection by States

However, in India the States generate very low share of about 6 per cent of their revenue
from direct taxes while the figure is 19 per cent in Brazil and 44 per cent in Germany.

Direct tax collection by Local bodies

In the third tier, rural local governments in India generate only 6 per cent of revenues from
own resources compared to 40 per cent in Brazil and Germany. Meanwhile, urban local
governments in India are much closer to International norms collecting 18 per cent of total
revenues from direct taxes compared to 19 per cent in Brazil and 26 per cent in Germany.
Further, urban local governments in India generate 44 per cent of their total revenue from

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own sources. This is evident that urban local governments have emerged more fiscally
empowered than rural local government in India.

Conclusion
While calling for better data and evidence to evaluate the impact of 73rd and 74th
Constitutional Amendments (that devolved more powers to the rural and Urban local
governments respectively) on India s federal structure, its governance and accountability,
the Survey concludes that the local governments in India in tier 2 and tier 3 rely much
more on devolved resources. They generate less tax resources and collect less direct taxes.
The reason does not seem to be so much that they don t have enough taxation power.
Rather, they are not fully utilizing existing taxation powers.

Possible political reasons behind low collection

The Survey poses questions – is the problem a potential unwillingness to tax by the state,
stemming possibly from the close proximity between the state and the citizens? Are
citizens able but unwilling to pay more because they are dissatisfied with the quality of
services they are receiving? Or is it an equilibrium desired by all with Centre and States
using their devolution powers to control lower levels which are unable to tax the
proximate citizens and need outside resources?

The Survey says answers to these questions must inform future discussions of devolution
and decentralization. Unless the underlying problems are identified and solved, the states
and third tier governments could remain stuck in a low equilibrium trap forever depending
on outside resources with weak accountability mechanisms and weak own-resource
general capacity.

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Summary of Chapter 5, Volume I – Is there a Late Converger Stall in

Economic Development? Can India Escape it?

India Not Yet Facing Late Converger Stall

In chapter 5 of volume I, the Survey examines how far the apprehensions of an impending
Late Converger Stall are true for India and whether the stall is likely to affect India s
growth in the coming years.

The Survey notes that the present era is one of economic convergence whereby poorer
countries including India have grown faster than richer countries and closed the gap in
standards of living. India moved from being a low-income country in 1960 to a lower
middle-income country in 2008, and is now attempting to make a transition to middle
income status.

What are the apprehensions?

However, there are fears that this process of convergence may slow down for the late
converger countries like India, who are trying to make this transition after the global
financial crisis. It notes that India needs to take on four challenges in order to ward off the
fears of an impending Late Converger Stall in the process of economic development. The
four challenges that the Survey points to include:
1. the backlash against globalization which reduces exporting opportunities,
2. the difficulties of transferring resources from low productivity to higher productivity
sectors (structural transformation),
3. the challenge of upgrading human capital to the demands of a technology-intensive
workplace, and
4. coping with climate change-induced agricultural stress.

1. Hyper globalization repudiation or backlash against globalization –

Early convergers like Japan, South Korea and China were able to post average export
growth rates of over 15% for thirty years of their convergence periods. However, the
trading environment has changed for late convergers like India. A backlash in advanced
countries against rapid globalization has led to a fall in world trade GDP ratios since 2011.
This means a decline in exporting opportunities, especially since politics in advanced
countries is moving de facto in the direction of seeking and forcing lower trade GDP ratios.

b. Thwarted structural transformation or difficulties of transferring resources from

low productivity to higher productivity sectors
For successful development, resources need to shift from low productivity to high
productivity sectors. Structural transformation gets thwarted if resources shift from
informal, low productivity sectors to ones that are only marginally less informal or more

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productive. Studies in India show a weakening correlation between overall growth and
good growth.

c. Upgrading human capital to the demands of a technology-intensive workplace

Late convergers like India have failed to provide even the basic education necessary for
structural transformation. This is reflected in the finding that in India, roughly 40 to 50% of
rural children in grades 3 to 8 cannot meet the basic learning standards. This failure will
prove increasingly costly because the human capital frontier for the new structural
transformation will shift further away as technology will increasingly favour skilled human
capital. There is, however, some consolation that the trend has started to improve since
2014.

d. Climate change-induced agricultural stress

Growth rates of agricultural productivity for richer countries have been consistently
greater than for developing countries. For India agricultural productivity growth has been
stagnant, averaging roughly 3% over the last 30 years. It is also vulnerable to temperature
increase and still heavily dependent on precipitation. For late convergers, agricultural
productivity is critical not just for feeding people but for ensuring human capital
accumulation in those who move from agriculture to the modern sectors.

The Survey goes on to note that growth in India has occurred with limited transfer of
labour resources from low productivity to high productivity and dynamic sectors, and
despite relatively modest agricultural growth. Rapidly improving human capital, will be key
to sustaining India s dynamic growth trajectory. Rapidly improving agricultural
productivity against the headwinds of climate change and water scarcity will be another
key to achieving good sustainable growth. As of now India may not be faced with a Late
Converger Stall , but need to act in time to ward it off.

Learning Poverty Count (LPC) and Learning Poverty Gap (LPG)

Great strides have been made in India s primary school enrollment, which is now nearly
universal for both boys and girls at elementary level. Yet, both cross-country evidence and
evidence from India suggests that educational outcomes are incommensurate with years of
schooling.

LPC and LPG?

Specifically, we estimate a learning poverty headcount (LPC) as well as a learning poverty
gap (LPG). The LPC simply measures the number of children who do not meet the basic
learning benchmark, whereas the LPG additionally takes into account how far each student
is from the benchmark.

How do we estimate?

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Such estimates are rendered possible by the Annual Survey of Education Reports (ASER)
that have over time tested a sample of children between the ages of 5 and 16, residing in
rural India. Students are tested in terms of a set of tasks in reading and arithmetic, which
have remained constant over time. In a sense, these tests amount to an absolutely minimal
or basic level of educational attainment–akin to the poverty or subsistence line. Specifically,
we chose this line as being able to read a simple story (in the local language), and being
able to do subtraction – roughly meeting the passing standard for grade 3. For the present
analysis, we focus on children between in grades 3 through 8.

What are the findings?

The findings are stark. On math and reading, India s absolute LPC is between 40 and 50
percent: in other words, roughly 40-50 percent of children in rural India in grades 3 to 8
cannot meet the fairly basic learning standard. Discouragingly, this poverty count score
rises over time, substantially in the case of math. There is some consolation that since 2014
has the trend started to show some improvement; and also, consolation that at least there
are no significant differences in the LPC for boys and girls.

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Summary of Chapter 6, Volume I – Climate, Climate Change, and Agriculture

Sustainable Development Goals

The Sustainable Development Goals (SDGs) (known as the Global Goals) are a set of targets
relating to future international development. They have replaced the Millennium
Development Goals (MDGs) after their expiry in 2015. The SDGs were first formally
discussed at the United Nations Conference on Sustainable Development held in Rio de
Janeiro in June 2012 (Rio+20). SDGs are further divided into 17 categories as against the
MDGs which were divided into 8 categories. SDGs have target year of 2030. The goals are
interconnected—often the key to success on one goal involves issues associated with
another goal. The SDGs provide clear guidelines and targets for all the countries in
accordance with their own priorities and the environmental challenges of the world at
large.

Sustainable development goals are as follows:

Goal 1: End poverty in all its forms everywhere
Goal 2: End hunger, achieve food security and improved nutrition, and promote
sustainable
agriculture
Goal 3: Ensure healthy lives and promote well-being for all the people at all the ages
Goal 4: Ensure inclusive and equitable quality education and promote lifelong learning
opportunities for all
Goal 5: Achieve gender equality and empower all women and girls
Goal 6: Ensure availability and sustainable management of water and sanitation for all
Goal 7: Ensure access to affordable, reliable and sustainable energy for all
Goal 8: Promote inclusive and sustainable economic growth, full and productive
employment and decent work for all
Goal 9: Build resilient infrastructure, promote inclusive and sustainable industrialization
and foster innovation
Goal 10: Reduce inequality within and amongst countries
Goal 11: Make cities and human settlements inclusive, safe, resilient and sustainable
Goal 12: Ensure sustainable consumption and production patterns
Goal 13: Take urgent action to combat climate change and its impacts
Goal 14: Conserve and sustainably use the oceans, seas and marine resources
Goal 15: Protect, restore and promote sustainable use of terrestrial ecosystems,
sustainably
manage forests, combat desertification, and halt and reverse land degradation and halt
biodiversity loss
Goal 16: Promote peaceful and inclusive societies for sustainable development, provide
access to justice for all and build effective, accountable and inclusive institutions at all
levels
Goal 17: Strengthen the means of implementation and revitalize the global partnership for
sustainable development

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INTERNATIONAL SOLAR ALLIANCE

The International Solar Alliance is an alliance of more than 120 countries, most of them
being sunshine countries, which come either completely or partly between the Tropic of
Cancer and the Tropic of Capricorn. The alliance is also called International Agency for
Solar Policy and Application (IASPA). The alliance s primary objective is to work for
efficient use of solar energy to reduce dependence on fossil fuels. This initiative was first
proposed by Indian prime minister Narendra Modi in a speech in November 2015, in which
he referred the sunshine countries as suryaputra ( sons of the Sun ). The alliance is a
treaty-based intergovernmental organization.

