Vol Ii
Vol Ii
Vol Ii
CONTENT
$ CHAPTER-1
> State of the Economy in 2018-19 : A Macro View ...................................................................04
$ CHAPTER-2:
> Fiscal Developments .............................................................................................................................06
$ CHAPTER-3:
> Monetary Management & Financial Intermediation ...............................................................09
$ CHAPTER-4:
> Prices & Inflation ...................................................................................................................................13
$ CHAPTER-5:
> Sustainable Development & Climate Change ............................................................................16
$ CHAPTER-6:
> External Sector ........................................................................................................................................22
$ CHAPTER-7:
> Agriculture and Food Management ...............................................................................................30
$ CHAPTER-8:
> Industry & Infrastructure ...................................................................................................................41
$ CHAPTER-9:
> Services Sector .......................................................................................................................................47
$ CHAPTER-10:
> Social Infrastructure, Employment & Human Development ...............................................50
ECONOMIC SURVEY 2018-19
CHAPTER: 1
STATE OF THE
ECONOMY IN 2018-19
A MACRO VIEW
/ Indian Economy
$ India is still the fastest growing major economy and 7th largest economy in terms of GDP in 2018-19.
$ India’s GDP at current international dollar with PPP adjustments ranks 3rd in the world.
$ Growth of India’s GDP moderated to 6.8% in 2018-19 from 7.2% in 2017-18.
$ Various reasons behind moderation is mainly due to:
! “Agriculture and allied” – Decline in rabbi crop production and contraction in food prices.
! Lower growth in trade, hotel, transport, communication and service related to broadcasting.
! Moderation in public administration and defence sectors.
$ Election related uncertainty may have contributed too.
$ Deceleration in manufacturing sector has hindered growth of industry sector. IIP of manufacturing sector
grew at 0.3% compared to 7.5% in the same quarter of previous year.
$ Slowdown in auto sector.
$ Stress in NBFC’s also contributed to slowdown.
$ GDP deflator has become small as gap between nominal and real growth rate has reduced.
$ Decline in CPI inflation during the last few years. Headline CPI declined to 3.4 per cent in 2018-19 from 3.6
per cent in 2017-18.
$ Headline WPI inflation stood at 4.3 per cent in 2018-19, higher as compared to 3.0 per cent in 2017-18.
$ On the external front, current account deficit (CAD) increased from 1.9 per cent of GDP in 2017-18 to 2.6 per
cent in April-December 2018. The widening of the CAD was largely on account of a higher trade deficit driven
by rise in international crude oil prices.
$ Trade deficit increased from US$ 162.1 billion in 2017-18 to US$ 184 billion in 2018-19.
$ Rupee depreciated by 7.8 per cent vis-à-vis US dollar, 7.7 per cent against Yen, and 6.8 per cent against Euro
and Pound Sterling in 2018-19.
$ The foreign exchange reserves in nominal terms (including the valuation effects) decreased by US$ 11.6 billion
at end-March 2019 over end-March 2018.
$ FDI inflows grew by 14.2% in 2018-19. Among the top sectors attracting FDI equity inflows, services,
automobiles and chemicals were the major categories.
$ As per Provisional Actual (PA) for 2018-19, fiscal deficit stood at 3.4 per cent of GDP.
$ Direct taxes grew by 13.4% owing to improved performance of corporate tax. However, indirect taxes fell short
of budget estimates by about 16% following a shortfall in GST revenues.
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ECONOMIC SURVEY 2018-19
/ Banking Sector
$ Indian banking sector has been dealing with twin balance sheet problem, which refers to stressed corporate
and bank balance sheets. The increase in Non-Performing Assets (NPA) of banks led to stress on balance
sheets of banks, with the Public Sector Banks (PSBs) taking in more stress.
$ But, the performance of the banking sector (domestic operations), and PSBs in particular, improved in
2018-19.
/ Drivers of Growth
$ Consumption has always been a strong and major driver of growth in the economy. Especially private final
consumption has always been a strong and major driver of growth in the economy. Although the share of
private consumption in GDP remains high, the pattern of consumption has undergone some change over time
– from essentials to luxuries and from goods to services.
$ Second component of consumption is the government final consumption expenditure (GFCE). Growth of
GFCE decelerated from 15.0 per cent in 2017-18 to 9.2 per cent in 2018-19.
$ The third major component of demand is investment. Investment (Gross Capital Formation) accounts for
nearly 32 per cent of GDP, within which fixed investment (Gross fixed capital formation) accounts for about
29 per cent of GDP.
$ Green shoots (fresh investments) in the investment activity appear to be taking hold as also seen in the pickup
in credit growth to industry. Credit to, large and micro, small & medium enterprises has also witnessed pickup
ingrowth.
$ Investment rates have been declining since 2011-12, though the investment rate in services is displaying
signs of bottoming out. In 2017-18, investment rate in services sector became the highest. Investment rate in
agriculture still continues to lag behind and now is half the investment rate in the industry sector.
$ There has been a decline in savings rate as well, with the household sector entirely contributing to the
decline.
