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Economic Survey 2020-21

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Last updated: Feb, 2021

The Union Minister for Finance & Corporate Affairs, Ms. Nirmala Sitharaman presented the Economic Survey 2020-21 in the Parliament on January 29, 2020. The key highlights of the Economic Survey 2020-21 are as follows:

Saving Lives and Livelihoods amidst a Once-in-a-Century Crisis

  • India focused on saving lives and livelihoods by its willingness to take short-term pain for long-term gain, at the onset of the COVID-19 pandemic.
  • An early, intense lockdown provided a win-win strategy to save lives and preserve livelihoods via economic recovery in the medium to long-term.
  • Strategy also motivated by the Nobel-Prize winning research by Hansen & Sargent (2001): a policy focused on minimizing losses in a worst-case scenario when uncertainty is very high.
  • India was the only country to announce structural reforms to expand supply in the medium-long term and avoid long-term damage to productive capacities.
  • Calibrated demand side policies to ensure that the accelerator is slowly pushed down only when the brakes on economic activities are being removed.
  • A public investment programme centred around the National Infrastructure Pipeline to accelerate the demand push and further the recovery.
  • Upturn in the economy, avoiding a second wave of infections - a sui generis case in strategic policymaking amidst a once-in-a-century pandemic.

Healthcare takes centre stage

  • COVID-19 pandemic emphasized the importance of healthcare sector and its inter-linkages with other sectors - showcased how a health crisis transformed into an economic and social crisis.
  • National Health Mission (NHM) played a critical role in mitigating inequity as the access of the poorest to pre-natal/post-natal care and institutional deliveries increased significantly.

India’s Economic Performance in 2020-21

  • India’s real GDP to record a 11.0% growth in FY2021-22 and nominal GDP to grow by 15.4%.
  • India expected to have a Current Account Surplus of 2% of GDP in FY21, a historic high after 17 years.
  • India remained a preferred investment destination in FY 2020-21 with FDI pouring in amidst global asset shifts towards equities and prospects of quicker recovery in emerging economies:
    • Net FPI inflows recorded an all-time monthly high of US$ 9.8 billion in November 2020, as investors’ risk appetite returned.
    • India was the only country among emerging markets to receive equity FII inflows in 2020.
  • V-shaped recovery is underway, as demonstrated by a sustained resurgence in high frequency indicators such as power demand, e-way bills, GST collection, steel consumption, etc.
  • India became the fastest country to roll-out 10 lakh vaccines in 6 days and also emerged as a leading supplier of the vaccine to neighbouring countries and Brazil.
  • India adopted a four-pillar strategy of containment, fiscal, financial, and long-term structural reforms:
    • Calibrated fiscal and monetary support was provided, cushioning the vulnerable in the lockdown and boosting consumption and investment while unlocking.
    • A favourable monetary policy ensured abundant liquidity and immediate relief to debtors while unclogging monetary policy transmission.
  • Innovation
    • India entered the top-50 innovating countries for the first time in 2020 since the inception of the Global Innovation Index in 2007, ranking first in Central and South Asia, and third amongst lower middle-income group economies.

Fiscal Developments

  • Expenditure policy in 2020-21 initially aimed at supporting the vulnerable sections but was re-oriented to boost overall demand and capital spending once the lockdown was unwound.
  • Monthly GST collections have crossed the Rs. 1 lakh crore (US$ 13.70 billion) mark consecutively for the last 3 months, reaching its highest levels in December 2020 ever since the introduction of GST.
  • Reforms in tax administration have begun a process of transparency and accountability and have incentivized tax compliance by enhancing honest tax-payers’ experience.

External Sector

  • India’s forex reserves at an all-time high of US$ 586.1 billion as on January 08, 2021.
  • India experiencing a Current Account Surplus along with robust capital inflows leading to a BoP surplus since Q4 of FY2019-20.
  • Balance on the capital account is buttressed by robust FDI and FPI inflows:
    • Net FDI inflows of US$ 27.5 billion in April-October 2020: 14.8% higher as compared to first seven months of FY2019-20.
    • Net FPI inflows of US$ 28.5 billion in April-December 2020 as against US$ 12.3 billion in corresponding period of last year.
  • India to end with an Annual Current Account Surplus after a period of 17 years.
  • Net services receipts amounting to US$ 41.7 billion remained stable in April-September 2020 as compared with US$ 40.5 billion in corresponding period a year ago.
  • Resilience of the services sector was primarily driven by software services, which accounted for 49% of total services exports.
  • Net private transfer receipts, mainly representing remittances by Indians employed overseas, totalling US$ 35.8 billion in H1: FY21.
  • External debt stood at US$ 556.2 billion at the end of September 2020, a decrease of US$ 2.0 billion (0.4%) as compared to end-March 2020.
  • RBI’s interventions in forex markets ensured financial stability and orderly conditions, controlling the volatility and one-sided appreciation of the Rupee.
  • Initiatives undertaken to promote exports:
    • Production Linked Incentive (PLI) Scheme
    • Remission of Duties and Taxes on Exported Products (RoDTEP)
    • Improvement in logistics infrastructure and digital initiatives

Monetary Management and Financial Intermediation

  • Accommodative monetary policy in 2020: repo rate cut by 115 basis point since March 2020.
  • Systemic liquidity in FY2020-21 has remained in surplus so far. RBI undertook various conventional and unconventional measures like:
    • Open Market Operations
    • Long Term Repo Operations
    • Targeted Long Term Repo Operations
  • The monetary transmission of lower policy rates to deposit and lending rates improved in FY2020-21.
  • NIFTY-50 and BSE SENSEX reached record high closing of 14,644.7 and 49,792.12 respectively on January 20, 2021.
  • The recovery rate for the Scheduled Commercial Banks through IBC (since its inception) has been over 45%.