The Framework Agreement of the International Solar Alliance opened for signatures in
Marrakech, Morocco, in November 2016, and 121 countries have joined it. The ISA is
headquartered in India. In January 2016, Narendra Modi, and the French president
François Hollande jointly laid the foundation stone of the ISA headquarters and
inaugurated the interim Secretariat of the ISA at the National Institute of Solar Energy
(NISE) in Gwalpahari, Gurugram.

NATIONAL ACTION PLAN ON CLIMATE CHANGE OR MEASURES OF INDIA TO REDUCE

CLIMATE CHANGE
The National Action Plan on Climate Change (NAPCC) was released on 30th June 2008. It
effectively pulls together a number of government s existing national plans on water,
renewable energy, energy efficiency, agriculture and others—bundled with additional
ones—into a set of eight missions. The Prime Minister s Council on Climate Change is in
charge of the overall implementation of the Plan.

The Plan document emphasises the overriding priority of maintaining high economic
growth rates to raise living standards; the plan identifies measures that promote
development objectives, while also yielding co-benefits for addressing climate change
effectively .

It says that these national measures would be more successful with the assistance from
developed countries, and pledges that India s per capita greenhouse gas emissions will at
no point exceed that of developed countries even as we pursue our development
objectives .
Eight sub-missions under National Action Plan on Climate Change are mentioned below.

National Solar Mission or Jawaharlal Nehru National Solar Mission

It has the objective to produce solar power of 100,000 MW (earlier 20,000 MW) by 2022.
The National Solar Mission is a major initiative of the Government of India and state
governments to promote ecologically sustainable growth, while addressing India s energy
security challenge.

It will also constitute a major contribution by India to the global effort to meet the
challenges of climate change. The objective of the National Solar Mission is also to establish
India as a global leader in the solar energy.

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National Mission for Enhanced Energy Efficiency

The National Mission for Enhanced Energy Efficiency (NMEEE) includes the
following:
1. Perform, Achieve and Trade: A market-based mechanism to enhance energy efficiency in
energy-intensive large industries, through certification of energy savings that could be
traded.
2. Market Transformation for Energy Efficiency (MTEE): Accelerates the shift to energy-
efficient appliances in designated sectors through innovative measures to make the
products more affordable.
3. Energy Efficiency Financing Platform (EEFP): The objective of EEFP is to provide a
platform to interact with financial institutions and project developers for implementation
of energy-efficient projects.
4. National Mission for Sustainable Habitat
It envisages a framework to build urban resilience to climate change, by integrating
adaptation and mitigation aspects into the urban planning process. It outlines the need for
addressing preparedness and creating resilient urban infrastructure through appropriate
capacity building and regulatory realignment.

National Water Mission

The main objective of the National Water Mission (NWM) is conservation of water,
minimising wastage and ensuring its more equitable distribution, both across and within
states, through integrated water resources development and management .

The five identified goals of the Mission are as follows:

1. Comprehensive water database in public domain and assessment of the impact of climate
change on water resource;
2. Promotion of citizen and state action for water conservation, augmentation and
preservation;
3. Focussed attention to vulnerable areas including over-exploited areas;
4. Increasing water-use efficiency by 20%, and
5. Promotion of basin level integrated water resources management.

National Mission for Sustaining Himalayan Ecosystem

The Mission attempts to address some important issues concerning the following:
1. Himalayan glaciers and the associated hydrological consequences.
2. Biodiversity conservation and protection.
3. Wildlife conservation and protection.
4. Traditional societies and their livelihood.
5. Planning for sustaining the Himalayan ecosystem.

It further aims to achieve the following:

1. To understand scientifically complex processes affecting this ecosystem,
2. To evolve suitable management and policy measures for sustaining and safeguarding the
Himalayan ecosystem including Himalayan glaciers, and

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3. To work with the states in the Indian Himalayan region for the implementation of
scientifically derived policy measures.

National Mission for Green India

It recognises that climate change phenomena will seriously affect and alter the distribution,
type and quality of natural biological resources of the country and the associated
livelihoods of the people. Mission for a Green India acknowledges the influences that the
forestry sector has on environmental amelioration through climate mitigation, food
security, water security, biodiversity conservation and livelihood security of forest-
dependent communities. India and Climate Change.

The objectives of the Mission are as follows:

1. To increase forest/tree cover on five million hectares (mha) of forest/non-forest lands
and to improve the quality of forest cover on another five mha (a total of 10 mha).
2. To improve ecosystem services including biodiversity, hydrological services and carbon
sequestration as a result of treatment of 10 mha.
3. To increase forest-based livelihood income of about three million households living in
and around the forests.
4. To enhance annual CO2 sequestration by 50 to 60 million tonnes in the year 2020.

National Mission for Sustainable Agriculture

It seeks to address issues regarding sustainable agriculture in the context of risks
associated with climate change by devising appropriate adaptation and mitigation
strategies through four functional areas, namely:
1. Research and development,
2. Technologies, products and practices,
3. Infrastructure and
4. Capacity building for ensuring food security, equitable access to food resources,
enhancing livelihood opportunities and contributing to economic stability at the national
level.

The Mission, therefore, seeks to transform Indian agriculture into a climate resilient
production system.

National Mission on Strategic Knowledge for Climate Change

The National Mission on Strategic Knowledge for Climate Change serves as a support
mission for generating and providing strategic knowledge to all the other seven national
missions under NAPCC, with built-in capacity for continuous and mid-course changes. It
takes into account the international developments in climate change related issues.

OTHER INITIATIVES TO REDUCE CLIMATE CHANGE

National Bioenergy Mission

The Government of India has introduced the ninth mission under NAPCC. This new mission
is called National Bioenergy Mission. It is being developed to push sustainable development
in the renewable energy sector.
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The Bioenergy Mission aims to achieve the following:

1. To improve energy efficiency in traditional biomass consuming industries.
2. To develop a bioenergy city project.
3. To provide logistic support to biomass processing units.
4. To develop GIS-based National Biomass Resource Atlas to map potential biomass regions
in the country.

Seventy percent of our country s population have only limited access to electricity.
Presently, India has a total installed capacity of 3,000 MW of biomass-based power
generation. Studies sponsored by the Ministry have estimated surplus biomass availability
at about 120–150 million metric tonnes per annum, covering agricultural and forestry
residues corresponding to a potential of about 18,000 MW.

Apart from this, 5000 MW additional power could be generated through bagasse produced
in the country s 550 sugar mills. Each MW generated from biomass plants would be able to
cover about 6,000 rural households.

Climate Change and Agriculture

The survey captures the footprints of climate change on the Indian territory and
consequent adverse impact on agricultural yields. Extreme temperature increases and
deficiency in rainfall have been captured on the Indian map and the graphical changes in
agricultural yields are brought out from such data. The impact was found to be twice as
large in un-irrigated areas as in irrigated ones.

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Summary of Chapter 7, Volume I – Gender and Son Meta-Preference: Is

Development Itself an Antidote

Why survey has been given pink colour?

The Pink-color Economic Survey 2017-18 lays special emphasis on Gender and Son meta-
preference, while providing an assessment of India s performance on gender outcomes
relative to other economies.

The Survey takes into account that Gender equality is an inherently multi-dimensional
issue. Accordingly, assessments have been made based on three specific dimensions of
gender, ie
1. Agency (relates to women s ability to make decisions on reproduction, spending on
themselves, spending on their households and their own mobility and health),

2. Attitudes (relate to attitudes about violence against women/wives, and the ideal number
of daughters preferred relative to the ideal number of sons) and

3. Outcomes (relate to son preference measured by sex ratio of last child, female
employment, choice of contraception, education level, age at marriage, age at first birth and
physical or sexual violence experienced by women)

The key findings of the assessment made in the Survey include: Over the last 10-15 years,
India s performance improved on 14 out of 17 indicators of women s agency, attitudes, and
outcomes. On seven of them, the improvement has been such that India s situation is
comparable to that of a cohort of countries after accounting for levels of development.

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Where India lacks?

The Survey, however, cautions that on several other indicators, notably employment, use of
reversible contraception, and son preference.

Inter-state comparison
Economic Survey 2017-18 states that within India, there is significant heterogeneity, with
the North-Eastern states (a model for the rest of the country) consistently out-performing

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others and not because they are richer; hinterland states are lagging behind but the
surprise is that some southern states do less well than their development levels would
suggest.

Son preference in society

The Survey thus recommends that India must confront the societal preference, even meta-
preference for a son, which appears inoculated to development. The skewed sex ratio in
favor of males led to the identification of missing women. But there may be a meta-
preference manifesting itself in fertility stopping rules contingent on the sex of the last
child, which notionally creates unwanted girls, estimated at about 21 million, adds the
Survey.