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ECONOMIC SURVEY 2018-19
CHAPTER: 2
FISCAL DEVELOPMENTS
/ Introduction
$ Budget 2018-19 affirmed Government’s intent on fiscal consolidation. The new fiscal targeting framework was
adopted, which rests on twin pillars of reducing debt and fiscal deficit.
$ The debt-GDP ratio of Central Government was projected at 48.8 per cent at end-March 2019. It is targeted
to decline to 46.7 per cent by end-March 2020 and 44.6 per cent by end-March 2021, restoring the long-term
trend of decline in the debt to GDP ratio.
$ Broadening and deepening the direct tax base and stabilization of Goods and Services tax are the other
priorities.
$ Improving the quality of expenditure remains the key target.
$ Tax Revenue
! Budget 2018-19 envisaged a growth of 16.7 per cent in gross tax revenue (GTR) over the revised estimates
(RE) of 2017-18. Here, 51 per cent of GTR was estimated to accrue from direct taxes and the remaining 49
per cent from indirect taxes.
! Direct taxes have grown by 13.4 per cent owing to improved performance of corporate tax. Whereas,
indirect taxes have fallen short of budget estimates by about 16 per cent. This is largely owing to the
shortfall in GST revenues.
! Better tax administration, widening of TDS carried over the years, anti-tax evasion measures and increase
in effective tax payers base have contributed to direct tax buoyancy.
/ Trends in Expenditure
$ Government faces the challenge of providing sufficient funds for investment and infrastructure expansion
while maintaining fiscal discipline.
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$ Composition of government expenditure reveals that expenditure on defence, salaries, pensions, interest
payments and subsidies account for more than sixty per cent of total expenditure.
$ Defence Initiatives
! Capital Expenditure in absolute terms has gone up in the past few years.
! Several measures as part of “Business Process Re-engineering” have been undertaken to make the
acquisition process industry friendly, provide a level playing field for various stakeholders and reduce the
complexities.
! To achieve self-reliance in the defence sector and make India a global hub in defence manufacturing, the
Ordinance Factories (OFs), Defence Public Sector Undertakings (DPSUs) and the private industry ecosystem
have enhanced their capabilities and widened the product range.
! In order to encourage participation of Indian industry in design and development of defence items, a
‘Make-II’ procedure was notified wherein a number of industry friendly provisions have been introduced,
such as relaxation of eligibility criteria, minimal documentation, and provision for consideration of suo-
moto proposals suggested by industry/ individual.
! An innovation ecosystem for Defence, titled “Innovation for Defence Excellence” (iDEX) was launched.
iDEX is aimed at creating an ecosystem to foster innovation and technology development in Defence and
Aerospace.
! iDEX intends to engage industries including MSMEs, Start-ups, Individual Innovators, R&D institutes and
Academia and provide them grants/funding and other support to carry out R&D, which has potential for
future adoption for Indian defence and aerospace needs.
! A Defence Investor Cell has been made functional in the Department of Defence Production (DDP). It
has played an important role as one-stop solution for all types of defence production related queries.
! Continuous efforts are being made to increase indigenization wherever technologically feasible and
economically viable to facilitate private sector participation.
! The Defence Industry sector has been opened up to 100 per cent for Indian private sector participation,
with Foreign Direct Investment (FDI) up to 26 per cent, both subject to licensing.
/ Transfers to States
$ Transfer of funds to States comprises essentially of three components: share of States in Central taxes
devolved to the States, Finance Commission Grants, and Centrally Sponsored Schemes (CSS), and other
transfers.
$ In 2014-15, direct transfers to State implementing agencies were discontinued and all transfers to States
including for the CSS were routed through the Consolidated Funds of the States.
$ Another significant development has been award of the Fourteenth Finance Commission to devolve 42 per
cent of the divisible pool of taxes to the States, up from 32 per cent earlier.
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ECONOMIC SURVEY 2018-19
$ State Finances
! State budgets expanded considerably on account of increase in revenue expenditure.
! Capital expenditure consists of capital outlay and loans and advances by the State Governments.
! The loans and advances by the State Governments declined sharply in 2017-18 RE owing to reduction in
loans and advances by States for power projects and food storage and warehousing.
! The RBI study on State Finances points to the deterioration in fiscal deficit to GDP ratio in 2017-18 RE when
compared to the budget estimate.
! The issuance of UDAY bonds in 2015-16 and 2016-17, farm loan waivers, and the implementation of Pay
Commission awards have led to higher debt to GDP ratio.
! However, despite rising States’ debt to GDP ratio, interest payment as proportion of revenue receipts has
not deteriorated.
$ Outlook
! There are apprehensions of slowing of growth, which will have implications for revenue collections.
! The financial year 2018-19 has ended with shortfall in GST collections.
! Resources for now expanded Pradhan Mantri Kisan Samman Nidhi (PM-KISAN) and Ayushmaan
Bharat, as well as new initiatives of the new Government, will have to be found without compromising the
fiscal deficit target as per the revised glide path.
! US sanctions on oil import from Iran is likely to have impact on oil prices and thereby on the petroleum
subsidy, apart from implications for current account balances.
