Economy: Survey

Categories
Economy
Published
09-Mar-2020

Gig Economy

Context

In India, recently the Gig Economy is continuously rising as lot of companies like Paytm, Uber, Ola Cabs etc are indulged in it.

About

Gig Economy

In a gig economy, temporary, flexible jobs are commonplace and companies tend toward hiring independent contractors and freelancers instead of full-time employees.
A gig economy undermines the traditional economy of full-time workers who rarely change positions and instead focus on a lifetime career.
The gig economy can benefit workers, businesses, and consumers by making work more adaptable to the needs of the moment and demand for flexible lifestyles.
At the same time, the gig economy can have downsides due to the erosion of traditional economic relationships between workers, businesses, and clients.
Gig-economy work and zero-hour contracts have similarities. Both treat workers as contractors and offer no guarantee of pay, but gig economy roles are normally paid per piece — such as a set rate to deliver a package or drive a fare to a location — while zero-hours contracts are paid hourly, but with no set minimum. Both are the result of companies trying to cut or limit staffing costs, and can leave workers unsure how much they'll earn.

Open Acreage Licensing Policy (OALP)

Context

The ministry of petroleum and natural gas has launched the third bidding round under the Open Acreage Licensing Policy (OALP), offering 23 hydrocarbon blocks covering over 31,000 sq km for exploration.

About

Open Acreage Licensing Policy (OALP) gives an option to a company looking for exploring hydrocarbons to select the exploration blocks on its own, without waiting for the formal bid round from the Government.
Under Open Acreage Licensing Policy (OALP), a bidder intending to explore hydrocarbons like oil and gas, coal-bed methane, gas hydrate, etc., may apply to the Government seeking exploration of any new block (not already covered by exploration).
The Government will examine the Expression of Interest and justification. If it is suitable for the award, Govt. will call for competitive bids after obtaining necessary environmental and other clearances.
OALP was introduced vide a Cabinet decision of the Government as part of the new fiscal regime in the exploration sector called HELP or Hydrocarbon Exploration and Licensing Policy, to enable a faster survey and coverage of the available geographical area which has potential for oil and gas discovery.
What distinguishes OALP from New Exploration and Licensing Policy (NELP) is that under OALP, oil and gas acreages will be available round the year instead of cyclic bidding rounds as in NELP. Potential investors need not have to wait for the bidding rounds to claim acreages.
Setting up of National Data Repository is one of the milestones achieved for Open Acreage Licensing Policy. To make India a favorable destination globally for the Exploration of Crude Oil and Natural Gas, the Government plans to move to the OALP regime soon.
It is well acknowledged that there is a need for a faster vehicle of awarding blocks to bring more areas under exploration.
As India has vast unexplored sedimentary basins, a strategy that facilitates a time-bound full coverage has become a necessity. Moreover, even the OALP pre-supposes offering of data to the interested companies for them to submit their bids/ interest. Hence, the availability of data is no longer an option, but a pre-condition.

Mudra loan

Context

The Reserve Bank of India (RBI) has expressed concern over rising bad loans from Pradhan Mantri MUDRA Yojana (PMMY).

About

A survey by the Labour Ministry, yet to be made public, has found just one out of five beneficiaries (20.6 per cent) from the sample survey availed of Mudra loanfor setting up a new establishment, the rest used the funds for expanding their existing business.
It has found that 1.12 crore additional jobswere created during April 2015-December 2017, the first 33 months following the rollout of the scheme.
Of this, 51.06 lakh were self-employed or working ownerswhich also included unpaid family members while 60.94 lakh were employees or hired workers.
A total of Rs 5.71 lakh crore in loans was sanctioned under three categories of Mudra — Shishu, Kishor and Tarun —through 12.27 crore loan accounts during the first three years. The average ticket size of a loan was Rs 46,536.

Pradhan Mantri MUDRA Yojana (PMMY)

Pradhan Mantri Mudra Yojana (PMMY) is a flagship scheme of Government of India to “fund the unfunded” by bringing such enterprises to the formal financial system and extending affordable credit to them.
It enables a small borrower to borrow from all Public Sector Banks such as PSU Banks, Regional Rural Banks and Cooperative Banks, Private Sector Banks, Foreign Banks, Micro Finance Institutions (MFI) and Non-Banking Finance Companies (NBFC) for loans upto Rs 10 lakhs for non-farm income generating activities.
The scheme was launched on 8th April, 2015 by the Hon'ble Prime Minister.

Eligibility

Any Indian Citizen who has a business plan for a non-farm sectorincome generating activity such as manufacturing, processing, trading or service sector and whose credit need is less than Rs 10 lakh.
The citizen can approach either a Bank, MFI, or NBFCfor availing of Micro Units Development & Refinance Agency Ltd. (MUDRA) loans under Pradhan Mantri Mudra Yojana (PMMY).

Types of loans provided

Under the aegis of Pradhan Mantri MUDRA Yojana, MUDRA has already created the following products / schemes.

Shishu : covering loans upto 50,000/-
Kishor : covering loans above 50,000/- and upto 5 lakh
Tarun : covering loans above 5 lakh and upto 10 lakh
The interventions have been named 'Shishu', 'Kishor' and 'Tarun' to signify the stage of growth / development and funding needs of the beneficiary micro unit / entrepreneur and also provide a reference point for the next phase of graduation / growth to look forward to.
It would be ensured that at least 60% of the credit flows to Shishu Category Units and the balance to Kishor and Tarun Categories.
There is no subsidy for the loan given under PMMY. However, if the loan proposal is linked some Government scheme, wherein the Government is providing capital subsidy, it will be eligible under PMMY also.

Economic Survey Vol. 1

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

For more than three-fourths of known economic history, India has been the dominant economic power globally. Such dominance manifested by design. During much of India’s economic dominance, the economy relied on the invisible hand of the market for wealth creation with the support of the hand of trust. Specifically, the invisible hand of markets, as reflected in openness in economic transactions, was combined with the hand of trust by appealing to ethical and philosophical dimensions. As far as half-a-century back, Spengler (1971) reflected this fact by asserting that Kautilya’s Arthashastra postulates the role of prices in an economy.
The Survey shows that contemporary evidence following the liberalization of the Indian economy support the economic model advocated in our traditional thinking. The exponential rise in India’s GDP and GDP per capita post liberalisation coincides with wealth generation in the stock market. Similarly, the evidence across various sectors of the economy illustrates the enormous benefits that accrue from enabling the invisible hand of the market. Indeed, the Survey shows clearly that sectors that were liberalized grew significantly faster than those that remain closed. The events in the financial sector during 2011-13 and the consequences that followed from the same illustrate the second pillar - the need for the hand of trust to support the invisible hand. In fact, following the Global Financial Crisis, an emerging branch of the economics literature now recognises the need for the hand of trust to complement the invisible hand.
The Survey posits that India’s aspiration to become a $5 trillion economy depends critically on strengthening the invisible hand of markets together with the hand of trust that can support markets. The invisible hand needs to be strengthened by promoting pro-business policies to (i) provide equal opportunities for new entrants, enable fair competition and ease doing business, (ii) eliminate policies that undermine markets through government intervention even where it is not necessary, (iii) enable trade for job creation, and (iv) efficiently scale up the banking sector to be proportionate to the size of the Indian economy. Introducing the idea of “trust as a public good that gets enhanced with greater use”, the Survey suggests that policies must empower transparency and effective enforcement using data and technology to enhance this public good.