Appreciation for government schemes

The survey acknowledges that government s Beti Bachao, Beti Padhao and Sukanya
Samridhi Yojanaschemes, and mandatory maternity leave rules are all steps in the right
direction.

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Summary of Chapter 8, Volume I – Transforming Science and Technology in

India

Indian Science & Technology- Outputs in the last one year

The Survey s observations on transformation of Indian Science & Technology in the last one
year in the OUTPUTS of the sector are as follows:-

Publications
Looking at publications and patents in Science & technology in India can help assess the
productivity and quality of Indian research. In 2013, India ranked 6th in the world in
scientific publications. Its ranking has been increasing as well. The growth of annual
publications between 2009 to 2014 was almost 14 percent. This increased India s share in
global publications from 3.1 % in 2009 to 4.4 % in 2014 as per the Scopus Database.

In addition to increasing publications, trends in quality are also slowly improving. The
Nature Index (which publishes tables based on counts of high-quality research outputs in
the previous calendar year covering the natural sciences) ranked India at 13 in 2017.

Patents
According to the WIPO, India has the world s 7th largest Patent Filing Office. In 2015, India
registered 45,658 patents in comparison to China (1,101,864), USA (589,410) Japan
(318,721) Republic of Korea (213,694) and Germany (91,726). However, India produces
fewer patents per capita.

Challenges in domestic patent system

One major challenge in India has been the domestic patent system. While India s patent
applications and grants have grown rapidly in foreign jurisdictions, the same is not true at
home.

Residential applications have increased substantially since India joined the international
patent regime in 2005. However, the number of patents granted fell sharply post- 2008 and
has remained low. While Indian residents were granted over 5000 patents in foreign offices
in 2015, the number of resident filings in India was little over 800.

The government s recent hiring of over 450 additional patent examiners and creation of an
expedited filing system for Indian residents in 2017 will therefore be a welcome and crucial
intervention to help fix the existing patent system. Having addressed issues on the patent
filing side, addressing patent litigation issues will also be crucial to ensuring that the patent
system effectively rewards innovation.

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Summary of Chapter 9, Volume I – Ease of Doing Business’ Next Frontier:

Timely Justice

Evaluation on Ease of Doing Business

Jump in India’s ranking

The Economic Survey notes that India jumped 30 places to break into the top 100 for the
first time in the World Bank s Ease of Doing Business Report (EODB), 2018.

EASE OF DOING BUSINESS REPORT

It is released annually by World Bank. Ranking of country is based on 10 indicators each
having equal weightage.

A higher ranking of country in this list means that its regulatory environment is more
conducive and favourable for undertaking business. 10 indicators are:
1. getting electricity,
2. dealing with construction permits,
3. registering property,
4. protecting investors,
5. getting credit,
6. employing workers,
7. trading across borders,
8. paying taxes,
9. enforcing contracts
10. resolving insolvency

2018 report highlights

1. New Zealand scored first rank followed by Singapore.
2. BRICS Nations: India ranks lowest in Doing Business amongst the BRICS nations.
3. India’s neighbours: Bhutan (75), China (78), Nepal (105), Sri Lanka (111), Pakistan
(147), Bangladesh (177).

On which indicators did India perform well?

The rankings reflect the government s reform measures on a wide range of indicators.

Taxation and insolvency indices

India leaped 53 and 33 spots in the taxation and insolvency indices, respectively, on the
back of administrative reforms in taxation and passage of the Insolvency and Bankruptcy
Code (IBC), 2016.

Protecting investors, getting credit and electricity indices

It also made strides on protecting minority investors and obtaining credit, and retained a
high rank on getting electricity, after a 70 spot rise in EODB, 2017 due to the government s
electricity reforms.

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Enforcing contracts: a weak point

The Survey however says that India continues to lag on the indicator on enforcing
contracts, marginally improving its position from 172 to 164 in the latest report.

The Survey says that a clear and certain legislative and executive regime backed by an
efficient judiciary that fairly and punctually protects property rights, preserves sanctity of
contracts and enforces the rights and liabilities of parties, is a prerequisite for business and
commerce.

The Government has taken a number of actions to improve the contract enforcement
regime. Some of the steps briefly are as follows:-

• Scrapping of over , redundant legislations.

• Amending the Arbitration and Conciliation Act, .
• Passing the Commercial Courts Commercial Divisions and Commercial Appellate Division
of High Courts Act, 2015.
• Expanding the Lok Adalat Programme
• The Judiciary has at the same time expanded the National Judicial Data Grid (NJDG) and is
near to ensuring that every High Court is digitized.

Lack of enforceability
1. Delays and pendency are caused due to the increase in overall workload of the judiciary,
in turn due to expanding jurisdictions and use of injunctions and stays.
2. In the case of tax litigation, this stems from government persisting with litigation despite
high rates of failure at every stage of the appellate process; and
3. Actions by courts and government acting together can considerably improve the
situation.

Suggestions
The Survey goes on to note that the Government and the Courts need to both work together
for large-scale reforms. It suggests some steps, which in brief are as follows:

• Expanding judicial capacity in lower courts and reducing existing burden on High Courts
and The Supreme Court.
• Considering its low success rate, the tax department could exercise greater self-restraint
by limiting appeals.
• Substantially increasing state expenditure on the judiciary, particularly on modernization
and digitization.
• Building on the success of the Supreme Court, creating more subject-matter and stage-
specific benches that allow the Court to build internal specialization and efficiencies in
combating pendency and delay.
• Courts could consider prioritizing stayed cases, and impose stricter timelines within
which cases with temporary injunctions may be decided, especially when involving
government infrastructure projects.
• Improving Courts Case Management and Court Automation Systems.
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Summary of Chapter 2, Volume II – Review of Fiscal Developments

Fiscal Management
Sound Public financial management has been one of the pillars of India's macroeconomic
stability in the last three years. In accordance with this, the Fiscal Deficit, Revenue Deficit
as well as the Primary Deficit has been declining for the past 3 years.

Revenue Deficit
Revenue deficit is the difference between revenue expenditure and revenue receipts.
Revenue expenditure – Revenue receipts = Revenue deficit

Revenue deficit indicates that the government s revenue expenditure exceeds the
government s revenue receipts. On the other hand, revenue surplus indicates that the
government s revenue receipts exceed the government s revenue expenditure.

Fiscal Deficit
Fiscal deficit refers to the excess of total expenditure over total receipts (excluding
borrowings) during a given financial year.
Fiscal deficit = Total expenditure – Total receipts, excluding borrowings

Fiscal deficit includes not just revenue expenditure and receipts but also capital
expenditure and receipts, except borrowings.

The extent of fiscal deficit is an indication of how far the government is spending beyond its

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means. In other words, fiscal deficit indicates the level of borrowings of the government.

Primary Deficit
Primary deficit is one of the parts of fiscal deficit. While fiscal deficit is the difference
between total revenue and expenditure, primary deficit can be arrived by deducting
interest payment from fiscal deficit. Interest payment is the payment that a government
makes on its borrowings.
Primary deficit = Fiscal deficit − Interest payments

Interest payments are excluded from the calculation of primary deficit because interest
payments are made on account of borrowings made in the past. Thus, primary deficit
specifies the net impact of present transactions (and excludes the impact of transactions
undertaken in the past).

Note: Like there are fiscal, revenue, and primary deficits of the central government, in the
same manner each state has separate figures for fiscal, revenue, and primary deficits.

The early pick-up in expenditure coupled due to advancing of budget last year and
increased interest outgo exerted pressure on fiscal deficit which expanded to 112 per cent
of budget estimates by November 2017. A good part of this growth is likely to normalize as
the year progresses.

If indications and patterns till November are to hold, then the States taken together may be
able to meet their targeted level of fiscal deficit in 2017-18.

Benefit of advancing budget

The advancing of the budget cycle and processes by almost a month gave considerable
leeway to the spending agencies to plan in advance and start implementation early in the
financial year, leading to a robust pace of progress of Central expenditure.

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Summary of Chapter 3, Volume II – Monetary Management and Financial

Intermediation

Monetary Management and Financial Intermediation

The survey reviews the Monetary Management and Financial Intermediation. Here are the
highlights:-

Repo rate
Monetary policy remained steady with only one policy rate cut in August, during 2017-18
(till January). In the third bi-monthly Monetary Policy Statement for 2017-18 in August
2017, the Monetary Policy Committee decided to reduce the policy Repo Rate by 25 basis
points to 6.0 per cent. It kept the rates unchanged in both October and the latest meeting
held in December.

Repo rate
Under repo or repurchase agreement, the RBI lends money to commercial banks and
commercial banks give government bonds to the RBI with an agreement to purchase them
back. In other words, repo rate or repurchase rate is the rate at which the RBI lends money
to banks for a short time period.

Objective of repo
Commercial banks borrow from the RBI by means of repo. Thus, repo is used to inject
liquidity (money supply) in the system. If the RBI wants to reduce money supply, it
increases the repo rate. Similarly, if it wants to increase money supply, it reduces the repo
rate.