! Fifteenth Finance Commission will submit its report for next five years beginning April 2020. Its
recommendation especially on tax devolution will have implications for Central Government finances.
# RE - Revised Estimates
# PA - Provisional Actuals
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CHAPTER: 3
/ Introduction
$ Banking system improved as NPA ratios declined and credit growth accelerated. Insolvency and Bankruptcy
Code led to recovery and resolution of significant amount of distressed assets and improved business
culture.
$ During 2018-19, the growth rate of monetary aggregates back on to the track after experiencing demonetisation
and remonetisation.
Cash with Banks 18.8 18.7 16.7 6.8 14.4 13.3 45.8 -20.1 3.5
Currency with the
19.2 13.9 12.0 10.0 10.4 11.8 -6.2 11.9 23.5
Public
Bankers’ Deposits with
29.1 14.8 -10.9 4.6 7.6 11.0 8.6 7.9 7.9
the RBI
Demand Deposits 14.2 -3.8 5.9 8.6 10.5 9.7 20.0 13.8 7.9
Time Deposits 16.0 19.3 14.7 14.7 12.3 10.6 10.8 6.4 8.5
Reserve Money (M0) 21.5 13.9 6.2 8.8 10.1 12.1 -1.3 9.6 19.5
Narrow Money (M1) 16.8 5.8 9.5 9.6 10.6 11.3 3.9 12.9 16.5
Broad Money (M3) 16.2 15.9 13.5 13.6 11.9 10.7 9.3 7.8 10.2
Source: RBI.
Note: Growth rates have been calculated for financial year averages of the monetary aggregates.
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ECONOMIC SURVEY 2018-19
$ Moreover, based on an assessment of financial market conditions, the RBI increased the Facility to Avail
Liquidity for Liquidity Coverage Ratio (FALLCR) which supplemented the ability of individual banks to avail
liquidity from the repo market against high-quality collateral. The RBI also decided to inject rupee liquidity for
longer duration through long-term foreign exchange buy/sell swaps.
$ The tighten liquidity impacted short-term as well as long term interest rates, led to increase in spread of
treasury bills (t-bill) and Government security (g-sec) rates over the repo rate. Availability of durable liquidity
has a big impact on the market borrowing cost of the government.
$ Banking Sector
! The performance of the banking sector, in particular Public Sector Banks (PSBs) has improved in 2018-19
(March-December 2018).
6 The Gross Non-Performing Advances (GNPA) ratio of SCBs decreased from 11.5 per cent to 10.1 per
cent. Their Restructured Standard Advances (RSA) ratio declined from 0.7 per cent to 0.4 per cent.
The Stressed Advances (SA) ratio decreased from 12.1 per cent to 10.5 per cent.
6 GNPA ratio of PSBs decreased from 15.5 per cent to 13.9 per cent. SA ratio of PSBs decreased from 16.3
per cent to 14.4 per cent.
6 Capital to risk-weighted asset ratio (CRAR) of SCBs increased from 13.8 per cent to 14.0 per cent
largely due to improvement of CRAR of Public sector banks (PSBs). SCBs’ return on assets (RoA)
decreased from 0.21 per cent to 0.03 per cent while their return on equity (RoE) decreased from 2.41
per cent to 0.4 per cent.
$ Credit Growth
! Growth in non-food bank credit (NFC) improved in 2018-19. Bank credit lending to large industry and
services segments were the main drivers of overall NFC growth in 2018-19.
! However, growth of credit to services sector has been decelerated and yet to gain momentum.
$ Capital Market
! The year 2018-19 witnessed a significant decrease in resource mobilization through public issue and rights
issue of equity. Resource mobilisation through issuance of debt public issue also rose rapidly. In this
period, Indian corporates preferred private placement route to gear up the capital requirement.
! The mutual fund funding, investments by FPIs and value of offshore derivative instruments got
decreased.
! The secondary market segment, represented by BSE and NSE, also witnessed healthy growth.
$ Insurance Sector
! Insurance protects people against mortality; property; and casualty risks; it provides a safety net for
individuals and enterprises in urban and rural areas. It also provides funds for infrastructure development
and other long gestation projects of the nation.
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! The potential and performance of the insurance sector are generally assessed on the basis of two
parameters, viz., insurance penetration and insurance density. The measure of insurance penetration and
density reflects the level of development of insurance sector in a country.
! Insurance penetration which was 2.71 per cent in 2001, has steadily increased to 3.69 per cent in 2017 (Life
2.76 per cent and Non-Life 0.93 per cent). Insurance penetration in some of the emerging economies in Asia,
i.e., Malaysia, Thailand and China during the same year were 4.77, 5.29 and 4.57 per cent respectively.
! The insurance density in India which was US$11.5 in 2001, reached to US$73 in 2017 (Life-55$ and Non-
Life -18$).
! Globally insurance penetration and density were 3.33 per cent and US$353 for the life segment and 2.80
per cent and US$297 for the non-life segment respectively.
Implementation of IBC
$ To operationalize the IBC, the National Company Law Appellate Tribunal (NCLAT), the Principal Bench of
NCLT at New Delhi, and 11 benches of NCLT – two at New Delhi and one each at Ahmedabad, Allahabad,
Bengaluru, Chandigarh, Chennai, Guwahati, Hyderabad, Kolkata, and Mumbai were constituted.
