India has become the fourth largest economy in the world due to a strong economic growth but still

has a low per capita income, the Economic Survey revealed on Thursday. "India has emerged as the fourth largest economy globally with a high growth rate and has improved its global ranking in terms of per capita income. Yet, the fact remains that its per capita income continues to be quite low," it said. "India has moved up the ranks, but is still the poorest among the G-20," the survey added. The per capita income of India stood at $1,527 in 2011, it said. "...this is perhaps the most visible challenge. Nevertheless, India has a diverse set of factors, domestic as well as external, that could drive growth well into the future," the survey said. Between 1980 and 2010, India achieved a growth of 6.2 per cent, while the world as a whole registered a growth rate of 3.3 per cent. As a result, India's share in global GDP more than doubled from 2.5 per cent in 1980 to 5.5 per cent in 2010, it said. Consequently, India's rank in per capita GDP showed an improvement from 117 in 1990 to 101 in 2000 and further to 94 in 2009. China, however, improved its rank from 127 to 74 during the same period. G-20 or the Group of 20 nations was formed in 1999 after the East Asian crisis as a forum of finance ministers and central bank governors. Meanwhile, the survey said any slowdown in eurozone, which accounts for 19 per cent of the global GDP, could impact the Indian economy. The International Monetary Fund (IMF) has forecast that the eurozone is likely to go through a mild recession in 2012.

Read more at:http://indiatoday.intoday.in/story/economic-survey-2012-13-india-growth-poverty/1/177886.html

Union Finance Minister P. Chidambaram on 27 February presented the Economic Survey 2012-13 in the Lok Sabha of the Parliament. India's Economic Survey for 2012-13 pegs the country's growth at 6.1-6.7% and inflation at 6.2-6.6% for the next fiscal 2013-14 and made a strong call for cutting subsidies. Economic Survey is presented every year, just before the Union Budget. It is a flagship annual document of the Ministry of Finance, Government of India. Economic Survey reviews the developments in the Indian economy over the previous 12 months. It 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. The economic survey 2012-13 was prepared by a team of economists led by Chief Economic Advisor Raghuram Rajan, and pitches for speeding up economic reforms to activate a sluggish economy. It serves as an indicator of what is likely to be contained in the General Budget proposals. Following are the major Higlhlights of the Economic Survey 2012-13 GDP growth seen at 6.1-6.7 percent in 2013/14 Government target for fiscal deficit is 4.8 pct of GDP in 2013/14 Government target for fiscal deficit is 3 pct of GDP in 2016/17 Headline WPI inflation may decline to 6.2-6.6 pct by March2013 Focus on curbing imports, making oil prices more market determined to reign in current account deficit Foreign Institutional Investors (FIIs) flows need to be targeted towards long -term rupee instruments Prioritisation of expenditure seen as key ingredient of credible medium-term fiscal consolidation plan

 Raising tax to GDP ratio to more than 11 percent seen as critical for sustaining fiscal consolidation Room for accommodative monetary policy with expected fiscal consolidation India likely to meet fiscal deficit target of 5.3 pct of GDP in 2012/13, despite significant shortfall in revenues Recommends curbing gold imports to reign in current account deficit Room to increase exports in the short run limited Industrial output seen growing around 3 pct in 2012/13 Govt priority to fight inflation by reducing fiscal impetus to demand as well as by focusing on incentivizing food production. More jobs in low productivity construction sector Balance of Payments under pressure with net exports decline Service sector has shown more resilience despite global slowdown Pitches for hike in price of diesel and LPG to cut subsidy burden Railway freight grows by 5.1 per cent in 2012-13 Foreign Exchange reserves remains steady at USD 295.6 Billion at December 2012 end.

- See more at: http://www.jagranjosh.com/current-affairs/economic-surveyof-india-201213-highlights-1361958783-1#sthash.7YLP3owV.dpuf

Economic Survey 2012: Overview and Highlights

17
Tags: Economic Survey, Union Budget 2012, Budget 2012, Economic survey 2012,Economic Survey of India, Economic Survey overview, Economic Survey Highlights