Prices and Inflation

  • Consumer Price Index (CPI) inflation stood at 4.6% in December 2020, mainly driven by rise in food inflation (from 6.7% in 2019-20 to 9.1% in April-December 2020, owing to build up in vegetable prices).

Sustainable Development and Climate Change

  • India has taken several proactive steps to mainstream the SDGs into the policies, schemes, and programmes.
  • Voluntary National Review (VNR) presented to the United Nations High-Level Political Forum (HLPF) on Sustainable Development.
  • Localisation of SDGs is crucial to any strategy aimed at achieving the goals under the 2030 Agenda
    • Several States/UTs have created institutional structures for implementation of SDGs and also nodal mechanisms within every department and at the district levels for better coordination and convergence.
  • Eight National Missions under National Action Plan on Climate Change (NAPCC) focussed on the objectives of adaptation, mitigation, and preparedness on climate risks.
  • International Solar Alliance (ISA) launched two new initiatives – ‘World Solar Bank’ and ‘One Sun One World One Grid Initiative’ - poised to bring about solar energy revolution globally.

Performance of key sectors:

Agriculture and Food Management

  • The share of Agriculture and Allied Sectors in Gross Value Added (GVA) of the country at current prices is 17.8% for the year 2019-20 (CSO-Provisional Estimates of National Income, May 29, 2020).
  • Total food grain production in the country in the agriculture year 2019-20 (as per Fourth Advance Estimates), is 11.44 million tonnes more than 2018-19.
  • The actual agricultural credit flow was Rs. 13,92,469.81 crore (US$ 190.82 billion) against the target of Rs. 13,50,000 crore (US$ 185.00 billion) in 2019-20. The target for 2020-21 was Rs. 15,00,000 crore (US$ 205.56 billion) and a sum of Rs. 9,73,517.80 crore (US$ 133.41 billion) was disbursed until November 30, 2020:
    • 1.5 crore dairy farmers of milk cooperatives and milk producer companies were targeted to provide Kisan Credit Cards (KCC) as part of Prime Minister’s Aatmanirbhar Bharat Package after the budget announcement of February 2020.
    • As of mid-January 2021, a total of 44,673 Kisan Credit Cards (KCCs) have been issued to fishers and fish farmers and an additional 4.04 lakh applications from fishers and fish farmers are with the banks at various stages of issuance.
  • The Pradhan Mantri Fasal Bima Yojana covers over 5.5 crore farmer applications year on year
    • Claims worth Rs. 90,000 crore (US$ 12.33 billion) paid, as on January 12, 2021.
    • Speedy claim settlement directly into the farmer accounts through Aadhar linkage
    • 70 lakh farmers benefitted and claims worth Rs. 8741.30 crore (US$ 1.20 billion) were transferred in COVID-19 lock down period.
  • An amount of Rs. 18000 crore (US$ 2.47 billion) have been deposited directly in the bank accounts of 9 crore farmer families of the country in December 2020 in the 7th instalment of financial benefit under the PM-KISAN scheme.
  • Fish production reached an all-time high of 14.16 million metric tons in 2019-20:
    • GVA by the Fisheries sector to the national economy stood at Rs. 2,12,915 crore (US$ 29.18 billion) constituting 1.24% of the total national GVA and 7.28% of the agricultural GVA.
  • Food Processing Industries (FPI) sector growing at an Average Annual Growth Rate (AAGR) of around 9.99% as compared to around 3.12% in Agriculture and 8.25% in Manufacturing at 2011-12 prices in the last 5 years ending 2018-19.
  • Pradhan Mantri Garib Kalyan Anna Yojana:
    • 80.96 crore beneficiaries were provided food grains above NFSA mandated requirement free of cost until November 2020.
    • Over 200 LMT of food grains were provided amounting to a fiscal outgo of over Rs. 75000 crore (US$ 10.28 billion).
  •  Aatmanirbhar Bharat Package: 5 kg per person per month for four months (May to August) to approximately 8 crores migrants (excluded under NFSA or state ration card) entailing subsidy of Rs. 3109 crore (US$ 426.05 million) approximately.