$ The Insolvency and Bankruptcy Board of India (IBBI) – the regulator, was established on October 1, 2016.
It registered three Insolvency Professional Agencies (IPAs), namely, the Indian Institute of Insolvency
Professionals of Institute of Chartered Accountants of India (IIIP of ICAI), the Institute of Company
Secretaries of India’s Institute of Insolvency Professionals (ICSI IIP), and the Insolvency Professional
Agency of Institute of Cost Accountants of India (IPA of ICMAI).
$ The IBC provides for the establishment of Information Utilities (IU) to collect financial information from
creditors, get it authenticated by debtors, store and provide access to the resolution professional,
creditors, liquidator and other stakeholders so that they can make informed decisions.
$ The National e-Governance Services Limited (NeSL) was registered as the first IU by the IBBI. The
details of information filed with NeSL show a growing trend of use of IU by creditors. Increased use of IUs
is expected to eliminate information asymmetry and improve implementation timelines under the IBC.
$ A key objective of the IBC is the maximization of the value of assets of the CDs and consequently value
for its stakeholders. A critical element towards achieving this objective is the transparent and credible
determination of the value of the assets of CD to facilitate comparison and informed decision making.
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ECONOMIC SURVEY 2018-19
$ Institutional Response:
! Two amendments were introduced in the IBC:
6 Section 29A, prohibiting persons with certain disabilities from submitting a resolution plan.
6 Changes to make the IBC easier to operate by reducing the threshold for decision making by the
committee of creditors from 75 per cent to 66 per cent in specified matters and to 51 per cent for
routine decisions. This amendment also entailed the recognition of home buyers as FCs.
! The NCLTs and NCLAT continue to play an important role as adjudicating and appellate authorities
respectively for IBC. The government has notified additional benches in Amravati, Indore, Cuttack and
Kochi.
! The Securities Contracts (Regulation) Rules, 1957 was amended to protect the interest of minority
shareholders.
$ Impact of IBC
! Behavioural Changes: The IBC has paved the way for Operational Creditors, mostly SMEs and small
vendors to use the IBC as a recovery tool. The threat of promoters losing control of the company or
protracted legal proceedings is forcing many corporate defaulters to pay off their debt even before the
insolvency can be started.
/ Reforms in Pipeline
$ The UNCITRAL Model Law on Cross-Border Insolvency (Model Law) is the most widely accepted blueprint
to effectively deal with cross-border insolvency issues while ensuring the least intrusion into each country’s
internal insolvency and bankruptcy laws. India has initiated steps to inact a model law.
$ Recognising the need for a legal framework to deal with insolvency of group companies, the IBBI has recently
set up a working group under former SEBI Chairman Mr. U. K. Sinha to recommend a complete regulatory
framework to facilitate insolvency resolution and liquidation of debtors in a corporate group.
$ A Working Group under the chairmanship of Mr. P. K. Malhotra, former law secretary, has been set up by
the IBBI to recommend the strategy and approach for implementation of the provisions of IBC dealing with
insolvency and bankruptcy of individuals.
$ The technology can be used to an extent by the NCLT and the IBBI to enhance case management for strict
timekeeping of insolvency cases.
$ Technology can also be used for data mining and analysis for constant review of the IBC impact on the
ground. IPs should be encouraged to use technology to speed up data collection and access for the purpose
of efficient CIRP.
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ECONOMIC SURVEY 2018-19
CHAPTER: 4
/ Introduction
$ The economy witnessed a gradual transition from a period of high and variable inflation to more stable and
low level of inflation in the last five years. Headline inflation based on CPI-C continued its declining trend for
fifth straight financial year. It has remained below 4.0 % in the last two years.
$ Food inflation based on Consumer Food Price Index (CFPI) too declined over the last five years, and has
remained below 2.0% for the last two consecutive years.
$ Inflation based on Wholesale Price Index (WPI) stood at 4.3% during the FY-19.
$ FY-19 saw low headline as well as food inflation. The year witnessed deflation in prices of pulses, vegetables
and sugar. Core inflation averaged higher than the previous year.
Table: General Inflation based on different Price Indices (in per cent)
2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19
WPI 6.9 5.2 1.2 -3.7 1.7 3.0 4.3 (P)
CPI-C 9.9 9.4 5.9 4.9 4.5 3.6 3.4
CPI-IW 10.4 9.7 6.3 5.6 4.1 3.1 5.4
CPI-AL 10.0 11.6 6.6 4.4 4.2 2.2 2.1
CPI-RL 10.2 11.5 6.9 4.6 4.2 2.3 2.2
Note: CPI-C inflation for 2012-13 and 2013-14 is based on old series 2010=100; (P) - Provisional; C
stands for Combined, IW stands for Industrial Workers, AL stands for Agricultural Labourers and RL
stands for Rural Labourers.
$ Core Inflation
! Core inflation captures the underlying trend of inflation and is more stable. It is not affected by temporary
shocks.