Chapter-2 Entrepreneurship and Wealth Creation at the Grassroots

The “Startup India” campaign of the Government of India recognizes entrepreneurship as an increasingly important strategy to fuel productivity growth and wealth creation in India. Given this initiative, this chapter examines the content and drivers of entrepreneurial activity at the bottom of the administrative pyramid – over 500 districts in India.
The analysis employs comprehensive data on new firm creation in the formal sector across all these districts from the Ministry of Corporate Affairs (MCA)-21 databases.
- First, using the World Bank’s Data on Entrepreneurship, this chapter confirms that India ranks third in number of new firms created. The same data shows that new firm creation has gone up dramatically in India since 2014. While the number of new firms in the formal sector grew at a compounded annual growth rate of 3.8 per cent from 2006-2014, the growth rate from 2014 to 2018 has been 12.2 per cent. As a result, from about 70,000 new firms created in 2014, the number has grown by about 80 per cent to about 1, 24,000 new firms in 2018.
- Second, reflecting India’s new economic structure, i.e. comparative advantage in the Services sector, new firm creation in services is significantly higher than that in manufacturing, infrastructure or agriculture.
- Third, grassroots entrepreneurship is not just driven by necessity as a 10 percent increase in registration of new firms in a district yields a 1.8 percent increase in GDDP. Thus, entrepreneurship at the bottom of the administrative pyramid – a district – has a significant impact on wealth creation at the grassroot level. This impact of entrepreneurial activity on GDDP is maximal for the manufacturing and services sectors.
- Fourth, birth of new firms is very heterogeneous across Indian districts and across sectors. Moreover, it is dispersed across India and is not restricted to just a few cities.
- Fifth, literacy and education in the district foster local entrepreneurship significantly. For instance, the eastern part of India has the lowest literacy rate of about 59.6 per cent according to the census of 2011. This is also the region in which new firm formation is the lowest. In fact, the impact of literacy on entrepreneurship is most pronounced when it is above 70 per cent.
- Sixth, the level of local education and the quality of physical infrastructure in the district.
Finally, policies that enable ease of doing business and flexible labour regulation enable new firm creation, especially in the manufacturing sector. As the manufacturing sector has the greatest potential to create jobs for our youth, enhancing ease of doing business and implementing flexible labour laws can create the maximum jobs in districts and thereby in the states.
Literacy, education and physical infrastructure are the other policy levers that district and state administrations must focus on foster entrepreneurship.

Chapter- 3 Pro-Business versus Pro-Crony

India’s aspiration to become a $5 trillion economy depends critically on promoting “probusiness” policy that unleashes the power of competitive markets to generate wealth, on the one hand, and weaning away from “pro-crony” policy that may favour specific private interests, especially powerful incumbents, on the other hand. Economic events since 1991 provide powerful evidence supporting this crucial distinction.
Viewed from the lens of the Stock market, which captures the pulse of any economy, creative destruction has increased significantly after reform. Before liberalization, a Sensex firm expected to stay in it for 60 years, which decreased to only 12 years after liberalization. Every five years, one-third of Sensex firms are churned out, reflecting the continuous influx of new firms, products and technologies into the economy.
Despite impressive progress in enabling competitive markets, pro-crony policies have destroyed value in the economy. For example, an equity index of connected firms significantly outperformed the market by 7 per cent a year from 2007 to 2010, reflecting abnormal profits extracted at common citizens’ expense. In contrast, the index underperforms the market by 7.5 per cent from 2011, reflecting the inefficiency and value destruction inherent in such firms.
Pro-crony policies as reflected in discretionary allocation of natural resources till 2011 led to rent-seeking by beneficiaries while competitive allocation of the same resources post 2014 have put an end to such rent extraction. Similarly crony lending that led to willful default, wherein promoters have collectively siphoned off wealth from banks, led to losses that dwarf subsidies directed towards rural development.