Zeebiz Buerau New Delhi: Finance Minister Pranab Mukherjee tabled the Economic Survey 2011-12 in Parliament on Thursday, stating the Gross Domestic Product (GDP) is likely to grow 7.6 percent in FY'13. "The growth rate of real GDP (is expected) to pick up to 7.6 percent (plus or minus 0.25 percent) in 2012-13 and faster beyond that," said Pranab Mukherjee in Parliament. It expects the economic growth to further improve to 8.6 percent in 2013-14. The Survey said fiscal consolidation is likely to get back on track from 2012-13, when savings and capital formation will also begin to improve. "Moreover, with the easing of inflationary pressure in the months to come, there could be reduction in policy rates by the RBI, which would encourage investment that could have a positive impact on growth", it added. Indian economy is likely to slowdown to 6.9 percent in 2011-12 from 8.4 percent in the previous two years mainly on account of global slowdown and domestic factors. "There were also the pressures of democratic politics, which slowed reforms," the Survey said while endorsing the Central Statistical Organisation's (CSO) estimate of 6.9 percent growth during 2011-12. India's economic growth slowed to its weakest annual pace in almost three years in the three months to December, as high interest rates and rising input costs constrained investment and manufacturing, government data released earlier showed. GDP rose 6.1 percent in October to December compared with a year earlier. That marked a sharp pullback from 6.9 percent growth in July to September and was the seventh successive quarterly slowdown. Following are the highlights of Economic Survey 2011-12 :

Rate of growth estimated to be 6.9% in FY 12

Outlook for growth and stability promising

Real GDP growth expected at 7.6% in FY 13

GDP pegged at 8.6% in FY 14

Agriculture grows at 2.5 % growth in FY 12

Services grow at 9.4 %, in FY 12, share in GDP at 59%

Industrial growth pegged at 4-5 % in FY 13

Industry expected to improve as economic recovery resumes

Inflation on WPI was high, but shows signs of moderation

Inflation moderation likely to spur investment

WPI food inflation dropped from 20.2% in February 2010 to 1.6% in January 2012

Calibrated steps initiated to contain inflation

India remains among the fastest growing economies of the world

Indias sovereign credit rating rose by 2.98 percent in 2007 -12

Fiscal consolidation on track

Savings & Capital Formation expected to rise

Exports grew at 40.5% in H1

Imports grew by 30.4% in H1

Foreign trade performance key driver of growth

Forex reserves enhanced, cover nearly the entire external debt stock

Central spending on social services up at 18.5% in FY 12 Vs 13.4% FY 07

MNREGA coverage of 5.49 crore households in FY 11

Sustainable development and climate change high priority

Tenuous global economic environment turned sharply adverse in September, 2011

Euro-zone crisis responsible for international downturn

Slowdown of Indian economy due to global, domestic factors

Decline in overall investment rate cause for slow recovery

Gross capital formation in Q3 of FY 12 as a ratio of GDP at 30%, down from 32% in FY 11

Global economy remains fragile; efforts needed through G-20 for stability

Progressive deregulation of interest rates on savings accounts recommended

Deregulation of interest rates on savings accounts to help raise financial savings and improve transmission of monetary policy

Need deepening of domestic financial markets, especially corporate bond market

Efforts on to attract dedicated infrastructure funds

Indias foreign trade performance key driver of growth

Balance of Payments widens to USD 32.8 bn in H1 of FY 12 Vs USD 29.6 bn FY 11

Forex reserves up from USD 279 bn in March 10 to US USD 305 bn in March11

India now more closely integrated with the world economy

Indias share of trade to GDP of goods and services in world tripled in 1990 -2010

Indias flows of capital as a share of GDP in word increased dramatically in last two decades

Inflation

Inflation to moderate further in FY 13

Renewed focus on supply side measures essential for price stability

Inflation expected to moderate at 6.5-7% by March end

Gap between WPI and CPI inflation narrows in FY 12

Milk, eggs/meat/fish, gram & edible oils major drivers of food inflation

Monetary policy measures taken to contain inflation

Substantial Monetary policy challenge to rein-in inflation

RBI addressed liquidity concerns

Monetary market remained orderly in FY 12 2011-12

Need to examine linkages between policy rate changes and inflation

Threat from asset price bubbles in real estate and stock markets

Scope to further sharpen monetary policy and use macro prudential to deal with above said threats

Unexpected shocks such as oil prices remain inflationary threats

High level of food stocks to help maintain overall price stability

Measures for price stability in food items

Need guidance for farmers on fertilizers, insecticide, alternate cropping patterns