! In India, core inflation is generally measured by excluding highly volatile components from the headline
inflation. By their very nature, food and fuel have been highly volatile. As headline inflation exhibits volatility
due to short run shocks, Central banks in many countries focus on core inflation.
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ECONOMIC SURVEY 2018-19
! CPI-C based core inflation, which equals CPI excluding the food and fuel group, has remained above 4%
since the start of new series of CPI-C. Core inflation based on CPI-C increased to 5.8% in 2018-19 from
4.6% in 2017-18. However, it has declined from 5.7 % in November 2018 to 4.5% in April 2019.
! Refined core inflation, which equals CPI excluding food and fuel group, petrol & diesel, too has moved
closely with core inflation; it was 5.7% in 2018-19 as compared to 4.6% in 2017-18 and stood at 4.8% in
April 2019.
$ Drivers of Inflation
! Main contributors of headline inflation based on CPI-C during FY 2018-19 are miscellaneous, housing, and
fuel and light groups. Relative importance of services in shaping up headline inflation has increased.
! Goods inflation was 2.6% during FY-19 as compared to 3.2% during FY 2017-18.
! In contrast, services inflation was 6.3% during FY-19 when compared to 5% during 2017-18.
! Services inflation has been higher than goods inflation and the gap between the two is growing. Services
inflation has influenced headline inflation as it has contributed more than its weight.
6 Housing has the highest weight amongst services - 10.07%.
> The Housing Price Indices (HPIs) are a broad measure of movement of residential property prices
observed within a geographical boundary. The first official housing price, ‘NHB RESIDEX’, was
launched in July 2007 by the National Housing Bank for 50 cities on a quarterly basis with FY 2017-
18 as the base year.
> Among the 50 cities covered are 18 State/UT capitals and 33 are part of the smart city list released
by Government of India.
> RBI’s quarterly HPI is based on transactions data received from housing registration authorities in
ten major cities. Growth in housing prices shows a downward trend.
6 Transport and communication: 4.59%
> Within ‘transport & communication’, on an average, services components are witnessing higher
inflation than goods. However, volatility is more for goods than for services.
6 Education: 3.51%
> It includes ‘books, journals: first hand’; ‘stationery, photocopying charges’; ‘tuition and other fees
(school, college, etc.)’; ‘private tutor/coaching centre’ and ‘other educational expenses (incl. fees for
enrolment in web-based training)’.
> Inflation of ‘private tutor/ coaching centers’ and ‘tuition and other fees (school, college, etc)’ has
risen during 2018-19.
> The sharp decline in ‘primary school-fee’ inflation may be possibly due to the enactment of Right
to Education Act (RTE) in 2010.
6 Health: 1.82%
> Services components of health are witnessing higher inflation:
! Contribution of health, education, transport and communication in driving services inflation has gained
prominence across rural and urban areas. Inflation in health is more prominent in rural than urban areas
probably owing to supply side constraints.
$ Rural-Urban Inflation
! CPI rural inflation declined during FY-19 over FY 2017-18. However, CPI urban inflation increased marginally
during FY-19. Many States witnessed fall in CPI inflation during FY-19.
! The decline in rural inflation is steeper than that of urban inflation since July 2018, resulting in decline in
headline inflation. Fall in rural inflation is due to moderation in food inflation, which has been negative
for the last six months (October 2018 to March 2019). The importance of food in determining rural
inflation has been declining over the years. In contrast, the role of miscellaneous category, i.e., services in
determining rural inflation has increased.
! Miscellaneous group was the main driver of CPI (Rural) inflation in 2018-19, contributing more than 70%
to the overall rural inflation. In urban areas, miscellaneous group and housing have contributed to inflation
in equal measure during FY-19.
$ State-wise Inflation
! Many States have witnessed fall in CPI inflation during 2018-19. Inflation in 23 States/Union Territories
(UTs) was below 4% in FY-19.
! Inflation ranged between (-) 1.9% to 8.9 % across States in FY-19 compared to 1.5% to 12.4% in FY 2017-18.
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! 16 States/UTs had inflation rate lower than All India average for FY-19 with Daman & Diu having the lowest
inflation followed by Himachal Pradesh and Andhra Pradesh.
! In rural areas, among major States/UTs, 16 States had recorded inflation of less than 4% in FY-19 as
compared to 13 in FY 2017-18. In urban areas, 9 States recorded inflation of less than 4% in FY-19 as
against 15 in 2017-18.
Advisories are being issued, as and when re- During lean periods of 2017-18 and 2018- 19, to control the rise
quired, to State Governments to take strict in onion prices, onions were released at reasonable prices from
action against hoarding & black marketing, the stock procured under PSF.
especially for commodities in short supply.
These measures are taken to effectively en- The order empowering States/ UTs to impose controls including
force the Essential Commodities Act, 1955 Stock Limits on Edible Oils and Edible Oilseeds has been with-
& the Prevention of Black-marketing and drawn in June, 2018.
Maintenance of Supplies of Essential Com-
modities Act, 1980.
