Economic Survey 2013-14: Highlights

Finance Minister Arun Jaitley tabled the Economic Survey for FY 2013-14 in Lok Sabha on Wednesday, ahead of the Union Budget.

Wholesale Price Index (WPI) Inflation shows sign of receding; fell to 5.98% during 2013-14

Consumer price inflation (CPI) declined to about 9.49 per cent in 2013-14.

Food inflation, however, remained stubbornly high during FY 2013-14, reaching a peak of 11.95% in third quarter.

Both, Wholesale and Consumer Price Inflation, expected to go downward.

The passage of the PFRDA Act, the shift of commodity futures trading, FSLRC report were the three major milestones of the year 2013-14

In the banking sector gross NPAs of banks registered a sharp increase. Overall NPAs of the banking sector increased from 2.36 per cent of total credit advanced in March 2011 to 4.40 per cent of total credit advanced in December 2013.

The RBI has indentified five sectors — infrastructure, iron and steel, textiles, aviation and mining as the stressed sectors.

The New Pension System (NPS), now National Pension System, represents a major reform of Indian pension arrangements, and lays the foundation for a sustainable solution to ageing in India by shifting to an individual account, defined-contribution system.

Till May 7, 2014 a total of 67.11 lakh members have been enrolled under the NPS with a corpus of Rs. 51,147 crore.

The Swavalamban Scheme for workers in the unorganized sector launched in 2010, has now been extended to five years for the beneficiaries enrolled in 2010-11, 2011-12, and 2012-13 and thus the benefits of co-contribution under the Scheme would be available till 2016-17.

The FSLRC in its Report submitted on March 24, 2011 has given wide-ranging recommendations, broadly in the nature of governance enhancing principles for enhanced consumer protection, greater transparency in the functioning of financial sector regulators in terms of their reporting system, greater clarity on their interface with the regulated entities and greater transparency in the regulation making process by means of mandatory public consultations, incorporation of cost benefit analysisetc.

Fiscal deficit for 2013-14 contained at 4.5% of the GDP

Fiscal Outcome of Central Government in 2013-14 achieved

Economy Survey recommends fiscal consolidation through higher tax-GDP ratio then merely reducing the expenditure to GDP ratio

Proactive policy action helped government remain in fiscal consolidation mode in 2013-14

Total outstanding liabilities of the central and state governments decline as a proportion of GDP

Economic Survey says that despite the global and domestic challenges, the economy achieved its targeted fiscal consolidation in 2013-14 but this was done by cutting expenditure (majorly plan /capital expenditure) which is unsustainable for an economy.

Addressing the risk of food, fertilizer and petroleum subsidies is critical.

Another challenge lies in improving tax buoyancy, and overall shortfall in non-debt receipts could be contained with greater efforts at mobilisation and reforms.

Fiscal consolidation remains imperative for the economy, both in the current context and the years to come with the emphasis on maintaining the quality of adjustment.

Long-term Borrowings Account for 78.2 per cent of Total External Debt

Sustaining the improvement in the BoP position in the medium term is a challenge.

Given the uncertain global environment and the frequent bouts of flight of capital on aversion to all kinds of risks, there is need to put in place a mechanism for closely monitoring developments and assessing vulnerabilities so as to take measures to cope with the situation.

External Debt Remains within Manageable Limits

India’s external debt stock at end of March 2013 stood at US $ 404.9 billion (Rs. 2,200,410 crore), recording an increase of US$ 44.1 billion (12.2 per cent) over the previous year’s level of US $ 360.8 billion (Rs. 1,844,167 crore).

India’s foreign exchange reserves increased from US $ 292.0 billion at end March 2013 to US $ 304.2 billion at end march 2014.

India has the Second Fastest Growing Services Sector with Compound Annual Growth Rate at 9.0 Per Cent

India ranked 12th in terms of services Gross Domestic Product (GDP) in 2012.

While services share in World GDP was 65.9 per cent and in employment was only 44 per cent in 2012, in India, they were 56.9 per cent and 28.1 per cent respectively.

Services constitute a 57 per cent share in GDP at factor cost (at current prices) in 2013-14, an increase of 6 percentage points over 2000-01.

In 2013-14, FDI inflows to the services sector (top five sectors including construction) declined sharply by 37.6 per cent to US$ 6.4 billion compared to an overall growth in FDI inflows at 6.1 per cent resulting in the share of the top five services in total FDI falling to nearly one-sixth.

India’s increase in share in world services exports from 0.6 per cent in 1990 to 3.3 per cent in 2013 was faster than in merchandise exports. Exports of software services, accounting for 46 per cent of India’s total services exports, decelerated to 5.4 per cent in 2013-14, travel, accounting for a nearly 12 per cent share, witnessed negative growth of 0.4 per cent.

The annual average exchange rate of the rupee went up from Rs. 47.92 per US dollar in 2011-12 to Rs. 54.41 per US dollar in 2012-13 and further to Rs 60.50 per US dollar in 2013-14.

India’s Balance of Payments (BoP) position improved dramatically in 2013-14, particularly in the last three quarters. This owed in large part to measures taken by the Government and the Reserve Bank of India (RBI) and in some part, to the overall macroeconomic slowdown that fed into the external sector

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