Smt. Nirmala Sitharaman (The Union Minister for Finance & Corporate Affairs) presented the Economic Survey 2019-20 in the Parliament on February 01, 2020. Here in this post, we have presented some major highlights of the Economic Survey 2019-20 that are important from the Exam Point of view. But before that, we need to understand some basic concepts about the Economic Survey.

What is Economic Survey?

Economic Survey of India is a document prepared by the Ministry of Finance on annual basis and it contains a detailed account of the various sectors of the economy and overall economic scenario of the country of the last year.

Who prepares the Economic Survey?

The economic survey is prepared under the guidance of the Chief Economic Adviser of Finance Ministry. The present Chief Economic Adviser is Krishnamurthy V. Subramanian.

Economic Division of the Department of Economic Affairs of the Finance Ministry prepares it under the guidance of Chief Economic Adviser. At the final stage, it is approved by Union Finance Minister

When is Economic Survey released

It is presented a day before the presentation of the Union Budget in the Parliament. For extra knowledge, you can learn that the first Economic Survey of India was presented in the year 1950-51. Up to 1964, it was presented along with the Union Budget. From 1964 Onwards, it has been delinked from the Budget.

Highlights of Economic Survey 2019-20

The economic survey 2019-20 is divided into 2 volumes. Volume 1 has 11 chapters while Volume 2 has 10 chapters. Important point from each chapter is presented below:

Theme of the Economic Survey 2019-20 – Enable Markets, Promote ‘Pro-Business’ Policies and Strengthen ‘Trust’ in the Economy.

Volume 1 – Download Here

Chapter 1: Wealth Creation: The Invisible Hand Supported by the Hand of Trust

Survey posits that India’s aspiration to become a $5 trillion economy depends critically on:

Strengthening the invisible hand of the market.
Supporting it with the hand of trust.

Chapter 2: Entrepreneurship and Wealth Creation at the Grassroots

India ranks third in number of new firms created, as per the World Bank.
New firm creation in India increased dramatically since 2014- About 1.24 lakh new firms created in 2018, an increase of about 80 % from about 70,000 in 2014.

Chapter 3: Pro-business versus Pro-markets

Survey says that India’s aspiration of becoming a $5 trillion economy depends critically on:

Promoting ‘pro-business’ policy that unleashes the power of competitive markets to generate wealth.
Weaning away from ‘pro-crony’ policy that may favour specific private interests, especially powerful incumbents

Chapter 4: Undermining Markets: When Government Intervention Hurts More Than It Helps

Government intervention, though well intended, often ends up undermining the ability of the markets to support wealth creation and leads to outcomes opposite to those intended. Four examples of anachronistic government interventions:

Essential Commodities Act (ECA), 1955
Drug Price Control under ECA
Government intervention in Grain markets
Debt waivers

Chapter 5: Creating Jobs and Growth by Specializing in Network Products

By integrating “Assemble in India for the world” into Make in India, India can:

Raise its export market share to about 3.5 % by 2025 and 6 % by 2030.
Create 4 crore well-paid jobs by 2025 and 8 crore by 2030.

Exports of network products can provide one-quarter of the increase in value added required for making India a $5 trillion economy by 2025.

Chapter 6: Targeting Ease of Doing Business in India

A jump of 79 positions to 63 in 2019 from 142 in 2014 in World Bank’s Doing Business rankings
The turnaround time of ships in India has almost halved to 2.48 days in 2018-19 from 4.67 days in 2010-11.

Chapter 7: Golden jubilee of bank nationalisation: Taking stock

Survey observes 2019 as the golden jubilee year of bank nationalization
India has only one bank in the global top 100 – same as countries that are a fraction of its size: Finland (about 1/11th), Denmark (1/8th), etc.
In 2019, investment for every rupee in PSBs, on average, led to the loss of 23 paise, while in NPBs it led to the gain of 9.6 paise.

Chapter 8: Financial Fragility in the NBFC Sector

Survey investigates the key drivers of Rollover Risk of the shadow banking system in India in light of the current liquidity crunch in the sector.
Key drivers of Rollover Risk:

- Asset Liability Management (ALM) Risk.
- Interconnectedness Risk.
- Financial and Operating Resilience of an NBFC.
- Over-dependence on short-term wholesale funding.

Chapter 9: Privatization and Wealth Creation

Strategic disinvestment of Government’s shareholding of 53.29 per cent in HPCL led to an increase of around Rs. 33,000 crore in national wealth.

Chapter 10: Is India’s GDP Growth Overstated? No!

Models that incorrectly over-estimate GDP growth by 2.7 % for India post-2011 also misestimate GDP growth over the same period for 51 out of 95 countries in the sample.
Several advanced economies such as UK, Germany and Singapore have their GDPs misestimated with incompletely specified econometric model.

Chapter 11: Thalinomics: The Economics of a Plate of Food in India

Absolute prices of a vegetarian Thali have decreased significantly since 2015-16 across India and the four regions; though the price has increased during 2019-20.
From 2006-07 to 2019-20- Affordability of vegetarian Thalis improved 29 %. Affordability of non-vegetarian Thalis improved by 18 %.

Volume 2 – Download Here

Chapter 1: State of the Economy

Based on CSO’s first Advance Estimates of India’s GDP growth for 2019-20 at 5 per
cent. India’s GDP growth is expected to grow in the range of 6.0 to 6.5 per cent in 2020-21.
The year 2019 was a difficult year for the global economy with world output growth
estimated to grow at its slowest pace of 2.9 per cent since the global financial crisis of 2009, declining from a subdued 3.6 per cent in 2018 and 3.8 per cent in 2017.