Industry and Infrastructure

  • A strong V-shaped recovery of economic activity further confirmed by IIP data.
  • The IIP & eight-core index further inched up to pre-COVID levels.
  • The broad-based recovery in the IIP resulted in a growth of (-) 1.9% in Nov-2020 as compared to a growth of 2.1% in Nov-2019 and a nadir of (-) 57.3% in Apr-2020.
  • Further improvement and firming up in industrial activities are foreseen with the Government enhancing capital expenditure, the vaccination drive, and the resolute push forward on long pending reform measures.
  • Aatmanirbhar Bharat Abhiyan with a stimulus package worth 15% of India’s GDP announced.
  • India’s rank in the Ease of Doing Business (EoDB) Index for 2019 has moved upwards to the 63rd position in 2020 from 77th in 2018 as per the Doing Business Report (DBR):
    • India has improved its position in 7 out of 10 indicators.
    • Acknowledges India as one of the top 10 improvers, the third time in a row, with an improvement of 67 ranks in three years.
    • It is also the highest jump by any large country since 2011.
  • FDI equity inflows were US$ 49.98 billion in FY20 as compared to US$ 44.37 billion in FY19:
    • It is US$ 30.0 billion for FY21 (up to September-2020).
    • The bulk of FDI equity flow is in the non-manufacturing sector.
    • Within the manufacturing sector, industries like automobile, telecommunication, metallurgical, non-conventional energy, chemical (other than fertilizers), food processing, petroleum & natural gas got the bulk of FDI.
  • Government has announced a Production-Linked Incentive (PLI) Scheme in the 10 key sectors under the aegis of Aatmanirbhar Bharat for enhancing India’s manufacturing capabilities and exports:
    • To be implemented by the concerned ministries with an overall expenditure estimated at Rs. 1.46 lakh crore (US$ 20.01 billion) and with sector specific financial limits.


Services Sector

Key indicators such as Services Purchasing Managers’ Index, rail freight traffic, and port traffic, are all displaying a V-shaped recovery.

  • FDI inflows into India’s services sector grew robustly by 34% YoY in April-September 2020 to reach US$ 23.6 billion.
  • The services sector accounts for over 54% of India’s GVA and nearly four-fifths of total FDI inflow into India.
  • The sector’s share in GVA exceeds 50% in 15 out of 33 States and UTs and is particularly more pronounced (greater than 85%) in Delhi and Chandigarh.
  • Services sector accounts for 48% of total exports, outperforming goods exports in the recent years.
  • The shipping turnaround time at ports has almost halved from 4.67 days in 2010-11 to 2.62 days in 2019-20.
  • The Indian start-up ecosystem has been progressing well amidst the COVID-19 pandemic, being home to 38 unicorns - adding a record number of 12 start-ups to the unicorn list last year.
  • India’s space sector has grown exponentially in the past six decades:
    • Spent about US$ 1.8 billion on space programmes in 2019-20.
    • Space ecosystem is undergoing several policy reforms to engage private players and attract innovation and investment.

Social Infrastructure, Employment and Human Development

  • The combined (Centre and States) social sector expenditure as% of GDP has increased in 2020-21 compared to last year.
  • India’s rank in HDI 2019 was recorded at 131, out of a total 189 countries:
    • India's GNI per capita (2017 PPP $) has increased from US$ 6,427 in 2018 to US$ 6,681 in 2019.
    • Life expectancy at birth improved from 69.4 years in 2018 to 69.7 years in 2019.
  • The access to data network, electronic devices such as computer, laptop, smart phone etc. gained importance due to online learning and remote working in the pandemic.
  • Major proportion of workforce engaged as regular wage/salaried in the urban sector in the period of January 2019-March 2020 (quarterly survey of PLFS).
  • Government’s incentive to boost employment through Aatmanirbhar Bharat Rozgar Yojana and rationalization and simplification of existing labour codes into 4 codes.
  • Under PMGKP announced in March 2020, cash transfers of up to Rs. 1000 (US$ 13.70) to existing old aged, widowed, and disabled beneficiaries under the National Social Assistance Programme (NSAP).
  • An amount of Rs. 500 (US$ 6.85) each was transferred for three months digitally into bank accounts of the women beneficiaries under PM Jan Dhan Yojana, totalling about Rs. 20.64 crore (US$ 2.83 million).
  • Free distribution of gas cylinders to about 8 crore families for three months.
  • Limit of collateral free lending increased from Rs. 10 lakh (US$ 13.70 thousand) to Rs. 20 lakh (US$ 27.41 thousand) for 63 lakh women SHGs which would support 6.85 crore households.
  • Wages under Mahatma Gandhi NREGA increased by Rs. 20 (US$ 0.27) from Rs. 182 (US$ 2.49) to Rs. 202 (US$ 2.77) w.e.f. April 01, 2020.
  • India’s fight against COVID-19:
    • Initial measures of lockdown, social distancing, travel advisories, practicing hand wash, wearing masks reduced the spread of the disease.
    • Country also acquired self-reliance in essential medicines, hand sanitizers, protective equipment including masks, PPE Kits, ventilators, COVID-19 testing and treatment facilities.
    • World’s largest COVID-19 vaccination drive commenced on January 16, 2021 using two indigenously manufactured vaccines.

Note: Conversion rate used as on January 29, 2021 is Rs. 1 = US$ 0.014

Click for Economic Survey 2020-21: Volume 1

Click for Economic Survey 2020-21: Volume 2