Currency in circulation
In tandem with the re-monetisation process, from November 17, 2017, as a favourable base
effect set in, the Y-o-Y growth of both Currency in Circulation and M0 turned sharply
positive and higher than their respective growth rates in the previous year.

M0 (reserve money): Reserve money is also called high powered money or monetary
base . It has the following components:
 Currency with the public
 Statutory reserves of banks held with themselves
 Cash reserves of banks held with the RBI
 Other deposits with the RBI

What is the Relevance of Reserve Money?

The RBI manages the money supply in the economy through reserve money. For instance,
if the RBI reduces the reserve money, then money supply increases in the economy and
vice versa. In other words, if there is more of reserve money in the system, money supply
would increase and vice versa. It is to be noted that most of the changes in the money
supply are due to changes in the high-powered money. Thus, reserve money is also called

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monetary base . Moreover, changes in reserve money have multi-fold impact on the
economy on account of money multiplier.

NPAs of banks
The performance of the banking sector, Public Sector Banks in particular, continued to be
subdued in the current financial year. The Gross Non-Performing Advances (GNPA) ratio of
Scheduled Commercial Banks (SCBs) increased from 9.6 per cent to 10.2 percent between
March 2017 and September 2017.
Non-Performing Assets
From the perspective of a bank, the loans given by it are considered its assets. If the loan
amount (principal) and/or the interest are not paid by the borrower, then it is considered a
non-performing asset (NPA). Generally, an NPA is a loan or advance for which the principal
and/or interest payment has been overdue for more than 90 days.

Credit growth
Non-Food Credit (NFC) grew at 8.85 per cent Y-o-Y in November 2017 as compared to 4.75
per cent in November 2016. Bank credit lending to Services and Personal Loans (PL)
segments continue to be the major contributor to overall NFC growth.

IBC Mechanism Being Used Actively to Resolve NPA Problem

The IBC mechanism is being used actively to resolve the NPA problem of the banking
sector. A major factor behind the effectiveness of the new Code has been the adjudication
by the Judiciary. The Code prescribes strict time limits for various procedures under it. In
this process, a rich case-law has evolved, reducing future legal uncertainty.

What is bankruptcy? What is the IBC’s intent?

A company is bankrupt if it is unable to repay debts to its creditors (banks, suppliers etc).
The inability to repay debts by some Indian firms has resulted in a huge pile of non-
performing assets for the banking system.

The Indian government had introduced the IBC as a method to tackle the issue. Under the
Code, a resolution has to be found for the indebted company within 270 days. Otherwise,
a liquidator is appointed. The company can also opt for voluntary liquidation by a special
resolution in a general meeting.

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Summary of Chapter 4, Volume II – Prices and Inflation

Inflation During 2017-18 averaged to the Lowest in the Last Six Years
Inflation in the country continued to moderate during 2017-18. Consumer Price Index(CPI)
based headline inflation averaged 3.3 per cent during the period which is the lowest in the
last six financial years.

The decline in the inflation was broad-based across major commodity groups except
Housing and Fuel & Light. The Headline inflation has been below 4 per cent for twelve
straight months, from November, 2016 to October, 2017 and CPI food inflation averaged
around one per cent during April-December in the current financial year, says the Survey.

Consumer Price Index (CPI)

CPI is a key measure for targeting inflation inflation .The CPI is, as its name implies, an
index or a number used to measure change in the cost of living .

How does inflation or deflation relate to the CPI?

In order to calculate the inflation, we compare the CPI of the current month with the same
month last year.
For instance, CPI (rural) values for November 2016–17 and November 2015–16 were
133.6 and 128.3, respectively.
Inflation rate (in rural areas) for the month of November 2016
CPI No e er e – CPI No e er e
= × 100
CPI No e er
. – 8.
= 8.
× 100 = 4.13%

Thus, we can conclude that the CPI is used to calculate the actual inflation rate.

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Inflation under control

The Survey observes that the economy has witnessed a gradual transition from a period of
high and variable inflation to more stable prices in the last four years. Headline inflation
measured by the CPI has remained under control for the fourth successive year. In fact the
decline in the inflation in the first half of the current fiscal year was indicative of a benign
food inflation which ranged between (-) 2.1 to 1.5 per cent. Survey says This has been
possible due to Good agricultural production coupled with regular price monitoring by the
Government.

Reason for rise in inflation in recent months

However, the rise in food inflation in recent months is mainly due to factors driving prices
of vegetables and fruits. In rural areas while food was main driver of CPI inflation during
2016-17, in urban areas housing sector has contributed the most to inflation in the current
financial year.

If we a look at state-wise inflation during 2017-18, many states have witnessed sharp fall in
CPI inflation. Inflation in 17 states was below 4 per cent, during the period.

Measures taken to Control Inflation

Government has taken a number of measures for controlling inflation such as:
1. Advisories are being issued, as and when required, to State Governments to take strict
action against hoarding & black marketing and effectively enforce the Essential
Commodities Act, 1955 & the Prevention of Black-marketing and Maintenance of Supplies
of Essential Commodities Act, 1980 for commodities in short supply.

2. Higher MSP

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Higher MSP has been announced so as to incentivize production and thereby enhance
availability of food items which may help moderate prices.

3. Price Stabilization Fund(PSF)

A scheme titled Price Stabilization Fund(PSF) is being implemented to control price
volatility of agricultural commodities like pulses, onions etc.

Price Stabilization Fund (PSF)

The Price Stabilization Fund (PSF) was set up in 2014-15 under the Department of
Agriculture, Cooperation & Famers Welfare (DAC&FW) to help regulate the price volatility
of important agri-horticultural commodities like onion, potatoes and pulses were also
added subsequently. The PSF scheme was transferred from DAC&FW to the Department of
Consumer Affairs (DOCA) w.e.f. 1st April, 2016.

How can PSF be utilised?

The scheme provides for maintaining a strategic buffer of commodities for subsequent
calibrated release to moderate price volatility and discourage hoarding and unscrupulous
speculation. For building such stock, the scheme promotes direct purchase from
farmers/farmers association at farm gate/Mandi.

The PSF is utilized for granting interest free advance of working capital to Central Agencies,
State/UT Governments/Agencies to undertake market intervention operations. Apart from
domestic procurement from farmers/wholesale mandis, import may also be undertaken
with support from the Fund.

Past usage of PSF

The fund allocated under PSF has been primarily utilized towards building the buffer of
upto 20 lakh tonnes of pulses. In addition, other activities like creation of a buffer of 17,747
tonnes of Onions; import of 5000 tonnes of Tur and 2000 tonnes of Onions; purchase of
6011 tonnes of Onions by NAFED and SFAC ; financial assistances to States like West
Bengal ( Rs. 2.5 crores), Andhra Pradesh ( Rs. 25 crores) and Telangana ( Rs. 9.15 crores)
for setting State Level PSF; etc. were also undertaken.

4. Buffer stock of pulses

The Government approved enhancement in buffer stock of pulses from 1.5 lakh MT to 20
Lakh MT to enable effective market intervention for moderation of retail prices.
Accordingly, a dynamic buffer stock of pulses of upto 20 lakh tones has been built.

5. Sugar
The Government has imposed stock holding limits on stockiest/dealers of sugar till April,
2018. The Government imposed 20% duty on export of sugar for promoting availability
and moderating price rise. Permitted import of 5 lakh tones of raw sugar at zero duty;
subsequently, import of additional 3 lakh tones was allowed at 25% duty.

6. Onions

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Export of all varieties of onion will be allowed only on letter of credit subject to a minimum
export price (MEWP) of $850 per MT till 31st December, 2017. States/UTs have been
advised to impose stock limit on onions. States were requested to indicate their
requirement of onions so that import of requisite quantity may be undertaken to improve
availability and help moderate the prices.

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Summary of Chapter 5, Volume II – Sustainable Development, Energy and

Climate Change

India’s Commitment to Climate Change

India’s stand on climate change

The Chapter on Sustainable Development, Energy and Climate Change notes India s
commitment to environment and climate change.

It states that India has strengthened its response to the threat of climate change in
accordance with the principles of equity and Common but Differentiated Responsibilities
and in the light of national circumstances with the Paris Pledge to reduce the emission
intensity of GDP by 33-35 percent over 2005 levels by the year 2030.

Commitment to Sustainable development goals

On the issue of sustainable development, the Survey says that India s urban population is
projected to grow to about 600 million by 203. Stating that as on 30th November 2017, the
share of renewable energy sources was 18 percent in the total installed capacity of
electricity in the country and that the increasing share of renewables has trebled in the last
10 years.

Concern over pollution

The Survey expresses concern over air pollution in Delhi with the onset of winter due to
various factor. It ascribes four main reasons for Delhi s worsening air quality –
1. crop residue,
2. biomass burning,
3. vehicular emissions and redistributed road dust, industries, power plants and
4. winter temperature inversion, humidity and absence of wind.

