The government 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.
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
India’s 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
India’s 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 March’11
India now more closely integrated with the world economy
India’s share of trade to GDP of goods and services in world tripled in 1990-2010
India’s 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
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
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
Trade
India’s 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 India’s largest trading partner, followed by China
India’s services exports bounce back after contraction in FY 10
India’s 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 India’s 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
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
Rupee’s high volatility impairs investor confidence
Aggressive stand to check Rupee volatility recommended