Regular review meetings on prices and avail- Pulses from the buffer are utilized for strategic mar-
ability of key commodities are held at the ket intervention for price management, meeting in-
highest level, including at the level of Min- stitutional requirements like supplies to State Gov-
isters, Committee of Secretaries, Inter Min- ernments/UTs for Mid-Day Meal Scheme (MDM),
isterial Committee, Price Stabilization Fund Integrated Child Development Services (ICDS) Scheme, and
Management Committee (PSFMC), and Public Distribution System (PDS), and through Open Market
other Departmental level review meetings to Sale, etc. In addition, pulses from the buffer are being utilized
take stock of the prevailing price and avail- to meet the requirement of Army and Central Para-Military
ability situation and recommend appropriate Forces.
policy intervention.
Higher Minimum Support Price (MSP) for Prohibition on export has been withdrawn in April 2018 on all
pulses and other crops has been announced varieties of edible oils, except mustard oil. Export of mustard oil
so as to incentivize production and thereby in branded consumer packs of up to 5 kgs is permitted with a
enhance availability of food items, which Minimum Export Price (MEP) of United States Dollar (USD) 900
may help moderate prices. per million ton (MT).
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ECONOMIC SURVEY 2018-19
CHAPTER: 5
SUSTAINABLE DEVELOPMENT
& CLIMATE CHANGE
Important terms
$ Resource efficiency : It means using the Earth’s limited resources in a sustainable manner while minimising
impacts on the environment. It allows us to create more with less and to deliver greater value with less input.
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ECONOMIC SURVEY 2018-19
$ The mission was launched as a priority programme with a budget outlay of Rs. 20,000 crore for the period
2015-2020. During the period 2014-15 to 2018-19, a total amount of Rs. 6,106.25 crore has been spent on
the programme indicatinga substantial jump over earlier similar programmes.
$ For effective implementation and proper synchronization with the State and Local Bodies, National Mission
for Clean Ganga (NMCG) was empowered as an Authority under the Environment (Protection) Act, 1986
for fast track implementation and to formulate policies for long term sustainability of the Ganga rejuvenation
efforts.
/ Resource Efficiency
$ SDG 12 aims to ‘Ensure Sustainable Consumption and Production Patterns’ along with the eight other SDG
goals (2, 6, 7, 8, 9, 11, 14 and 15) have a bearing on resource efficiency.
$ A resource efficient development approach essentially means a transition of the management of natural
resources with a progressive minimization of waste in both consumption and production processes through
various policies and measures.
$ The International Resource Panel estimated that efficient resource policies in G7 countries could reduce the
global use of natural resource by 28 per cent, diminish greenhouse gas (GHG) emissions by an additional 15
to 20 per cent and deliver annual economic benefits of US$2 trillion globally by 2050 relative to existing trends
(UNEP, 2018).
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ECONOMIC SURVEY 2018-19
! India’s average share of material cost in the total production cost was estimated to be more than 70 per
cent and rate of recycling is very low as compared to other developed economy which signifies an urgent
need for improving productivity and efficiency (TERI, 2019).
! As per the NITI Aayog’s Strategy Paper on Resource Efficiency 2017, India consumed 5 billion tonnes
of biomass, fossil fuels, minerals and metals in 2010 and was the third largest consumer after China (21.5
billion tonnes) and USA (6.1 billion tonnes).
! It is projected that India’s demand for total material will more than double by 2030 under the assumption
of continued economic growth of 8 per cent till 2030 and possible slowing down to 5 per cent thereafter
till 2050 and medium growth in population. India would be requiring around 6.5 billion tonnes of minerals
in order to sustain the demand of growing population.
Regulations
$ Establish a national coordinating body- Bureau of Resource Efficiency (BRE) between various
ministries to identify, implement and achieve national RE goals.
$ Establish State Level coordinating bodies to identify implement and achieve State level RE
goals.
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$ Large and resource intensive industries and bulk waste generators may be mandated to file the
Resource Use and Efficiency Statement.
$ Establish and mandate a ‘Consent to Close’ requirement for medium and large industries in
the ‘RED’ category to ensure that waste streams are responsibly managed and recycled before
closure.
$ Rationalise tax regime on critical virgin raw materials to make secondary raw materials price
competitive.
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$ CPCB has issued a comprehensive set of directions under Section 18(1)(b) of Air (Prevention and Control
of Pollution) Act, 1986 for implementation of forty-two measures to mitigate air pollution in major cities
including Delhi and National Capital Region (NCR).
$ The Government has notified a Graded Response Action Plan for Delhi and NCR,which comprises of the
graded measures for each source framed according to the AQI categories.
$ MoEF&CC has launched NCAP in 2019 as a pan India time bound national level strategy. A budgetary allocation
of Rs. 150 crore has been made under NCAP during the financial year 2019-20.
! Overall objective of the NCAP is comprehensive management plan for prevention, control and abatement
of air pollution besides augmenting the air quality monitoring network across the country.
! The tentative national level target of 20-30 per cent reduction of PM2.5 and PM10 concentration by 2024
is proposed under the NCAP with 2017 as the base year for comparison of concentration. This will be mid-
term five years action plan beginning from 2019.