Where does the solution lie?

It suggests that the solution is to address each source problem systematically, coordination
between agencies and Central and State Governments and sustained civic engagement.

What has been done?

It says that among the steps being implemented at present are short-term emergency plan
and medium and long-range actions. The short-term emergency plan is to be implemented
when 24-hourly PM 2.5 exceeds 300-400µg/m3, including imposing heavy penalties on
burning of agricultural waste, using satellite-based tools to detect fires, payment of
incentives to farmers.

The medium and long-range actions include implementing congestion pricing for vehicles,
improving public transport system and expanding modernized bus fleets, phasing out old
vehicles and accelerating BS-VI.

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How can technology reduce pollution?

The Survey also notes the use of technology to convert agricultural waste into usable
fodder or bio-fuels and provide incentives to shift to non-paddy crops and as a point in case
quotes the straw management system for rice and wheat farming, as an example.

It also mentions the Happy Seeder machine that sows seeds without removing paddy straw
and suggests that such a technological solution must be combined with economics, by
providing incentives to Centre and states and should be implemented through agricultural
cooperatives and local bodies.

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Summary of Chapter 6, Volume II – External Sector

India’s External Sector Continues to be Strong

India s external sector continued to be resilient and strong in 2017-18.

Position of world economy

The global economy is gathering pace and is expected to accelerate from 3.2 percent in
2016 to 3.6 percent in 2017 and 3.7 percent in 2018 which reflects an upward revision of
the earlier projections by the International Monetary Fund (IMF).

India’s balance of payments situation

India s CAD stood at US$7.2 billion (1.2 percent of GDP) in Q2 of 2017-18, narrowing
sharply from US$ 15.0 billion (2.5 percent of GDP) in the preceding quarter.

Trade Deficit
India s trade deficit was US$ 108.5 billion in 2016-17.

Composition of Trade
Export growth in 2016-17 was fairly broad based with positive growth in major categories
except textiles & allied products and leather and leather manufactures. In 2017-18 (April-
November) among the major sectors, there was good export growth in engineering goods
and petroleum crude and products, moderate growth in chemicals & related products, and
textiles & allied products; but negative growth in gems and jewellery.

The prospects for India s External Sector in this and coming year look bright with world
trade projected to grow at 4.2 percent and 4 percent in 2017 and 2018 respectively from

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2.4 percent in2016; trade of major partner countries improving and above all India s export
growth also picking up.

Risks on external sector

The downside risks lie in the rise in oil prices. However, this could also lead to higher
inflow of remittances which have started picking up. The supportive policies like GST,
logistics and trade facilitation policies of the government could help further.

Foreign Exchange Reserves

India s foreign exchange reserves reached US$ 409.4 billion on end-December
2017. Foreign exchange reserves grew by 14.1 percent on a y-o-y basis from end
December 2016 (US$ 358.9 billion) to end December 2017. Foreign exchange reserves
increased further to US$ 413.8 billion on January 12, 2018.

Import cover
The import cover of India s foreign exchange reserves was 11.1 months at end-September
2017 as compared with 11.3 months at end -March 2017. Within the major economies
running current account deficit, India is among the largest foreign exchange reserve
holders and sixth largest among all countries of the world.

Indicator of Sufficiency of Forex: Import Cover

Import cover is an important indicator of the stability of the foreign exchange reserves
position. Import cover refers to the duration for which foreign exchange reserves of a
country can finance its imports (without considering any inflow of fresh forex). One
common rule of thumb is that forex reserves that can cover country s three months of
imports are considered adequate.
India s annual imports for 2016–17 were $380 billion and forex reserves on 31 March were

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$368 billion. Thus, India has as import cover of

8
Forex Annual imports × Number of months in a year = 8
× 12 = 11.1 months

Summary of Chapter 7, Volume II – Agriculture and Food Management

Feminisation’ of Agriculture Sector

With growing rural to urban migration by men, there is feminisation of agriculture sector,
with increasing number of women in multiple roles as cultivators, entrepreneurs, and
labourers.

Role of rural women

Rural women are responsible for the integrated management and use of diverse natural
resources to meet the daily household needs. This requires that women farmers should
have enhanced access to resources like land, water, credit, technology and training which
warrants critical analysis in the context of India. In addition, the entitlements of women
farmers will be the key to improve agriculture productivity.

What needs to be done?

The differential access of women to resources like land, credit, water, seeds and markets
needs to be addressed. Towards this, Government has been implementing various schemes
which help improve the entitlements of women farmers, which will prove to be
advantageous in bridging the policy gaps which exits in the sector.

Measures taken by government

The following measures have been taken to ensure mainstreaming of women in agriculture
sector:
• Earmarking at least % of the budget allocation for women beneficiaries in all ongoing
schemes/programmes and development activities.
• Initiating women centric activities to ensure benefits of various beneficiary-oriented
programs/schemes reach them.
• Focusing on women self-help group (SHG) to connect them to micro-credit through
capacity building activities and to provide information and ensuring their representation in
different decision-making bodies.
• Recognizing the critical role of women in agriculture, the Ministry of Agriculture and
Farmers Welfare has declared 15th October of every year as Women Farmer s Day.

With women predominant at all levels-production, pre-harvest, post-harvest processing,

packaging, marketing – of the agricultural value chain, to increase productivity in
agriculture, it is imperative to adopt gender specific interventions. An inclusive
transformative agricultural policy should aim at gender-specific intervention to raise
productivity of small farm holdings, integrate women as active agents in rural
transformation, and engage men and women in extension services with gender expertise.

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Agricultural Mechanization Picks up Pace

Increasing mechanisation
Indian Farmers are adapting to farm mechanization at a faster rate in comparison to recent
past. The Economic Survey says that, sale of tractors to a great extent it reflects the level of
mechanization. Indian tractor industries have emerged as the largest in the world and
account for about one-third of total global tractor production.

Need for further mechanisation

According to the World Bank estimates, half of the Indian population would be urban by
the year 2050. It is estimated that percentage of agricultural workers in total work force
would drop to 25.7% by 2050 from 58.2% in 2001. Thus, there is a need to enhance the level
of farm mechanization in the country.

Intensive involvement of labour

Due to intensive involvement of labour in different farm operations, the cost of production
of many crops is quite high. Human power availability in agriculture also increased from
about 0.043KW/ ha in 1960-61 to about 0.077 KW/ ha in 2014-15.

However, as compared to tractor growth, increase in human power in agriculture is quite

slow.

Over the year, the shift has been towards the use of mechanical and electrical sources of
power. In 1960-61, about 93% farm power was coming from animate sources, which has
reduced to about 10% in 2014-15. On the other hand, mechanical and electrical sources of
power have increased from 7% to about 90% during the same period.

Small holdings preventing mechanisation

According to the Economic Survey, there is predominance of small operational holding in
Indian Agriculture. It is, therefore, needed to consolidate the land holdings to reap the
benefits of agricultural mechanization. There is a need to innovate custom service or a
rental model by institutionalization for high cost farm machinery such as combine
harvester, Sugarcane harvester, potato combine, paddy transplanter, laser guided land
leveler, rotavator etc. to reduce the cost of operation and it can be adopted by private
players or State or Central Organization in major production hubs.

Steps taken for benefits of farmers

1. Rs.20,339 crore has been approved by the Government in 2017-18 to meet various
obligations arising from interest subvention being provided to the farmers on short term
crop loans, as also loans on post-harvest storages meets an important input requirement of
the farmers in the country, specially small and marginal farmers who are the major
borrowers.

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2. The Survey further adds that this institutional credit will help in delinking the farmers
from non-institutional sources of credit, where they are compelled to borrow at usurious
rates of interest.
3. Since the crop insurance under Pradhan Mantri Fasal Bima Yojana (PMFBY) is linked to
availing of crop loans, the farmers would stand to benefit from both farmer-oriented
initiatives of the Government, by accessing the crop loans.
4. The Survey says that the Government has been undertaking market reforms with a view
to ensuring that the farmers benefit from remunerative prices for their produce in the
market. The electronic National Agriculture Market (e-NAM) that was launched by
Government on April, 2016 aims at integrating the dispersed APMCs through an electronic
platform and enable price discovery in a competitive manner, to the advantage of the
farmers.
5. While the farmers are advised to undertaken on-line trade, it is also important that they
avail themselves of post-harvest loans by storing their produce in the accredited
warehouses.
6. The loans are available to Kisan Credit Card (KCC) holding small and marginal farmers at
interest subvention of 2% on such storages for a period of upto 6 months. This will help the
farmers to sell when they find the market is buoyant, and avoid distress sale. It is,
therefore, needful for the small and marginal farmers to keep their KCCs alive, the Survey
adds.
7. Economic Surveys says, that the Government is keen to double the income of the farmers
by 2022, for which it has launched several new initiatives that encompass activities from
seed to marketing. The credit from institutional sources will complement all such
government initiatives like Soil Health Card, Input Management, Per Drop More Crop in
Pradhan Mantri Krishi Sinchai Yojana (PMKSY), PMFBY, e-Nam, etc.