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

Government intervention, sometimes though well intended, often ends up undermining the ability of the markets to support wealth creation and leads to outcomes opposite to those intended. This chapter analyses four examples of anachronistic government interventions, though many more abound.
- First, frequent and unpredictable imposition of blanket stock limits on commodities under Essential Commodities Act (ECA) neither brings down prices nor reduces price volatility. However, such intervention does enable opportunities for rent-seeking and harassment. For instance, imposition of stock limits on dal in 2006-Q3, sugar in 2009- Q1 and onions in September 2019 spiked up the volatility of the wholesale and retail prices instead of smoothening them – in contrast to its objective of easing pressure on prices. Around 76000 raids under ECA were conducted during 2019. Assuming a minimum of 5 persons involved in a raid, considerable administrative effort goes into enforcement of ECA. As the conviction rate, however, is abysmally low and raids have no impact on prices, the ECA only seems to enable rent-seeking and harassment. The Act is anachronistic as it was passed in 1955 in an India worried about famines and shortages; it is irrelevant in today's India and must be jettisoned.
- Second, the regulation of prices of drugs through the DPCO 2013, has led to increase in the price of a regulated pharmaceutical drug vis-à-vis that of a similar drug whose price is not regulated. Our analysis shows that the increase in prices was witnessed for more expensive formulations than for cheaper ones and those sold in hospitals rather than retail shops, reinforcing that the outcome is opposite to what DPCO aims to do - making drugs affordable. The evidence across different commodities (pulses, sugar, onions and drugs) - not just onions or sugar where cartelisation is often suspected - and episodes spanning different time periods (2006-19) suggests that the ineffectiveness of ECA stems from unnecessary government intervention that undermines markets.
- Third, government policies in the foodgrain markets has led to the emergence of Government as the largest procurer and hoarder of foodgrains – adversely affecting competition in these markets. This has led to overflowing of buffer stocks with FCI, burgeoning food subsidy burden, divergence between demand and supply of cereals and acted as a disincentive towards crop diversification.
- Fourth, analysis of debt waivers given by States/Centre shows that full waiver beneficiaries consume less, save less, invest less and are less productive after the waiver when compared to the partial beneficiaries. The share of formal credit decreases for full beneficiaries when compared to partial beneficiaries, thereby defeating the very purpose of the debt waiver provided to farmers.
The Ministry of Consumer Affairs and its related arms must examine whether the anachronistic ECA, which was passed in 1955 in an India worried about famines and shortages, is relevant in today’s India. Around 76000 raids under ECA were conducted during 2019. Assuming a minimum of 5 persons involved in a raid, considerable administrative effort goes into enforcement of ECA. As the conviction rate, however, is abysmally low and raids have no impact on prices, the ECA only seems to enable rent-seeking and harassment. The Survey provides clear evidence that the case for jettisoning this anachronistic legislation is strong.
The regulation of prices of drugs, through the DPCO 2013, has led to increase in the price of the regulated pharmaceutical drug vis-à-vis that of a similar drug whose price is not regulated. The increase in prices is greater for more expensive formulations than for cheaper ones and for those sold in hospitals rather than retail shops. These findings reinforce that the outcome is opposite to what DPCO aims to do - making drugs affordable.
As the Government is a huge buyer of drugs through its various arms such as CGHS, Defense, Railways etc., the Government can intervene more effectively to provide affordable drugs by combining all its purchases and thereby exercise its bargaining power. The Ministry of Health and Family Welfare as well as its related arms must imbibe the evidence to evolve non-distortionary mechanisms that utilise Government’s bargaining power in a transparent manner.
Government policies in the foodgrain markets has led to the emergence of Government as the largest procurer and hoarder of rice and wheat crowding out. This has led to burgeoning food subsidy burden and inefficiencies in the markets, which is affecting the long run growth of agricultural sector. The foodgrains policy needs to be dynamic and allow switching from physical handling and distribution of foodgrains to cash transfers/ food coupons/smart cards.
Analysis of debt waivers given by States/Centre shows that full waiver beneficiaries consume less, save less, invest less and are less productive after the waiver when compared to the partial beneficiaries. Debt waivers disrupt the credit culture and end up reducing the formal credit flow to the very same farmers, thereby defeating the very purpose of the debt waiver provided to farmers.
This chapter makes the case that each department and ministry in the Government must systematically examine areas where the Government needlessly intervenes and undermines markets. Note that the chapter does not argue that there should be no Government intervention. Instead, interventions that were apt in a different economic setting may have lost their relevance in a transformed economy. Eliminating such instances will enable competitive markets and thereby spur investments and economic growth.

Chapter- 5 Creating Jobs and Growth by Specializing to Exports in Network Products

The current environment for international trade presents India an unprecedented opportunity to chart a China-like, labor-intensive, export trajectory and thereby create unparalleled job opportunities for our burgeoning youth.
By integrating “Assemble in India for the world” into Make in India, India can create 4 crore well-paid jobs by 2025 and 8 crore by 2030. Exports of network products, which is expected to equal $7 trillion worldwide in 2025, can contribute a quarter of the increase in value-added for the $5 trillion economy by 2025. This chapter, therefore, articulates a clear-headed strategy to grab this opportunity. China’s remarkable export performance vis-à-vis India is driven primarily by deliberate specialization at large scale in labour-intensive activities, especially “network products”, where production occurs across Global Value Chains (GVCs) operated by multi-national corporations. Laser-like focus must be placed on enabling assembling operations at mammoth scale in network products. As an India that harbours misplaced insecurity on the trade front is unlikely to grab this opportunity, our trade policy must be an enabler. In fact, contrary to recent fears, careful analysis that controls for all confounding factors shows that India has gained from trade agreements: a 0.7 per cent increase per year in trade surplus with partner countries for manufactured products and 2.3 per cent per year for total merchandise.
The current environment for international trade presents India an unprecedented opportunity to chart a China-like, labour-intensive, export trajectory and thereby create unparalleled job opportunities for our burgeoning youth.
By integrating “Assemble in India for the world” into Make in India, India can raise its export market share to about 3.5 per cent by 2025 and 6 per cent by 2030. This will create 4 crore well-paid jobs by 2025 and 8 crore by 2030.
One-quarter of the increase in value added required for making India a $5 trillion economy by 2025 can come from exports of network products.
This chapter, therefore, articulates a clear-headed strategy to grab this opportunity.
China’s remarkable export performance vis-à-vis India is driven primarily by deliberate specialization at large scale in labour-intensive sectors, especially “network products”, where production occurs across Global Value Chains (GVCs) operated by multi-national corporations. China used this specialised strategy to export primarily to markets in rich countries. Similarly, India must place laser-like focus on enabling assembling operations at mammoth scale in network products.
As an India that harbours misplaced insecurity on the trade front is unlikely to grab this opportunity, our trade policy must be an enabler. When the impact of India’s trade agreements on overall trade balance is made by accounting for all confounding factors, India’s exports have increased by 13.4 per cent for manufactured products and 10.9 per cent for total merchandise while imports increased by 12.7 per cent for manufactured products and 8.6 per cent for total merchandise. Thus, India has clearly gained 0.7 per cent increase in trade surplus per year for manufactured products and 2.3 per cent per year for total merchandise.