/ Climate Change
$ The ultimate objective of UNFCCC (1992) is to stabilize GHG concentration in the atmosphere at a level that
will prevent dangerous human interference with the climate system, in a time frame which allows ecosystems
to adapt naturally and enables sustainable development.
$ The main aim of the Paris Agreement is to hold the increase in the global average temperature well below
2°C above pre-industrial levels and pursuing efforts to limit the temperature increase even further to 1.5°C
above pre-industrial levels. It sets a roadmap for all nations in the world to take actions against climate
change in the post-2020 period.
$ As per the recent Intergovernmental Panel on Climate Change (IPCC) Special Report on Global warming
of 1.5°C, human-induced warming reached approximately 1°C (likely between 0.8°C and 1.2°C) above pre-
industrial levels in 2017, increasing at 0.2°C (likely between 0.1°C and 0.3°C) per decade (high confidence).
$ The year 2018was the sixth warmest year on record since the nation-wide records commenced in 1901.
$ Achievements in CoP 24 in Katowice, Poland in 2018:
! Paris Agreement Work Programme (PAWP) was adopted.
! Recognition of different starting points for developed and developing countries.
! Flexibilities for developing countries.
! Consideration of principles including equity and Common but Differentiated Responsibilities and
Respective Capabilities (CBDR-RC).
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$ Key Initiatives:
! ISA has been working with various financial institutions for scaling up financing, lowering the cost of capital,
and designing innovative financial instruments to accelerate the massive deployment of solar energy.
! In addition, “Action to Transaction” meets an innovative platform where project developers and bankers
were brought together, facilitated 238 projects in ISA countries.
! A task force was constituted to design a Common Risk Mitigation Mechanism to reduce risks and financial
cost of solar projects. The World Bank and Agence Française de Development (AFD) are developing a
joint Global Solar Risk Mitigation Initiative (SRMI), an integrated approach to tackle policy, technical
and financial issues.
! The ISA is also working with the European Investment Bank and the EU Commission to launch an
off-grid fund, initially for four Asian member countries of the ISA, to rapidly scale up to Africa and Latin
America.
! A project pipeline of US$5 billion in mini-grids and rooftops is created.
! ISA has forged financial partnerships with various MDBs, UN agencies, Climate Parliament, European
Commission, Commonwealth Secretariat and other International and Intergovernmental organizations.
ISA Solar Award has been instituted for Solar Scientists doing extraordinary work across ISA countries with a
onetime corpus contribution of US$1.5 million from the Government of Haryana.
Practice Question
$ India considers the outcome of COP24 a positive one which addresses concerns of all
Parties and sets us on the path towards successful implementation of the Paris Agreement.
Elucidate.
$ Air pollution is one of the biggest global environmental challenges of today and a major
issue in India. In this context, enumerate various steps taken by the Indian government to
tackle the issue of increasing air pollution.
$ Resource Efficiency (RE) has emerged as one of the key strategies towards the 2030 Agenda
of achieving the SDGs. Elaborate.
**********
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CHAPTER: 6
EXTERNAL SECTOR
Important terms
$ Foreign Exchange Reserves: The FOREX are reserve assets held by a central bank in foreign currencies. It
acts as buffer to be used in challenging times and used to back liabilities on their own issued currency as
well as to influence monetary policy.
$ Components of Indian FOREX Reserves: Foreign currency assets (FCAs), Gold, Special Drawing Rights
(SDRs) and RBI’s Reserve position with International Monetary Fund (IMF). FCAs constitute largest
component of Indian FOREX Reserves.
$ External Debt: It is owed to creditors outside the country. The outsider creditors can be foreign governments,
International Financial Institutions like WB, IMF etc., corporate and foreign private households. External
debt may be of several kinds such as multilateral, bilateral, IMF loans, Trade credits, External commercial
borrowings etc.
/ Introduction
$ India’s macroeconomic situation on the external side continues to be stable. Though the current account
deficit is projected at 2.4 per cent of GDP in 2018-19, up from 1.8 per cent in 2017-18, this is within reasonable
levels. The widening of the current account deficit has been driven by a deterioration of trade deficit from 6.0
per cent of GDP to 6.7 per cent across the two years. The acceleration in the growth of remittances has offset
the deterioration of the current account deficit.
$ The share of foreign direct investment has risen and that of net portfolio investment has fallen in total
liabilities, thereby reflecting a transition to more stable sources of funding the current account deficit. India’s
foreign exchange reserves continue to be comfortably placed in excess of US$400 billion.
$ The real effective exchange rate also depreciated in 2018-19, making India’s exports potentially more
competitive. The income terms of trade, a metric that measures the purchasing power to import, has been on
a rising trend, possibly because the growth of crude prices has still not exceeded the growth of India’s export
prices.
$ The exchange rate in 2018-19 has been more volatile than in the previous year, mainly due to volatility in
crude prices, but not much due to net portfolio flows.
$ Petroleum products, precious stones, drug formulations, gold and other precious metals continue to be top
export items. Crude petroleum, pearl, precious and semi-precious stones, and gold remain as top import
items. India’s main trading partners continue to be the US, China, Hong Kong, the UAE and Saudi Arabia.