Agricultural R&D Needed to Sustain Agricultural Productivity Growth

Expenditure on agricultural research

Agricultural R&D is the main source of innovation, which is needed to sustain agricultural
productivity growth in the long-term. The Survey says that the actual expenditure of
Department of Agricultural Research and Education/Indian Council of Agricultural
Research has increased from Rs.5393 crore in 2010-11 to Rs.6800 (BE) crore during 2017-
18.

Intellectual property in Agriculture

During the current year (2017-18), investment in Agriculture Research and Education
protected new Agricultural innovation by filling 45 patent applications at Indian patent
Office (IPO) and the cumulative patent applications have now risen to 1,025. 10 copyright
and 12 trademark applications were filed by ICAR for products and processes.

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New crop varieties

Economic Survey says that total 209 new Varieties/hybrids tolerant to various biotic and
abiotic stresses with enhanced quality have been developed for Cereals, Pulses, Oilseeds,
commercial and Forage crops.

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Summary of Chapter 8, Volume II – Industry and Infrastructure

India’s External Sector Continues to be Strong

India s external sector continued to be resilient and strong in 2017-18.

Position of world economy

The global economy is gathering pace and is expected to accelerate from 3.2 percent in
2016 to 3.6 percent in 2017 and 3.7 percent in 2018 which reflects an upward revision of
the earlier projections by the International Monetary Fund (IMF).

India’s balance of payments situation

India s CAD stood at US$7.2 billion (1.2 percent of GDP) in Q2 of 2017-18, narrowing
sharply from US$ 15.0 billion (2.5 percent of GDP) in the preceding quarter.

Trade Deficit
India s trade deficit was US$ 108.5 billion in 2016-17.

Composition of Trade
Export growth in 2016-17 was fairly broad based with positive growth in major categories
except textiles & allied products and leather and leather manufactures. In 2017-18 (April-
November) among the major sectors, there was good export growth in engineering goods
and petroleum crude and products, moderate growth in chemicals & related products, and
textiles & allied products; but negative growth in gems and jewellery.

Index of Industrial production

The Economic Survey 2017-18 further says that the Index of Industrial Production (IIP)
which is a volume index with base year 2011-12, shows that the industrial output
increased by 3.2 percent during April-November 2017-18. This was a composite effect of
robust growth in electricity generation at 5.2 percent and moderate growth in both mining
and manufacturing sectors at 3.0 percent and 3.1 percent respectively. The Index of
Industrial Production (IIP) registered a 25-month high growth of 8.4 per cent with
manufacturing growing at 10.2 per cent.

Index of Industrial Production and Core Sector

The index of industrial production (IIP) is a composite indicator that measures the short-
term changes in the volume of production of a basket of industrial products during a given
period. It is compiled and published monthly by the Central Statistical Organisation (CSO).
The current base year for IIP is 2011–12 with a value of 100.

Core sectors performance

According to the Economic Survey 2017-18, the Eight Core Infrastructure Supportive
Industries, viz. Coal, Crude Oil, Natural Gas, Petroleum, Refinery Products, Fertilizers, Steel,
Cement and Electricity attained a cumulative growth of 3.9 percent during April-

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November, 2017-18. The production growth of Coal, Natural Gas, Refinery Products, Steel,
Cement and Electricity was positive during this period. The steel production increased
substantially, while the production of crude oil and fertilizers fell marginally during the
period, the Economic Survey adds.

What Are Core Industries?

Core industries are the backbone of the overall economy. Their output is used by various
other industries. Thus, the core industries determine the state of overall industrial
development of the economy.

Eight core industries comprise nearly 38% of the weight of items included in the IIP
1. Electricity generation (weight: 10.32%)
2. Steel production (weight: 6.68%)
3. Petroleum refinery production (weight: 5.94%)
4. Crude oil production (weight: 5.22%)
5. Coal production (weight: 4.38%)
6. Cement production (weight: 2.41%)
7. Natural gas production (weight: 1.71%)
8. Fertilizer production (weight: 1.25%)

Level of FDI
The pre-Budget Economic Survey state that the total Foreign Direct Investment inflow
grew by 8 per cent i.e. USD 60.08 billion in 2016-17 in comparison to USD 55.56 billion of
the previous year. In 2017-18 (April – September), the inflow of total FDI was to the
quantum of USD 33.75 billion.

Credit rating by Moody’s

Credit rating company Moody s Investors Service has also raised India s rating from the
lowest investment grade of Baa3 to Baa2 .

Moody s Investors Service and Standard & Poor s (S&P) together control 80% of the global
market, and Fitch Ratings controls a further 15%. Ratings are based on the lending risks or
estimation of the borrower s ability to repay debt.

The Economic Survey listed out Sectoral Initiatives:-

Steel: In order to address dumping of cheap steel imports from China, South Korea and
Ukraine, the Government raised customs duty and imposed anti-dumping duty, Minimum
Import Price (MIP) on a number of items in February 2016, with a sunset clause of one
year. These measures helped the domestic producers and exports recovered. The
Government notified anti-dumping duties and Countervailing Duties on various steel
products in February 2017.

MSME Sector: MSMEs in India play a crucial role in providing large scale employment
opportunities at comparatively lower capital cost than large industries and also in

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industrialization of rural & backward areas. The Government has initiated a number of
schemes for the sector and particularly the Pradhan Mantri Mudra Yojana for development
and refinancing activities relating to micro industrial units in 2016-17.
Textiles and Apparels: To address some of the constraints faced by apparel firms, the
Cabinet announced a Rs.6000 crore package for the apparel sector on June 2016. It was
found that since its implementation in June 2016, the package had a positive impact on the
exports of Ready Made Garments (RMG) of Man-made fibres while it did not have a
statistically significant impact on the RMG of other natural fibres, except wool. The impact
of the package increased over time and did not show any signs of attenuation. The
Government has in December 2017 approved the scheme for Capacity Building in Textile
Sector (SCBTS) with an outlay of ₹1,300crore for the period 2017-2018 to 2019-2020.
Leather sector: Leather sector is also highly labour intensive sector. The sector faces
challenges which have been addressed through a scheme for the purpose of promotion of
employment in the leather & footwear sector in December 2017, with an outlay of Rs
2600 crore over three financial years 2017-18 to 2019-2020.
Gems and Jewellery: India is one of the largest exporters of gems and jewellery. Exports
of the sector have risen from 0.7 per cent in 2014-15 to 12.8 per cent in 2016-17. Training
in jewellery designing, setting up refineries, hallmarking centres etc. and creation of
multiple jewellery parks would help the sector.

Need of infrastructure development

Global Infrastructure Outlook

The Economic Survey notes that the Global Infrastructure Outlook forecasts around US$
4.5 trillion worth of investments is required by India till 2040 to develop infrastructure to
improve economic growth and community wellbeing.

What is the GI Hub?

Global Infrastructure Outlook is published by Global Infrastructure Hub. Launched by
the G20 in 2014, the Global Infrastructure Hub has a mandate to grow the global pipeline
of quality, bankable infrastructure projects. By facilitating knowledge sharing,
highlighting reform opportunities and connecting the public and private sectors, its goal
is to increase the flow and quality of private and public infrastructure investment
opportunities. All countries, regardless of whether or not they are members of the G20,
are able to work with the GI Hub.

The Global Infrastructure Hub operates as an independent not-for-profit company under

Australian law. Its board comprises representatives of advanced and emerging G20
countries: Australia, Japan, Germany, Argentina, Republic of Korea, the United Kingdom,
as well as two independent directors. Australia chairs the GI Hub Board, represented by
the Secretary to the Australian Treasury.

Transportation infrastructure

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India is far ahead than many emerging economies in terms of providing qualitative
transportation related infrastructure.

What is government aiming for?

The primary agenda for the Government has been building new National Highways (NHs)
and also converting State Highways (SHs) into NHs.

Conversion of State highways into National Highways

As in September, 2017, total length of National Highways (NHs) /Express Ways in India was
1,15,530 km which accounted for 2.06 per cent of the total road length. On the other hand,
the length of State Highways was 1,76,166 km as on 2015-16. The Government received
proposals for declaration of more than 64000 km of State roads as National Highways
(NHs) from various State Governments, against which the Ministry of Road and
Transportation has declared about 10000 km of Roads/routes as new National Highways.

Need to strengthen State PWD

In many under developed States with lower Per capita GSDP like
Bihar, Odisha, Chhatisgarh, Jharkhand and Jammu & Kashmir, West Bengal, Madhya
Pradesh, the density of Other Public Work Department (OPWD) Road/District Road is very
low. There is a need for developing OPWD roads including District Roads, so as to provide
better access, thereby enhancing economic activities, the Economic Survey adds.

What is required to be done?

The Survey observes that in order to expedite completion of delayed projects, various steps
have been taken for streamlining of land acquisition & environment clearances. The new
umbrella program like Bharatmala Pariyojana aims to achieve optimal resource allocation
for a holistic highway development.

