Here is a comprehensive look at what the Economic Survey 2020-2021 claims.
Finance Minister Nirmala Sitharaman has presented the Economic Survey 2020-2021 on Friday that details the state of the Indian economy right ahead of the government’s Budget 2021 scheduled to be presented on February 1, 2021.
The Economic Survey 2020-21 has been authored by a team led by Chief Economic Adviser Krishnamurthy Subramanian. The economic survey document outlines the current state of the Indian economy and the reforms that should be undertaken in a bid to accelerate growth.
Here are snapshots of the claims and outlook made in the Economic Survey 2020-2021.
- A V-shaped economic recovery is due on the back of the mega vaccination drive. There will be a robust recovery in the services sector and massive growth in consumption and investment.
- A V-shaped recovery is due to a resurgence in high-frequency indicators including power demand, rail freight, E-Way bills, GST collection, steel consumption, etc. Incidentally, the GST collection of January 2021 was recorded as an all-time high of nearly Rs 1.20 lakh crore.
- India is set to become the fastest-growing economy by 2023, as projected by IMF.
- India’s GDP is estimated to contract by 7.7% in the financial year 2020-21.
- The agriculture sector is set to register 3.4% growth, while the industry and services sector will contract by 9.6% and 8.8% respectively this year.
- India is set to have a current account surplus of 2% of GDP in the FY21. This records a historic high after 17 years.
- Net foreign portfolio investments (FPI) inflows recorded an all-time monthly high of $9.8 billion in November 2020.
- The government measures saved at least 1 lakh lives and 37 lakh people from contamination during the pandemic. A V-shaped economic recovery testifies India’s boldness in taking short-term pain for long-term gain.
- The capital budget allocated for the defense sector is being fully utilised since FY2016-17. In the FY2020-21, defense budget allocation, including civil estimates and pensions was Rs 471,378 crore, up by Rs 40,367.71 crore over the budget estimates of the previous financial year.
- Health outcomes of the states that have adopted Ayushman Bharat Pradhan Mantri Jan Arogya Yojana (PM-JAY) have improved as compared to those states who didn’t adopt the scheme.
- The Rs 1.46 lakh crore Production Linked Investment (PLI) scheme announced in November 2020, will make India an integral part of the global supply chain. Expanded to 10 sectors, it will create huge employment opportunities.
- The infrastructure sector will play a key role in the overall economic growth and macroeconomic stability. Several sectors of the economy will grow with calibrated unlocking of activities.
- Under the central government’s flagship skilling scheme Pradhan Mantri Kaushal Vikas Yojana 3.0, vocational courses will be rolled out for the skill development of school students of 9-12 grades. Merely, 2.4% of India’s workforce in the 15-59 years age group has any mere vocational or technical training, while 8.9% obtained such training through informal sources.
- The rating agencies should be more transparent and less subjective in the sovereign rating.
- The government aims to increase spending on healthcare from the current 1% to 2.5-3% of GDP under the National Health Policy 2017, in a bid to cut out-of-pocket spending. It could lead to a reduction in out-of-pocket expenditures from 65% to 30%.
- The new Farm Bill heralds a new era of market freedom. It has been designed primarily for the benefit of small and marginal farmers, which constitutes 85% of the total farmer population.
- Indian economy’s over-regulation results in regulations being ineffective even with relatively good compliance with the process.