Need strategy, regular imports of agriculture commodities in smaller quantities

Need to set up special markets for special crops

Improve Mandi governance

Need to promote interstate trade

Perishable food items should be taken out of ambit of the APMC Act

FDI in multi brand retain will fill infra gap during harvest period

Need to step up creation of modern stores facilities for food grains

Agriculture

FDI in multi-brand retail recommended

Higher levels of agricultural output augur well

Concerns over growth rate in agri sector falling short of target

Agriculture grows at 2.5% Vs target of 4% in five yr plan

Agriculture, allied activities account for 13.9 % of GDP in FY 12

Foodgrains stocks at 55.2 million tonnes

Production of foodgrains in FY 12 estimated at 250.42 million tones

Speedy improvement in yield through adequate investment in R&D needed

Agri infra priority area

Agri outlook for next fiscal bright

Industry

Industrial growth pegged at 4-5% in FY 12

Industrial growth less than recent past and far below potential

Need to boost business sentiments, encourage investment and identify bottlenecks

Industrial sector expected to rebound during next financial year

Industry expected to rebound with inflation easing, moderation in commodities prices in international market and revival of manufacturing performance

Long term average annual growth of industries comprising mining, manufacturing and electricity remain aligned with overall GDP growth rate

Employment in Industry increase from 16.2% in 1999-2000 to 21.9% in 2009-10 largely due tp construction sector

Contraction in production in the mining sector, particularly in coal and natural gas segments

Electricity sector witnessed improvement

Basic goods and non-durables goods grew at 6.1%

Moderation in growth in other segments of IIP

Negative growth observed in capital goods and intermediates segments

Gross Capital Formation in industry as percent to the overall GCF moderated to 48.3% in FY 11

Manufacturing GCF growth rate declined to 7% in FY 11 Vs 42% in FY 10

Moderation in rate of growth of credit in infrastructure and manufacturing sectors

Need to address land acquisition and infra issue on priority

Services Sector

Services sector proves saviour during global crisis

Services grow by 9.4% despite slowing GDP growth

Share of services in GDP at increased from 55.1% in FY 11 to 56.3% in FY 12

Financial & non-financial services, IT, Telecomm, Real Estate constituted 41.9 % of total FDI equity inflows during April 2000December 2011

FDI inflows to the Services Sector slowed down FY 10 & FY 11, dipping to negative zone

FDI inflows in FY 12 recovered; increased by 36.8 % to USD 9.3 billion (April-Dec)

Slight moderation in services growth no cause of worry

Moderation due to the steep fall in growth of public administration and defence services reflecting fiscal consolidation

Growth in trade, hotels and restaurants robust at 11.2%

Retail-sector growth expected to be even more robust in FY 13

Worry areas include real estate ownership of dwellings and business services segment

Software service exports steady; face threat from Eurozone

Trade

Indias exports grew at 23.5% to reach USD 242.8 bn in April 2011 - Jan 2012

Exports decelerated in Oct-Nov due to global downturn; recovered in Dec-Jan

Key performers in export - petroleum and oil products, gems and jewellery, engineering, cotton fabrics, electronics, readymade garments, drugs

Imports up 29.4% during April - Jan 2011-12 at USD 391.5 bn

Key import areas -POL (petroleum, oil and lubricant), gold and silver

Trade deficit in April-Jan 2011-12 at USD148.7 bn Vs USD 105.9 billion in last fiscal

Diversification of export and import markets a success

UAE Indias largest trading partner, followed by China

Indias services exports bounce back after contraction in FY 10

Indias services exports grew 38.4 % to USD 132.9 bn in FY 11

Growth in export of services moderated in H1 FY 12 to 17.1%

Software exports may show some sluggishness

Trade challenges include global situation, systemic problems

Further diversification of Indias export basket needed

Facilitate trade by removing procedural delays, red tape

Infrastructural bottlenecks need to be removed

Total investment in SEZs till 31 Dec 2011 at Rs. 2,49,630.80 crore

Formal approvals granted for setting up of 583 SEZs of which 380 notified

Forex Reserves at USD 293 bn

External Debt Stock at USD 326 bn

Oil, Gold and Silver prices contribute to modest rise in current account deficit

Net capital flows at USD 41.1 billion (4.5% of GDP) in the H1 of FY 12

External commercial borrowing at USD 10.6 billion in H1 of FY 12

Portfolio investment shows large decrease in inflow to USD 1.3 bn in H1 of FY 12

Trade deficit more than 8 % of GDP and current account deficit more than 3 % sign of growing imbalance in BOP