The Centre s decision to infuse Rs.2.11 lakh crore of fresh capital into public sector banks
along with Rs 6.92 lakh crore investment in infrastructure through a blend of financial
mechanisms, should help revive the growth momentum.

All You Need to Know about this plan:

1. The government has launched a new umbrella programme with the introduction of
the Bharatmala Pariyojana.
2. Out of this, Bharatmala Pariyojana to be implemented with an outlay of Rs 5.35 lakh
crore will generate 14.2 crore jobs.
3. The scheme will provide for the build of 83,677 km of roads involving capex (capital
expenditure) of Rs.6.92 lakhs crore over the next five years.
4. In addition to 34,800 km under Bharatmala, the balance works of 48,877 km of works
under other current schemes will be implemented in parallel by NHAI/MoRTH with an
outlay of Rs 1.57 lakh crore.
5. Government has also committed to unprecedented strengthening of public sector
banks with Rs 2.11 lakh crore recapitalisation plan.
6. A total of Rs 1.35 lakh crore via recap bonds front loaded would be raised while Rs

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76,000 crore via budgetary support and market raising.

7. Banks will also give a big push to MSMEs for jobs and growth through enhanced
access to financing and markets, and a drive to finance MSMEs in 50 clusters.
8. The gross FDI flows to India in 2016-17 amounted to $ 60.2 billion, as compared to $
55.6 billion in 2015-16 and $ 45.1 billion in 2014-15.
9. A target of Rs1.31 lakh crore has been made for capital expenditure for the railways.
Against the target, an expenditure of Rs 50,762 crore has been achieved.
10. Fiscal deficit of the central government had reached alarmingly high level of close to
6 per cent 2011-12 and averaged over 5 per cent between 2011-12 and 2013-14.

Railways
1. With emphasis on railways infrastructure development, the pace of commissioning
Broad Gauge (BG) lines and completion of electrification have been accelerated.
2. With financial assistance from Government of India, 425 km of metro rail systems are
operational and about 684 km are under construction in various cities across India (as in
December 2017).
3. Under Sagarmala Programme which is to promote port-led development along Indian
coast line, 289 Projects worth Rs. 2.17 Lakh Crore are under various stages of
implementation and development, the Survey adds.

Sagarmala Programme
Sagar Mala project is an initiative of the Government of India to "transform the existing
Ports into modern world class Ports and integrate the development of the Ports, the
Industrial clusters and hinterland and efficient evacuation systems through road, rail,
inland and coastal waterways resulting in Ports becoming the drivers of economic
activity in coastal areas.

Background
In March 2015 Cabinet gave approval for this project to develop 12 ports of India.

The programme aims to promote port-led development in the country by harnessing

India's 7,500-km long coastline, 14,500-km of potentially navigable waterways and
strategic location on key international maritime trade routes.

The Sagarmala Development Company was given the nod for incorporation by Indian
Cabinet in July 2016 with an initial authorized share capital of Rs 1000 Crore and
subscribed share capital of Rs 90 Crore, to give a push to port-led development.
Six megaports are planned in Sagarmala project.
State Place
Kerala Vizhinjam
Tamil Nadu Colachel
Maharashtra Vadhavan(near Dahanu)
Karnataka Tadadi
Andhra Pradesh Machilipatnam
West Bengal Sagar Island

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Telecommunication Sector
In the Telecommunication Sector, the Survey pointed out that the programme like Bharat
Net and Digital India are to convert India into a digital economy. As on end of September
2017, the total subscribers stood at 1207.04 million, out of which 501.99 million
connections were in the rural areas and 705.05 million in the urban areas

Digital India
Digital India is a campaign launched by the Government of India to ensure that
government services are made available to citizens electronically and to increase Internet
connectivity and digital literacy in order to empower people. It was launched in July 2015
by Prime Minister Narendra Modi. Digital India consists of three core components:

1. Creation of digital infrastructure: The Government of India entity Bharat Broadband

Network Limited (BBNL), which executes the National Optical Fibre Network project, is the
custodian of the Digital India (DI) project. It has an objective to connect 250,000 villages
through broadband network. This will provide the first basic set-up to achieve towards
Digital India. The government is planning to set up at least one Common Service Centre in
each of the gram panchayats.

2. Digital literacy: The Digital Literacy Mission will cover six crore rural households. To
connect rural India with Digital India, the Government of India compelled email services
provider giants, including Gmail, Office, and Rediff, to provide email address in regional
languages.

3. Delivery of services digitally: Some of the facilities that will be provided through this
initiative are digital locker, e-education, e-health, e-sign, national scholarship portal, and e-
sampark.

Civil Aviation Sector

Regarding Civil Aviation Sector, the Economic Survey says that in 2017-18 (April -
September), domestic airlines carried 57.5 million passengers, showing a growth rate of
16% over the corresponding previous year period, with 10.3 percent domestic cargo
handled. The Government is taking initiatives like liberalization of air services, airport
development and regional connectivity through scheme like UDAN.

UDAN

What is UDAN?
UDAN (Ude Desh ka Aam Naagrik) is an initiative by the government to connect the
country s under-served and unserved airports. Under the Centre s Regional Connectivity
Scheme (RCS), five airlines have won bids to operate on 128 routes which will be

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connecting 70 airports. Out of 70 the airports, 31 are unserved and 12 under-served.

While under-served airports are those which do not have more than a flight a day,
unserved airports are those where there are no operations. The first flight under UDAN is
expected to start next month.

Will the flights be easy on your pocket?

While the scheme attempts to tackle the issue of ghost airports, it also allows for
reduction in travelling expenses. 50 per cent seats on each flight will come at Rs 2,500
per seat for one-hour travel. The operators will also be extended viability gap funding
which will be operational for three years from the date of starting operations in a specific
UDAN route.

How will the operators be compensated?

Under UDAN, the operators would be extended viability gap funding — for which money
is partly raised through a levy of up to Rs 8,500 on flights operating in major routes like
Delhi and Mumbai.

The viability gap funding would be in place for three years for the airlines concerned
from the date of starting operations in a particular UDAN route. The scheme also
provides for various benefits including no airport charges and three-year exclusivity on
the routes.

Power Sector
Highlighting the initiatives and achievement in the Power Sector, the Survey mentions that
All-India installed power generation capacity has reached 3,30,860.6 MW as on
30thNovember, 2017 and electrification in 15,183 villages has been completed.
The Ujjawal DISCOM Assurance Yojana (UDAY) has focused on enhancing the financial
health of DISCOMs by reducing interest burden, cost of power and aggregated technical and
commercial losses. A new scheme, Saubhagya (Pradhan Mantri Sahaj BijliHarGhar Yojana),
was launched in September 2017 to ensure electrification of all remaining willing
households in the country in rural and urban areas with an outlay of Rs. 16,320 crore, the
Survey adds.

Ujwal DISCOM Assurance Yojana (UDAY)

Ujwal DISCOM Assurance Yojana (UDAY) is the financial turnaround and revival package
for electricity distribution companies of India (DISCOMs) initiated by the Government of
India with the intent to find a permanent solution to the financial mess that the power
distribution is in.[1] It allows state governments, which own the DISCOMs, to take over 75
percent of their debt as of September 30, 2015, and pay back lenders by selling bonds.
DISCOMs are expected to issue bonds for the remaining 25 percent of their debt.
Saubhagya (Pradhan Mantri Sahaj BijliHarGhar Yojana)

Saubhagya is a scheme launched to achieve universal household electrification in all parts

of the Country at a cost of Rs. 16,320 crore including Gross Budgetary Support (GBS) of Rs.
12,320 crores from Government of India.

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Keeping in view the role of electricity in human and socio-economic development,

Government of India has formulated the scheme to ensure last mile connectivity and
electricity connections to all remaining un-electrified urban and rural households in the
country. All States and Union Territories of the country are required to complete household
electrification in their respective jurisdiction by 31st March, 2019.

REC is a nodal agency

Rural Electrification Corporation Limited (REC), a Navaratna CPSE under the Ministry of
Power has been appointed as the nodal agency for coordinating the implementation of the
scheme.

The prospective beneficiary households for free electricity connections under the scheme
will be identified using Socio Economic and Caste Census (SECC), 2011 data.

Logistics industry
According to the Survey, the Indian logistics industry worth around US$ 160 Billion has
grown at a compound annual growth rate (CAGR) of 7.8 per cent during last five years.
Logistics sector provides employment to more than 22 million people. The Global Ranking
of the World Bank s 2016 Logistics Performance Index shows that India jumped to 35th
rank in 2016 from 54th rank in 2014 in terms of overall logistics performance. India has
improved its rank in all the six components of logistics performance index.

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Summary of Chapter 9, Volume II – Services Sector

Robust Growth in Services Exports and Services Imports

India’s services exports

India remained the eighth largest exporter in commercial services in the world in 2016
with share of 3.4 per cent. This is double the share of India s merchandise exports in the
world at 1.7 percent.