Chapter- 6 Targeting Ease of Doing Business in India

Ease of doing business is key to entrepreneurship, innovation and wealth creation. India has risen significantly in the World Bank’s Doing Business rankings in recent years, but there are categories where it lags behind – Starting a Business, Registering Property, Paying Taxes and Enforcing Contracts.
This chapter focuses on these parameters and compares India’s performance with both its peers and with the best-in-class. For example, registering property in Delhi and Mumbai takes 49 and 68 days respectively, while it takes 9 days in China and 3.5 days in New Zealand.
These performance matrices provide a measure of the scope for improvement. The chapter then explores the density of laws, rules and other statutory compliance requirements faced by a manufacturing or services business (specifically the restaurants segment).
Export competitiveness depends not only on the cost of production but also on the efficiency of logistics.
A series of case studies are used to analyse the time taken at each stage for specific merchandise items to travel from factory gate to the warehouse of the foreign customer. For instance, a study found that an apparels consignment going from Delhi to Maine (U.S.) takes roughly 41 days, but 19 of these are spent within India due to delays in transportation, customs clearance, ground handling and loading at sea-ports.
A study of carpets exports from Uttar Pradesh to the United States also showed similar results. The process flow for imports, ironically, is more efficient than that for exports! In contrast, however, the imports and exports of electronics through Bengaluru airport was found to be world class. The processes of Indian airports should be adapted and replicated in sea-ports.
India has jumped up 79 positions in World Bank’s Doing Business rankings, improving from 142 in 2014 to 63 in 2019. However, it continues to trail in parameters such as Ease of Starting Business (rank 136), Registering Property (rank 154), Paying Taxes (rank 115), and Enforcing Contracts (rank 163).
Enforcing a contract in India takes on average 1,445 days in India compared to just 216 days in New Zealand, and 496 days in China. Paying taxes takes up more than 250 hours in India compared to 140 hours in New Zealand, 138 in China and 191 in Indonesia. These parameters provide a measure of the scope for improvement.
Setting up and operating a services or manufacturing business in India faces a maze of laws, rules and regulations. Many of these are local requirements, such as burdensome documentation for police clearance to open a restaurant. This must be cleaned up and rationalized one segment at a time.
Case studies of merchandise exports found that logistics is inordinately inefficient in Indian sea-ports. The process flow for imports, ironically, is more efficient than that for exports. Although one needs to be careful to directly generalize from specific case studies, it is clear that customs clearance, ground handling and loading in sea ports take days for what can be done in hours. A case study of electronics exports and imports through Bengaluru airport illustrates how Indian logistical processes can be world class.
It must be noted that the turnaround time of ships in India has been on a continuous decline, almost halving from 4.67 days in 2010-11 to 2.48 days in 2018-19. This shows that achieving significant efficiency gains in the case of sea ports is possible. Although, a full case study of Chennai port was not done, partial data suggests that its processes are smoother than those of the ports discussed above.
The streamlining of the logistics process at sea-ports requires close coordination between the Logistics division of the Ministry of Commerce and Industry, the Central Board of Indirect Taxes and Customs, Ministry of Shipping and the different port authorities. The simplification of the Ease of Doing Business landscape of individual sectors such as tourism or manufacturing, however, requires a more targeted approach that maps out the regulatory and process bottlenecks for each segment. Once the process map has been done, the correction can be done at the appropriate level of government - central, state or municipal.

Chapter-7 Golden Jubilee of Bank Nationalization: Taking Stock

In 2019, India completed the 50th anniversary of bank nationalization. It is, therefore, apt to celebrate the accomplishments of the 3, 89,956 officers, 2, 95,380 clerks, and 1, 21,647 sub-staff who work in Public Sector Banks (PSBs). At the same time, an objective assessment of PSBs is apposite.
Since 1969, India has grown significantly to become the 5th largest economy in the world. Yet, India’s banking sector is disproportionately under-developed given the size of its economy. For instance, 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), Norway (1/7th), Austria (about 1/7th), and Belgium (about 1/6th). Countries like Sweden (1/6th) and Singapore (1/8th) have thrice the number of global banks.
A large economy needs an efficient banking sector to support its growth. Historically, in the last 50 years, the top-five economies have always been ably supported by their banks. Should India’s banks play a role proportionate to its economic size, India should have six banks in the top 100. As PSBs account for 70 per cent of the market share in Indian banking, the onus of supporting the Indian economy and fostering its economic development falls on them. Yet, on every performance parameter, PSBs are inefficient compared to their peer groups. Previously, the Narasimhan Committee (1991, 1997), Rajan Committee (2007) and P J Nayak Committee (2014) have provided several suggestions to enhance the efficiency of PSBs. The survey suggests use of FinTech (Financial Technology) across all banking functions and employee stock ownership across all levels to enhance efficiencies in PSBs. These will make PSBs more efficient so that they are able to adeptly support the nation in its march towards being a $5 trillion economy. All these recommendations need to be seriously considered and a definite, timebound plan of action drawn up. With the cleaning up of the banking system and the necessary legal framework such as the Insolvency and Bankruptcy Code (IBC), the banking system must focus on scaling up efficiently to support the economy.
In 2019, every rupee of taxpayer money invested in PSBs, on average, lost 23 paise. In contrast, every rupee of investor money invested NPBs on average gained 9.6 paise. Also, credit growth in PSBs has been much lower than NPBs for the last several years.
To incentivize employees and align their interests with that of all shareholders of banks, bank employees should be given stakes through an employee stock ownership plan (ESOP) together with proportionate representation on boards proportionate to the blocks held by employees.
A GSTN type of entity should be setup to enable the use of big data, artificial intelligence and machine learning in credit decisions, especially those pertaining to large borrowers. As Government is the owner of all the PSBs, Government has the right to use the data that PSBs generate during their business. Therefore, the Government as the promoter must set up this entity that will aggregate data from all PSBs to enable decision making using big data techniques.
The patterns in default that such powerful techniques can unearth are far beyond the capacity of any unscrupulous promoter to escape. Therefore, such investments are critical to ensuring better screening and monitoring of borrowers, especially the large ones.

Chapter- 8 Financial Fragility in the NBFC Sector

Following payment defaults by subsidiaries of Infrastructure Leasing and Financing Services and by Dewan Housing Finance Limited, investors in Liquid Debt Mutual Funds (LDMFs) ran collectively to redeem their investments. In fact, the defaults triggered panic across the entire gamut of NBFC-financiers, thereby causing a funding (liquidity) crisis in the NBFC sector.
This chapter highlights that problems faced by the NBFCs stemmed from their over-dependence on short term wholesale funding from the Liquid Debt Mutual Funds. While such reliance works well in good times, it generates significant risk to NBFCs from the inability to roll over the short-term funding during times of stress.
An asset-side shock not only exacerbates the Asset Liability Management (ALM) problem but also makes investors in LDMFs jittery and thereby leads to a redemption pressure that is akin to a “bank run.” This run on LDMFs then precipitates the refinancing (rollover) risk for NBFCs and further exacerbates the initial problems caused on the asset side. A dynamic health index (Health Score) is constructed that captures these risks and can be used as an early warning system to anticipate liquidity crisis in an NBFC. Policy makers can use this tool to monitor, regulate and avert financial fragility in the NBFC sector.
Motivated by the current liquidity crunch the NBFC sector, this chapter investigates the key drivers of Rollover Risk of the shadow banking system in India.
The key drivers of Rollover Risk are: ALM Risk, Interconnectedness Risk and Financial and Operating Resilience of an NBFC.
The over-dependence on short-term wholesale funding exacerbates Rollover Risk.
Using a novel scoring methodology, Rollover Risk is quantified for a sample of HFCs and Retail-NBFCs (which are representative of their respective sectors) and thereby compute a diagnostic (Health Score).
The Health Score for the HFC sector exhibited a declining trend post 2014. By the end of FY2019, the health of the overall sector had worsened considerably.
The Health Score of the Retail-NBFC sector was consistently below par for the period 2014 till 2019.
Larger Retail-NBFCs had higher Health Scores but among medium and small Retail NBFCs, the medium size ones had a lower Health Score for the entire period from March 2014 till March 2019.
The above findings suggest that the Health Score provides an early warning signal of impending liquidity problems.
The analysis find significant evidence that equity markets react favourably to increase in Health Score of individual HFCs and Retail-NBFCs, thereby confirming the validity of Health Score as an early warning signal.