Chapter 2: Fiscal Developments

Gross GST monthly collections have crossed the mark of Rs. 1 lakh crore for a total of five times during 2019-20 (up to December 2019).

Chapter 3: External Sector

India’s BoP position improved from US$ 412.9 bn of forex reserves in end March, 2019 to US$ 433.7 bn in end September, 2019.
India’s top five trading partners continue to be USA, China, UAE, Saudi Arabia and Hong Kong.
Top export items: Petroleum products, precious stones, drug formulations & biologicals, gold and other precious metals.
Top import items: Crude petroleum, gold, petroleum products, coal, coke & briquittes.
India’s imports continue to be largest from China, followed by USA, UAE and Saudi Arabia.
Under trade facilitation, India improved its ranking from 143 in 2016 to 68 in 2019 under the indicator, “Trading across Borders”, monitored by World Bank in its Ease of Doing Business Report.
Logistics industry of India- Currently estimated to be around US$ 160 billion. Expected to touch US$ 215 billion by 2020.
According to World Bank’s Logistics Performance Index, India ranks 44th in 2018 globally, up from 54th rank in 2014.

Chapter 4: Monetary Management and Financial Intermediation

Remained accommodative in 2019-20.
The Gross Non Performing Advances ratio remained unchanged for Scheduled Commercial banks at 9.3% between March and September 2019. Increased slightly for the Non-Banking Financial Corporations (NBFCs) from 6.1% in March 2019 to 6.3% in September 2019.

Chapter 5: Prices and Inflation

Consumer Price Index (CPI) inflation increased from 3.7 per cent in 2018-19 (April to December, 2018) to 4.1 per cent in 2019-20 (April to December, 2019).
WPI inflation fell from 4.7 per cent in 2018-19 (April to December, 2018) to 1.5 per cent during 2019-20 (April to December, 2019).

Chapter 6: Sustainable Development and Climate Change

SDG India Index-Himachal Pradesh, Kerala, Tamil Nadu, Chandigarh are front runners. Assam, Bihar and Uttar Pradesh come under the category of Aspirants.
India hosted COP-14 to UNCCD which adopted the Delhi Declaration: Investing in Land and Unlocking Opportunities.
COP-25 of UNFCCC at Mandrid- India reiterated its commitment to implement Paris Agreement.
Forest and tree cover- Increasing and has reached 80.73 million hectare. 24.56 % of the geographical area of the country.

Chapter 7: Agriculture and Food Management

Gross Value Added (GVA) at Basic Prices for 2019-20 from ‘Agriculture, Forestry and Fishing’ sector is estimated to grow by 2.8 %.

Chapter 8: Industry and Infrastructure

Total telephone connections in India touched 119.43 crore as on September 30, 2019.
The installed capacity of power generation has increased to 3, 64,960 MW as on October 31, 2019 from 3, 56,100 MW as on March 31, 2019.
Report of the Task Force on National Infrastructure Pipeline released on 31.12.2019 has projected total infrastructure investment of Rs. 102 lakh crore during the period FY 2020 to 2025 in India.

Chapter 9: Services Sector

Service Sector accounts for:

About 55 % of the total size of the economy and GVA growth.
Two-thirds of total FDI inflows into India.
About 38 per cent of total exports.
More than 50 % of GVA in 15 out of the 33 states and UTs.

Chapter 10: Social Infrastructure, Employment and Human Development

India’s ranking in Human Development Index improved to 129 in 2018 from 130 in 2017. With 1.34 % average annual HDI growth, India is among the fastest improving countries
The share of regular wage/salaried employees has increased by 5 percentage points from 18 % in 2011-12 to 23 % in 2017-18.
Total formal employment in the economy increased from 8 % in 2011-12 to 9.98 % in 2017-18.
Access to health services inter-alia through Ayushman Bharat and Mission Indradhanush across the country has improved.
Mission Indradhanush has vaccinated 3.39 crore children and 87.18 lakh pregnant women of 680 districts across the country.
About 76.7 % of the households in the rural and about 96 % in the urban areas had houses of pucca structure.
A 10 Year Rural Sanitation Strategy (2019-2029) launched to focus on sustaining the sanitation behavior change and increasing access to solid and liquid waste management.

Major Highlights of Economic Survey 2019-20

About 1.24 lakh new firms created in 2018, an increase of about 80 % from about 70,000 in 2014.
5 % GDP growth for 2019-20 based on CSO’s first Advance Estimates. India’s economic growth is expected to “strongly rebound” to 6-6.5 per cent in 2020-21 from 5 per cent estimated in the current fiscal.
To achieve GDP of $5 trillion by 2024-25, India needs to spend about $1.4 trillion over these years on infrastructure
India’s top five trading partners continue to be USA, China, UAE, Saudi Arabia and Hong Kong.
India’s imports continue to be largest from China, followed by USA, UAE and Saudi Arabia.
Top export items: Petroleum products, precious stones, drug formulations & biologicals, gold and other precious metals.
Forest and tree cover:- Increasing and has reached 80.73 million hectare. 24.56 % of the geographical area of the country.
Report of the Task Force on National Infrastructure Pipeline released on 31.12.2019 has projected total infrastructure investment of Rs. 102 lakh crore during the period FY 2020 to 2025 in India.
Total formal employment in the economy increased from 8 % in 2011-12 to 9.98 % in 2017-18.
Mission Indradhanush has vaccinated 3.39 crore children and 87.18 lakh pregnant women of 680 districts across the country.
A 10 Year Rural Sanitation Strategy (2019-2029) launched to focus on sustaining the sanitation behavior change and increasing access to solid and liquid waste management.

Economic Survey 2019-20 – Highlights