India s services sector registered an export growth of 5.7 per cent in 2016-17. During the
period April-September 2017-18, growth in services exports and services imports were
robust at 16.2 per cent and 17.4 per cent respectively. Net services receipts rose by 14.6
per cent during this period.

Steps taken to boost services exports

To boost services exports, the Survey mentions that the Government in its mid-term
Review of Foreign Trade Policy 2015-2020, has increased incentives under Services
Exports from India Schemes (SEIS) by 2 per cent, leading to an additional annual incentive
of Rs.1,140 crore which could help services exports including Hotel & Restaurant, Hospital,
Educational services etc.

Concerns
Although world trade volume of goods and services is projected to accelerate in 2018,
enhanced global uncertainty, protectionism and stricter migration rules would be key
factors in shaping India s services exports.

Contribution of Services sector in various States

The Economic Survey presents a unique State-wise comparison of the performance of the
Service sector in India.

Out of the 32 States and Union Territories (UTs), in 15 states and UTs, the Services Sector is
the dominant sector, contributing more than half of the Gross State Value Added (GSVA).
The restaurants, followed by real estate, ownership of dwellings and business services.

However, there is wide variation in terms of share and growth of services GSVA. Out of the
32 States and UTs for which data are available for 2016-17 (or latest year for which data
are available), in terms of services GSVA share, Delhi and Chandigarh are at the top with
over 80 per cent share, while Sikkim is at the bottom with 31.7 per cent share.

FDI Equity Inflows to the Services Sector Grew by 15.0 Percent

FDI equity inflows to the services sector grew by 15.0 percent during 2017-18 (April-
October).

FDI reforms
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1. The survey points out that the FDI policy provisions were radically overhauled across
sectors such as construction development, broadcasting, retail trading, air transport,
insurance and pension. At present, more than 90 per cent of FDI inflows are through
automatic route.
2. After the successful implementation of the e-filing and online processing of FDI
application by the Foreign Investment Promotion Board (FIPB), the Government
announced to phase out the FIPB in the Union Budget 2017-18.
3. Recently, on 10th January 2018, Union Cabinet approved amendments in FDI policy
allowing 100 per cent FDI under automatic route for Single Brand Retail Trading.
4. Foreign airlines also have been allowed to invest up to 49 per cent in Air India, the
survey adds.

FDI share of service sectors

The combined FDI share of the top 10 service sectors such as financial and non-financial
services falling under the Department of Industrial Policy & Promotion (DIPP) s service
sector definition; as well as telecommunications; trading; computer hardware & software;
construction; hotels & tourism; hospital & diagnostic centers; consultancy services; sea
transport; and information & broadcasting that can be taken as the best estimate of
services FDI.

However, these could include some non-service elements. The share of these services is
56.6 per cent of the cumulative FDI equity inflows during the period April 2000-October
2017 and 65.8 per cent of FDI equity inflows during 2017-18 (April-October).

If the shares of another 5 services or service related sectors like retail trading, agriculture
services, education, book, printing and air transport are included, then the total share of
FDI equity inflows to the services sector would increase to 58.5 per cent and 69.6 per cent
respectively for the above two periods.

Sector-Wise Performance of Major Services and Government Policies to Boost the Growth
of the Sector

Service sector share in GVA and GVA growth

The Services sector, with a share of 55.2 per cent in India s Gross Value Added (GVA),
continued to be the key driver of India s economic growth contributing almost 72.5 per
cent of GVA growth in 2017-18.

Growth in Service sector

While the growth of Service Sector as a whole is expected to be at 8.3 per cent in 2017-18,
the growth in Services exports was 16.2 per cent in H1 of 2017-18.
Major Services Sector-wise performance and some recent Government policies to boost
the growth of the sector are as follows:

TOURISM
Various initiatives have been taken by the Government to promote tourism include

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1. the introduction of the e-Visa facility under three categories of Tourist, Medical and
Business for the citizens of 163 countries;
2. launch of Global Media Campaign for 2017-18 on various Channels;
3. launch of The Heritage Trails to promote the World Heritage Sites in India;
4. launch of International Media Campaign on various international TV channels;
5. Celebration of Paryatan Parv having 3 components namely Dekho Apna Desh to
encourage Indians to visit their own country, Tourism for All with tourism events at sites
across all states in the country, and Tourism & Governance with interactive sessions &
workshops with stakeholders on varied themes.

IT-BPM
India s Information Technology – Business Process Management (IT-BPM) industry grew
by 8.1 per cent in 2016-17 to US$ 139.9 billion (excluding e-commerce and hardware) from
US$129.4 billion in 2015-16, as per NASSCOM data. IT-BPM exports grew by 7.6 per cent to
US$ 116.1 billion from US$ 107.8 billion during the same period. E-commerce market is
estimated at US$ 33 billion, with a 19.1 per cent growth in 2016-17.

To further promote this sector, many initiatives have been taken, which include
1. the establishment of BPO Promotion and Common Services Centres to help create digital
inclusion and equitable growth and provide employment to 1.45 lakh persons, mostly in
the small towns;
2. setting up a separate Northeast BPO promotion Scheme with 5000 seats and having
employment potential of 15000 persons;

REAL ESTATE
Some of the recent reforms and policies taken by the Government of India related to Real
Estate Sector include the Pradhan Mantri Awas Yojana (PMAY).

PPP policy for affordable housing was also announced on 21st September 2017 for
affordable housing segment to provide further impetus to the ambitious Housing for all by
2022 mission.

Pradhan Mantri Awas Yojana

Union Government had launched this scheme named as Pradhan Mantri Awas Yojana in
June 2015 under the aegis of Housing for All by 2022 Mission. Under this ambitious
scheme government plans to build two crore houses for the poor in urban areas by year
2022, which coincides with 75 years of Independence.

It has four basic components viz. slum rehabilitation, affordable housing, credit linked
interest subsidy and beneficiary-led individual house construction or enhancement.

R&D
India s gross expenditure on R&D has been at around 1 per cent of GDP. India ranks 60th
out of 127 on the Global Innovation Index (GII) 2017, improving from 66th rank in 2016.

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Summary of Chapter 10, Volume II – Social Infrastructure, Employment and Human

Development

Expenditure on social sector

The Survey adds that the government has been enhancing the expenditure on human
capital along with adopting measures to improve the efficiency of expenditure by
convergence of schemes. The expenditure on social services by the Centre and States as a
proportion of GDP had remained in the range of 6 per cent during 2012-13 to 2014-15.
Expenditure on Social services stands at 6.6 per cent in 2017-18 (BE).

Positive Health and Economic Impact in ODF Areas

The Economic Survey 2017-18 takes note of the basic fact that quality of hygiene and
sanitation has significant impact on improving the health outcomes. With the launch of
Swachh Bharat Mission (Gramin) on 2nd October, 2014, the sanitation coverage in rural
India has increased substantially from 39 per cent in 2014 to 76 percent in January, 2018.

Status of ODF
The number of persons defecating in open in rural areas, which were 55 crore in October,
2014 declined to 25 crore in January, 2018. So far, 296 districts 307,349 villages all over
India have been declared Open Defecation Free (ODF). Eight states and two Union
Territories. i.e., Sikkim, Himachal Pradesh, Kerala, Haryana, Uttarakhand, Chhattisgarh,
Arunachal Pradesh, Gujarat, Daman & Diu and Chandigarh have been declared as ODF
completely. The surveys conducted by the National Sample Survey Office (NSSO) and
Quality Council of India (QCI) on usage of toilets by the individuals who have access to
toilets reported more than 90 per cent of individuals using toilets in 2016 and 2017.

The Survey satisfactorily notes that there has been substantial reduction in the number of
persons defecating in open in rural areas which has had positive health and economic
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impact in ODF areas. In a report, The Financial and Economic Impact of SBM in India ,
UNICEF estimated that a household in an ODF village in rural India saves Rs 50,000/- every
year.

Tech Enabled Initiatives to Bring Transparency and Accountability for Enforcement

of Labour Laws
The Economic Survey 2017- 18 highlights several Labour reform measures. The Survey
mentions the specifics of technology driven initiatives that ensure delivery by reducing
complexity in compliance and bring transparency and accountability for better
enforcement of Labour laws. The Survey takes stock of legislative reforms in Labour sector
that are being implemented for creation of employment opportunities and for providing
sustainable livelihoods for the population who are largely engaged in informal economy.

The Survey notes that the Government has undertaken numerous technology enabled
transformative initiatives such as Shram Suvidha Portal, Ease of Compliance to maintain
registers under various Labour Laws/Rules, Universal Account Number, and National
Career Service portal in order to reduce the complexity in compliance and to bring
transparency and accountability for better enforcement of the labour laws.

The Survey mentions that there has been highest ever budget allocation under Mahatma
Gandhi National Rural Employment Guarantee Act (MGNREGA) during 2017-18. About 4.6
crore households were provided employment totaling 177.8 crore person days during
2017-18 as on 14thJanuary, 2018. Out of this, 54 per cent were generated by women, 22
per cent by Schedule Castes and 17 percent by Schedule Tribes.

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