High share of volatile FFI flows added external shock

Infrastructure

Performance of broad sectors and sub sectors in key infrastructure areas presents mixed picture

Achievements in certain infrastructure sector remarkable

Need to attract large scale investment into infrastructure

Public-Private Partnership successful model

PPPs expected to augment resource availability, improve efficiency

Investment requirement at USD 1 trillion during Twelfth Plan

50% investment to come from private sector as against the 36% anticipated

Financing infrastructure a big challenge

Improvement in growth in power, petroleum refinery, cement, railway freight traffic, passenger handled

Coal, Natural Gas, Fertilizers, handling of Export Cargo at airports and number of cell phone connections show negative growth

Steel sector witnesses moderation in growth

Core and infrastructure sector still depends on public sector projects

Delays increase project risk and cost, and need to be minimized

Credit growth to infrastructure sector turned negative in FY 12

Incremental credit flow to the infra sector in April-December 2011 nearly 61% in same period year before

Reduction in credit flow in power and telecom sectors

Total FDI inflows into majors infrastructure sectors during April-December 2011 registered growth of 23.6%

Challenges on form plateauing of the domestic savings and macro availability of resources

Need for innovative schemes to attract large-scale investment into infrastructure

Strengthening domestic financial institutions and development of long-term bonds market critical

Rupee

Rupee falls by 12.4 % against USD

Rupee falls from 44.97 per USD in March 2011 to 51.34 per USD in January 2012

Rupees high volatility impairs investor confidence

Aggressive stand to check Rupee volatility recommended

Financial Markets

Volatility in global financial markets likely to tighten availability and cost of foreign funding

Government measures mitigate liquidity stress

Indian banks robust amidst Eurozone crisis

Financial infrastructure continues to function without any major disruption

Indian financial markets, especially currency and equity, performed under pressure in FY 12

Global market turmoil caused risk aversion and moderation in capital inflows

Countervailing steps helped mitigate strains

Global situation, rising trade imbalance, pace of reform initiatives to boost capital flows

Domestic growth concerns likely to influence financial markets movements

Concerns over Greeces sovereign debt problem spreading to India

Banking business may become more complex and riskier in future with greater global integration

Risk and liquidity management, skill enhancement necessary

Need to maintain sustainable levels of external debt

Need innovative steps to bring corporate bond market at the centrestage

Infrastructure financing and financing of unorganized micro/small business sector needed

Banking and Micro Finance

Public sector banks show 19 % growth in priority sector lending

Credit Disbursement to agri sector exceeded target by 19 %

Credit Disbursement helped over 12.7 mn new farmers

98 % public sector bank branches fully computerised

Self Help Group- bank linkage programme major success

Capital in banks essential for balance sheet expansion

Rs 12,000 provided in FY 12 for capital infusion in public sector banks

Growth in bank credit extended by Scheduled Commercial Banks grew at 17.1%

Flow of agricultural credit impressive

Infrastructure Debt Funds to facilitate flow of funds into infrastructure projects

Resource mobilization through primary market shows sharp decline in FY 11

Environment and Climate Change

Lower carbon sustainable growth to be central element of 12th plan

Indias per capita CO2 emissions much lower than those of developed countries even if historical emissions are excluded

Need for more sensitivity from developed countries to carbon emissions

Economic pricing of energy, new technologies to be the key

India has taken voluntary actions to pursue sustainable development strategy

Warming planet may cause adverse effects, extreme weather events

India has stepped up protection of its natural environment, forests

Five main challenges include climate change, food security, water security, energy security and managing urbanization

Broad-based economic and social development answer for greater sustainability

Education and Employment

Reform process in education continued IN FY 12

Aakash, low cost computing device launched

Sarva Shiksha Abhiyan norms revised to correspond with the provisions of the RTE Act

National Council for Teacher Education notified as the academic authority for teacher qualifications

Number of out-of-school children down from 134.6 lakh in 2005 to 81.5 lakh in 2009

Need to scale up the successful centres of innovations, create higher technical institutions

Labour Bureau Survey indicates upward trend in employment since July 2009 maintained

Employment in organized sector increased by 1.9 % in 2010

Share of women in organized-sector employment at 20.4% in 2010 March end

MGNREGA: Coverage increases to 5.49 crore households in 2010-11

Government sets up committee for developing index for fixing MGNREGA wage rates