Chapter-9 Privatization and Wealth Creation

The recent approval of strategic disinvestment in Bharat Petroleum Corporation Limited (BPCL) led to an increase in value of shareholders’ equity of BPCL by Rs. 33,000 crore when compared to its peer Hindustan Petroleum Corporation Limited (HPCL)! This reflects an increase in the overall value from anticipated gains from consequent improvements in the efficiency of BPCL when compared to HPCL which will continue to be under Government control.
This chapter, therefore, examines the realized efficiency gains from privatization in the Indian context. It analyses the before-after performance of 11 CPSEs that had undergone strategic disinvestment from 1999-2000 to 2003-04. To enable a careful comparison using a difference in-difference methodology, these CPSEs are compared with their peers in the same industry group.
The analysis shows that these privatized CPSEs, on an average, perform better post privatization than their peers in terms of their net worth, net profit, return on assets (ROA), return on equity (RoE), gross revenue, net profit margin, sales growth and gross profit per employee. More importantly, the ROA and net profit margin turned around from negative to positive surpassing that of the peer firms, which indicates that privatized CPSEs have been able to generate more wealth from the same resources.
This improved performance holds true for each CPSE taken individually too. The analysis clearly affirms that privatization unlocks the potential of CPSEs to create wealth. The chapter, therefore, bolsters the case for aggressive disinvestment of CPSEs.

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

As investors deciding to invest in an economy care for the country’s GDP growth, uncertainty about its magnitude can affect investment. Therefore, the recent debate about India’s GDP growth rates following the revision in India’s GDP estimation methodology in 2011 assumes significance, especially given the recent slowdown in the growth rate.
Using careful statistical and econometric analysis that does justice to the importance of this issue, this chapter finds no evidence of mis-estimation of India’s GDP growth. The chapter starts from the basic premise that countries differ among each other in various observed and unobserved ways. Therefore, cross-country comparisons are fraught with risks of incorrect inference due to various confounding factors that stem from such inherent differences. As a result, cross-country analysis has to be carefully undertaken so that correlation is distinguished from causality.
The models that incorrectly over-estimate GDP growth by 2.77 per cent for India post-2011 also mis-estimate GDP growth over the same time period for 51 other countries out of 95 countries in the sample. The magnitude of mis-estimation in the incorrectly specified model is anywhere between +4 per cent to -4.6 per cent, including UK by +1.6 per cent, Germany by +1.0 per cent, Singapore by -2.3 per cent, South Africa by -1.2 per cent and Belgium by -1.3 per cent. Given the lower growth rates for UK and Germany compared to India, the mis-estimation in percentage terms in the incorrectly specified model is much larger for UK (76 per cent) and Germany (71 per cent) than for India (40 per cent).
However, when the models are estimated correctly by accounting for all unobserved differences among countries as well as the differential trends in GDP growth across countries, GDP growth for most of these 52 countries (including India) is neither over- or underestimated. In sum, concerns of over-estimation of India’s GDP are unfounded. The larger point made by this chapter needs to be understood by synergistically viewing its findings with the micro-level evidence in Chapter 2, which examines new firm creation in the formal sector across 504 districts in India. Two observations are critical.
- The granular evidence shows that a 10 per cent increase in new firm creation increases district-level GDP growth by 1.8 per cent.
- As the pace of new firm creation in the formal sector accelerated significantly more after 2014, the resultant impact on district-level growth.
GDP growth is a critical variable for decision-making by investors as well as policymakers. Therefore, the recent debate about whether India’s GDP is correctly estimated following the revision in estimation methodology in 2011 is extremely significant.
As countries differ in several observed and unobserved ways, cross-country comparisons have to be undertaken with care to separate out the effect of other confounding factors and isolate the effect of the methodology revision alone on GDP growth estimates.
The models that incorrectly over-estimate GDP growth by 2.7 per cent for India post-2011 also mis-estimate GDP growth over the same time period for 51 other countries out of 95 countries in the sample. Several advanced economies such as UK, Germany and Singapore turn out to have their GDPs misestimated when the econometric model is incompletely specified.
Correctly specified models that account for all unobserved differences among countries as well as differential trends in GDP growth across countries fail to find any misestimation of growth in India or other countries.
Concerns of a misestimated Indian GDP are unsubstantiated by the data and are thus unfounded.

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

Though economics affects the common lives of people in tangible ways, this fact often remains unnoticed. What better way to make economics relate to the common person than something that s (he) encounters every day – a plate of food? Enter “Thalinomics: The economics of a plate of food in India” – an attempt to quantify what a common person pays for a Thali across India.
Has a Thali become more or less affordable? Has inflation in the price of a Thali increased or decreased? Is the inflation the same for a vegetarian Thali as for a non-vegetarian one? Is the inflation in the price of a Thali different across different states and regions in India? Which components account for the changes in the price of a Thali – the cereals, vegetables, pulses or the cost of fuel required for its preparation? Questions that can engage a dinner-table conversation in Lutyens Delhi or in a road-side Dhaba in the hinterland can now be answered and positions taken on either side of a “healthy” debate.
Using the dietary guidelines for Indians (NIN, 2011), the price of Thalis are constructed. Price data from the Consumer Price Index for Industrial Workers for around 80 centres in 25 States/UTs from April 2006 to October 2019 is used.
Both across India and the four regions – North, South, East and West – it is found that the absolute prices of a vegetarian Thali have decreased significantly since 2015-16 though the price has increased in 2019. As a result, an average household of five individuals that eats two vegetarian Thalis a day gained around Rs. 10887 on average per year while a non-vegetarian household gained Rs. 11787, on average, per year. Using the annual earnings of an average industrial worker, it is found that affordability of vegetarian Thalis improved 29 per cent from 2006-07 to 2019-20 while that for non-vegetarian Thalis improved by 18 per cent.
2015-16 can be considered as a year when there was a shift in the dynamics of Thali prices. Many reform measures were introduced since 2014-15 to enhance the productivity of the agricultural sector as well as efficiency and effectiveness of agricultural markets for better and more transparent price discovery.

Economic Survey Vol.2

Chapter-1 State of the Economy

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. Uncertainties, although declining, are still elevated due to protectionist tendencies of China and USA and rising USA-Iran geo-political tensions.
Amidst a weak environment for global manufacturing, trade and demand, the Indian economy slowed down with GDP growth moderating to 4.8 per cent in H1 of 2019-20, lower than 6.2 per cent in H2 of 2018-19. A sharp decline in real fixed investment induced by a sluggish growth of real consumption has weighed down GDP growth from H2 of 2018-19 to H1 of 2019-20.
Real consumption growth, however, has recovered in Q2 of 2019-20, cushioned by a significant growth in government final consumption. At the same time, India’s external sector gained further stability in H1 of 2019-20, with a narrowing of Current Account Deficit (CAD) as percentage of GDP from 2.1 in 2018-19 to 1.5 in H1 of 2019-20, impressive Foreign Direct Investment (FDI), rebounding of portfolio flows and accretion of foreign exchange reserves. Imports have contracted more sharply than exports in H1 of 2019-20, with easing of crude prices, which has mainly driven the narrowing of CAD.
On the supply side, agricultural growth, though weak, is moderately higher in H1 of 2019-20 than in H2 of 2018-19. Headline inflation rose from 3.3 per cent in H1 of 2019-20 to 7.4 per cent in December 2019 on the back of temporary increase in food inflation, which is expected to decline by year end. Rise in CPI-core and WPI inflation in December 2019 suggests building of demand pressure.
The deceleration in GDP growth can be understood within the framework of a slowing cycle of growth with the financial sector acting as a drag on the real sector. In an attempt to boost demand, 2019-20 has witnessed significant easing of monetary policy with the repo rate having been cut by RBI by 110 basis points.
Having duly recognized the financial stresses built up in the economy, the government has taken significant steps this year towards speeding up the insolvency resolution process under Insolvency and Bankruptcy Code (IBC) and easing of credit, particularly for the stressed real estate and Non-Banking Financial Companies (NBFCs) sectors. At the same time, impact of critical measures taken to boost investment, particularly under the National Infrastructure Pipeline, present green shoots for growth in H2 of 2019-20 and 2020-21.
Based on first Advance Estimates of India’s GDP growth for 2019-20 recorded at 5 per cent, an uptick in GDP growth is expected in H2 of 2019-20. The government must use its strong mandate to deliver expeditiously on reforms, which will enable the economy to strongly rebound in 2020-21.

Chapter-2 Fiscal Developments

The year 2019-20 has been challenging for the Indian economy owing to the decelerating growth rate experienced in the first half of the year. Amongst the various reforms introduced during the year to promote growth and investment, reduction in corporate income tax rate was a major structural reform.
The fiscal policy 2019-20 was characterized by sluggish growth in Tax revenue relative to the budget estimates. The Non-Tax revenue registered a considerably higher growth in the first eight months of this financial year compared to the same period last year.
On the expenditure side, Total Expenditure has increased at a considerable pace during April to November 2019-20 with Capital Expenditure growing at roughly three times the growth registered during the same period last year.
The fiscal deficit as a per cent of Budget Estimate during the first eight months of this financial year was at a similar level as that in the corresponding period last year.
During the first eight months of 2019-20, the Revenue Receipts registered a higher growth compared to the same period last year, which was led by considerable growth in Non-Tax revenue.
During 2019-20 (upto December 2019), the gross GST monthly collections has crossed the mark of Rs. one lakh crore for a total of five times.
Structural reforms undertaken in taxation during the current financial year include change in corporate tax rate and measures to ease the implementation of GST.
The States have continued on the path of fiscal consolidation and contained the fiscal deficit within the targets set out by the FRBM Act.
The General Government (Centre plus States) has been on path of fiscal consolidation.
Going forward, considering the urgent priority of the Government to revive growth in the economy, the fiscal deficit target may have to be relaxed for the current year.

Chapter- 3 External Sector

India’s external sector gained further stability in the first half of 2019-20, witnessing improvement in Balance of Payments (BoP) position. India’s foreign reserves are comfortably placed at US$ 461.2 billion as on 10th January, 2020.
The improvement in BoP was anchored by narrowing of current account deficit (CAD) from 2.1 per cent in 2018-19 to 1.5 per cent of GDP in H1 of 2019-20. The contraction of CAD has emanated from easing of crude prices.
Export growth remains subdued with external demand weakened by slowdown in global investment, output and heightened trade tensions, notwithstanding resilient service exports. Increase in service imports is inevitable with increasing foreign direct investment (FDI) and ‘Make in India’.
Petroleum products, precious stones, drug formulations & biologicals, gold and other precious metals continue to be top exported commodities, with fastest growth seen in drug formulations & biologicals in 2019-20 (April to November). Crude petroleum, gold, petroleum products, coal, coke & briquittes constitute top import items, with fastest growth seen in electronics in 2019-20 (April to November).
India’s top five trading partners continue to be USA, China, UAE, Saudi Arabia and Hong Kong. Further improvement in BoP was contributed by easing of external financial conditions, impressive FDI, rebounding of portfolio flows and receipt of robust remittances. Net FDI inflows have continued to be buoyant in 2019-20 attracting US$ 24.4 billion in the first eight months, higher than the corresponding period of 2018-19. Net FPI in the first eight months of 2019-20 stood at US$ 12.6 billion.
This reflects a global sentiment that increasingly believes in India’s growth story and reform measures being undertaken by the government. External debt as at end September, 2019 remains low at 20.1 per cent of GDP.
India’s Net International Investment Position (NIIP) to GDP ratio has also improved compared to 2018-19. After witnessing significant decline since 2014-15, India’s external liabilities (debt and equity) to GDP has increased at the end of June, 2019 primarily driven by increase in FDI, portfolio flows and external commercial borrowings (ECBs).
In sync with an estimated 2.9 per cent growth in global output in 2019, global trade is estimated to grow at 1.0 per cent after having peaked in 2017 at 5.7 per cent. However, it is projected to recover to 2.9 per cent in 2020 with recovery in global economic activity.
India’s merchandise trade balance has improved from 2009-14 to 2014-19 although most of the improvement in the latter period was on account of more than fifty per cent decline in crude prices in 2016-17.
India’s net services surplus has been steadily declining in relation to GDP. It financed two-thirds of merchandise deficit in 2016-17 before declining to less than half in the last couple of years.
Under trade facilitation, India has improved its ranking from 143 in 2016 to 68 in 2019 under the indicator, “Trading across Borders”, monitored by World Bank in determining the overall ranking of around 190 countries in its Ease of Doing Business Report.
The logistics industry of India is currently estimated to be around US$ 160 billion and is expected to touch US$ 215 billion by 2020.
Net remittances from Indians employed overseas has been constantly increasing year after year and has continued doing so with the amount received in H1 of 2019-20 being more than fifty per cent of the previous year level.

Chapter-4 Monetary Management and Financial Intermediation

Monetary policy remained accommodative in 2019-20. The repo rate was cut by 110 basis points in four consecutive Monetary Policy Committee meetings in the financial year due to slower growth and lower inflation. However, it was kept unchanged in the fifth meeting held in December 2019.
Liquidity conditions were tight for initial two months of 2019-20; but subsequently it has remained comfortable. The financial flows to the economy however, remained constrained as credit growth declined for both banks and Non-Banking Financial Corporations.
The growth (YoY) of loans from NBFCs declined from 27.6 per cent in September 2018 and 21.6 per cent in December 2018 to 9.9 per cent at end September 2019.
The Gross Non Performing Advances ratio of Scheduled Commercial Banks has remained unchanged at 9.3 per cent between March and September 2019 and increased slightly for the Non-Banking Financial Corporations from 6.1 per cent to 6.3 per cent.
Capital to Risk-weighted Asset ratio of Scheduled Commercial Banks increased from 14.3 per cent to 15.1 per cent between March 2019 and September 2019.
Systemic liquidity has been largely in surplus in 2019-20. Weighted Average Call Money Rate remeined mostly close to repo rate within the Liquidity Adjustment Facility (LAF) corridor.
Nifty 50 and S&P BSE Sensex indices, reached record high closing of 12,355 and 41,952 respectively during 2019-20 (upto January 16, 2020). The resolution under IBC has been much higher as compared to previous resolution channels. Amount recovered as percentage of amount involved was 49.6 per cent in 2017-18 and 42.5 per cent in 2018-19. The proceedings under IBC take on average about 340 days, including time spent on litigation, in contrast with the previous regime where processes took about 4.3 years.
The total money raised by public issue and rights increased to Rs. 73,896 crore in 2019-20 (up to December 31, 2019) from Rs. 44,355 crore in the corresponding period last year. Rs. 6.29 lakh crore was raised through private placements in 2019-20 (up to December 31, 2019) as compared to Rs. 5.3 lakh crore in the corresponding period of previous year.
As on end December 2019, Rs. 1.58 lakh crore were realizable in cases resolved under Corporate Insolvency Resolution Processes.

Chapter-5 Prices and Inflation

Inflation has been witnessing moderation since 2014 backed by low food inflation. During the current financial year, however, food and beverages inflation has been trending differently. Food inflation has been on an upward trend mainly backed by rising vegetables, fruits and pulses prices.
However, the volatility in prices of most of the essential agricultural commodities with some exceptions like pulses has been on a downward trend. Since July 2018, CPI-Urban inflation has been consistently higher than CPI-Rural inflation, which is in contrast to earlier trend where rural inflation was higher than urban inflation.
Inflation has been declining in most of the States, however, the variability of inflation has been increasing. Since 2012, there has been a change in inflation dynamics. There is evidence for a strong reversion of headline inflation to core inflation.
Transmission of inflation from non-core components to core components is minimal.
Headline Consumer Price Index (CPI) inflation was 3.7 per cent in 2018-19 (April to December, 2018), compared to 4.1 per cent in 2019-20 (April to December, 2019).
During 2019-20, WPI based inflation has been on a continuous fall declining from 3.2 per cent in April 2019, only marginally rising in November and December to end at 2.6 per cent in December 2019.
Food index which declined on an annual basis between 2017-18 and 2018-19, saw an uptick during the current financial year (April-December, 2019).
During 2019-20 (April- December), food and beverages emerged as the main contributor to CPI-C inflation, with 54 per cent of the inflation during this period attributable to this group.
In the four metropolitan cities of the country, retail prices of various essential commodities have diverged from wholesale prices over the years.
Inflation in fifteen States/Union Territories (UTs) was below 4 percent in FY 2019-20 (April-December). Comparing FY 2018-19 (April- December) with FY 2019-20 (April- December), inflation has actually decreased in eight states.
Inflation expectations have declined thereby indicating that the inflation targeting framework has started influencing expectations of inflation in the economy.

Chapter-6 Sustainable Development and Climate Change

The Sustainable Development Goals (SDGs) constitute a befitting framework to answer the developmental challenges to achieve a sustainable future, free from social, economic, and environmental inequalities and thereby ensuring a greener and healthy Planet for future generations.
India’s achievement in the composite SDG index is commendable as the score has improved from 57 in 2018 to 60 in 2019. Along with following the holistic approach for achieving the SDGs by implementing a comprehensive array of schemes, India’s progress in adopting, implementing, and monitoring SDGs stands noteworthy.
The SDG indicator linked reporting and monitoring framework helped in exploring the nexus approach to attain development goals of India. As a responsible nation, with the introduction of various schemes, India has been continuously moving towards economic growth, keeping in mind the imperatives of sustainable development. As per the SDG Index, Kerala, Himachal Pradesh, Tamil Nadu, Andhra Pradesh, Telangana, Karnataka, Goa, Sikkim, Chandigarh and Puducherry are the front runners.
India is among a few countries in the world where forest and tree cover have increased considerably. The forest and tree cover have reached 80.73 million hectare which is 24.56 per cent of the geographical area of the country. Increased focus on sustainability requires various actions towards building individual and institutional capacity, accelerating knowledge and enhancing technology transfer and deployment, enabling financial mechanisms, implementing early warning systems, undertaking risk management and addressing gaps in implementation and upscaling. These fair and justified demands have been discussed in various multilateral negotiations but remain largely unresolved.
Burning of agricultural residues, leading to rise in pollutant levels and deterioration of air quality, is still a major concern though the total number of burning events recorded reduced due to various efforts taken.
Global agenda of delivering sustainable development and addressing climate change can be delivered only if all nations act upon their fair share of responsibilities including the fulfillment on means of implementation by the developed world to the developing countries. Therefore, enhanced ambition and enhanced support should be on equal footing.
India is the second largest Emerging Green Bond Market after China.
GCF’s first replenishment (2020-2023) witnessed 28 countries pledging resources to replenish the Fund for an amount of US$ 9.7 billion, which is even quantitatively lower than the IRM period.
At COP 25 of UNFCCC at Madrid, India reiterated its commitment to implement Paris Agreement in accordance with the principles of equity and common but differentiated responsibilities. COP 25 decision provides for balanced and integrated view of ambition that includes efforts for climate change mitigation, adaptation and means of implementation from developed country parties to developing country parties.
ISA has taken up the role of an ‘enabler’ by institutionalizing 30 Fellowships from the Member countries; of a ‘facilitator’ by getting the lines of credit worth US$ 2 Billion from EXIM Bank of India and US$ 1.5 Billion from AfD, France; of an ‘incubator’ by nurturing initiatives like the Solar Risk Mitigation Initiative and of an ‘accelerator’ by developing tools to aggregate demand for 1000 MW solar and 270,000 solar water pumps.
India launched the CDRI, focus on developing resilience in ecological, social and economic infrastructure.
Government of India hosted COP 14 to UNCCD from 2-13 September, 2019. COP 14 adopted the Delhi Declaration: Investing in Land and Unlocking Opportunities.

Chapter-7 Agriculture and Food Management

Agriculture and its allied sectors still remain an important sector because of its continued role in employment, income and most importantly in national food security. Proportion of Indian population depending directly or indirectly on agriculture for employment opportunities is more than that of any other sectors in India. Its contribution to national income has gradually declined from 18.2 per cent in 2014-15 to 16.5 in 2019-20, reflecting the development process and the structural transformation taking place in the economy.
The realisation of the objective of doubling farmer’s income requires that the challenges of the sector such as access to credit, insurance coverage, irrigation facilities, etc. are addressed. There is also a need to address the issue of lower farm mechanisation in India which is only about 40 per cent as compared to about 60 per cent in China and around 75 per cent in Brazil.
Given the fact that the livestock sector has grown at a compound annual growth rate of nearly 8 per cent over the last five years, it assumes an important role in income, employment and nutritional security. Though, the food processing sector is growing at an average annual growth rate of more than 5 per cent over the last six years ending 2017-18, more focussed attention to the sector is required due to its significant role in reducing post-harvest losses and creation of additional market for farm outputs. With the implementation of the National Food Security Act from July 2013, the food subsidy bill has increased from Rs. 113171.2 crore in 2014-15 to Rs. 171127.5 crore in 2018-19.
India’s food management should focus on rationalisation of food subsidy while addressing the challenges of food security, especially of the most vulnerable sections.
The regional distribution of agricultural credit in India shows a highly skewed pattern. It is seen that credit is low in North Eastern, Hilly and Eastern States. The share of North Eastern States has been less than one percent in total agricultural credit disbursement.

Chapter-8 Industry and Infrastructure

The industrial sector based on Index of Industrial Production (IIP) registered a growth of 0.6 per cent for 2019-20 (April-November) as compared to 5.0 per cent during 2018-19 (April-November).
Growth of manufacturing sector was 0.9 per cent during 2019-20 (April-November) as compared to 4.9 per cent during 2018-19 (April-November).
Growth of refinery products sector stood at (-)1.1 per cent during 2019-20 (April-November) as compared to 5.3 per cent during 2018-19 (April-November). Steel sector achieved a growth of 5.2 per cent during 2019-20 (April-November) as compared to 3.6 per cent during 2018-19 (April- November).
Government has initiated several policies in various infrastructure sectors to enhance their capacity and output.
Report of the Task Force on National Infrastructure Pipeline released on 31.12.2019 has projected total infrastructure investment of ` 102 lakh crore during the period FY 2020 to 2025 in India.
Fertilizer sector achieved a growth of 4.0 per cent during 2019-20 (April-November) as compared to (-)1.3 per cent during 2018-19 (April-November). Ø India has considerably improved its ranking in Ease of Doing Business to 63rd position in 2019 compared to 77th position in 2018.
Crude steel production witnessed growth of 1.5 per cent during 2019-20 (April-October).
The installed capacity of power generation has increased to 3,64,960 MW as on 31 October 2019.
Report of the Task Force on National Infrastructure Pipeline released on 31.12.2019 has projected total infrastructure investment of ` 102 lakh crore during the period FY 2020 to 2025 in India.

Chapter-9 Services Sector

The services sector’s significance in the Indian economy has continued to increase, with the sector now accounting for around 55 per cent of total size of the economy and GVA growth, two-thirds of total FDI inflows into India and about 38 per cent of total exports. The share of services sector now exceeds 50 per cent of Gross State Value Added in 15 out of the 33 states and UTs, with this share more than 80 per cent in Delhi and Chandigarh.
However, data on GVA growth, high-frequency indicators and sectoral trends suggest a moderation in services sector activity during 2019-20. Bank credit to services sector, air passenger traffic and rail freight traffic have witnessed a deceleration, while foreign tourist arrivals and port traffic have continued to ease during 2019-20.
On the bright side, the very latest readings on most of these indicators suggest a recovery. Moreover, gross FDI equity inflows into services sector have registered a strong recovery and services exports have maintained their momentum during April-September 2019.
Services exports have outperformed goods exports in the recent years, due to which India’s share in world’s commercial services exports has risen steadily over the past decade to reach 3.5 per cent in 2018, twice the share in world’s merchandise exports at 1.7 per cent.
India’s education services imports have increased markedly in the recent years, up from about US$ 2.3 billion in 2013-14 to US$ 5.0 billion in 2018-19. The shipping turnaround time at ports has almost halved from 4.67 days in 2010-11 to 2.48 days in 2018-19. India has launched around 5-7 satellites per year in the recent years with no failures, barring one in 2017.

Chapter- 10 Social Infrastructure, Employment and Human Development

Considering India’s demographic advantage of a large young population in the productive age group, improvements in the social sectors like education, health care, water supply and sanitation leaves a profound impact on the quality of life of the people as well as to the productivity of the economy.
Interventions made to reach out to all sections of the society includes fundamental changes in design of the policies/schemes, expanding the reach through people’s participation, awareness generation, technology use, and direct benefit transfer.
Expenditure on social services, as a proportion of GDP, has increased by 1.5 percentage points during the period 2014-15 to 2019-20. Access to education has improved the participation in education system at all levels both in rural and urban areas. Scaling up of the efforts to impart necessary skills through a wide network of ITIs focusing on women has pushed the skill development up. Gross Enrolment Ratio at secondary, higher secondary and higher education level needs to be improved.
Gender disparity in India’s labour market widened due to decline in female labour force participation especially in rural areas and around 60 per cent of productive age (15-59) group are engaged in full time domestic duties.
Total formal employment in the economy increased from 8 per cent in 2011-12 to 9.98 per cent 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 681 districts across the country.
About 76.7 per cent of the households in the rural and about 96 per cent in the urban areas had houses of pucca structure. Jal Shakti Abhiyan launched to accelerate progress on water conservation activities in water stressed districts of India.