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! The WEO accordingly advises that at the multi-lateral level, the main priority is for countries to resolve
trade disagreements cooperatively, without raising distortionary barriers that would further destabilize a
slowing global economy.
! These developments increase the vulnerability of external sector of emerging market economies like India,
which are dependent on crude imports for fuelling their economic growth.
! Emerging and developing economies on the other hand slipped from their current account surplus position
of US$379.0 billion in 2011 to US$0.1 billion in 2017. This reflects the shifting of the consumption hub of
the world from the advanced to the less advanced countries.
! It is in this context of global slowdown of output and trade, increase in trade protectionism across the world
and shifting of the consumption hub to the emerging and developing economies that the developments
on India’s trade and BoP fronts have been discussed.
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$ External Debt
! India’s External Debt was US$521.1 billion at end-December 2018, 1.6 per cent lower than its level at
end-March 2018.
! As per the World Bank data, though India is the third largest debtor country (in absolute amounts) among
developing countries (after China and Brazil), its average-age of debt is much higher given that its ratio
of short-term debt to total debt is only about 19.0 while that of China is 69 per cent. Higher age of debt
reduces the roll-over risk.
! Debt Service ratio indicates the claim that servicing of external debt makes on current receipts and is,
therefore, a measure of strain on BoP due to servicing of debt service obligations.
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$ Terms of Trade
! While depreciation of REER indicates that India’s exports must have become more competitive, appreciation
of REER indicates less competitive exports. Price competitiveness of exports can however be better assessed
by looking at how Terms of Trade (ToT) have fared across a time period.
! Commodity or net terms of trade (NTT) of a country is the ratio of the unit value (price) of export to
the corresponding unit value (price) of import measured relative to a base year.
Table: Logistics Cost of India and rest of the world (Reference Year-2016)
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$ The countries involved in these investigations are China PR, Hong Kong, Korea, Germany, EU, USA, Malaysia,
South Africa, Thailand, and Brazil among others.
/ Composition of Trade
$ Major Products Exchanged in 2018-19
! In 2018-19, petroleum products continued to be the largest exported commodity, in value terms, with a
share of 14.1 per cent in the country’s export basket.
! In the import basket of 2018-19, petroleum: crude, at 22.2 per cent had the largest share followed by gold
and other precious metal Jewellery at 6.4 per cent and pearls precious and semi-precious stones at 5.3 per
cent.
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! China continues to be the largest source of imports of India accounting for 13.7 per cent of the total
imported value in 2018-19.
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/ CONCLUSION
Government policies are expected to further lift restrictions on FDI inflows, which will continue to increase the
stability of sources funding the current account deficit. From a macro-economic perspective the deterioration
of CAD may be contained if consumption slows down in the economy while increase in investment and exports
become the new drivers of the Indian economy.
Practice Question
$ Indias’s Current Account Deficit (CAD) widens to 2.1% of GDP. In this context,
analyse how the variation in CAD impacts the economy.
$ What is the difference between FDI and FPI? FDI is more desirable than FPI for
Indian Economy. Comment.
**********
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CHAPTER: 7
Important terms
$ Irrigation water productivity: It is defined as ratio of the crop output to the irrigation water applied by
the farmer/ irrigation system either through surface canals, tank, pond or the well and tube well during the
crop growth.
$ Agriculture Census: Agriculture Census in India is conducted at five yearly intervals for collection of
information about structural aspects of agricultural holdings in the country. The basic statistical unit for
data collection is ‘Operational Holding’. Recent agriculture census was held in 2015-2016.
$ Operational Holding: All land which is used wholly or partly for agricultural production and is operated
as one technical unit by one person alone or with others without regard to the title, legal form, size or
location.
$ Fertilizer response ratio: It is an indicator of responsiveness of soil fertility to fertiliser application.
$ Economic cost of food grains: The acquisition and distribution costs of procuring food grains for the
central pool constitute the economic cost.
/ Context:
Agriculture remains the pre-dominant occupations in India for vast sections of the population. Over the years,
several new challenges have emerged before the sector. Therefore to transform the agriculture and rural economy,
this chapter focuses on allied sectors with a major focus on dairy, poultry, fisheries and rearing of small ruminants
and the rationalisation of food subsidy and greater use of technology in food management.
/ Gist Of Chapter:
To attain the Sustainable Development Goals (SDGs) of ending poverty and bringing in inclusive growth, activities
related to agriculture need to be closely integrated with the SDG targets. For a safe and food secure future,
the agriculture landscape has to undergo tremendous transformation and shift from the philosophy of ‘green
revolution led’ productivity to ‘green methods’ led sustainability in agriculture.
Share of Agriculture, Forestry & Fishing at 2011-12 Prices (in per cent)
Agriculture
forestry & 17.8 17.8 16.5 15.4 15.2 14.9 14.4
fishing
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Forestry &
1.5 1.5 1.4 1.3 1.2 1.2 NA
logging
Fishing &
0.8 0.8 0.8 0.9 0.9 0.9 NA
aquaculture
Note-* Third Revised Estimate,# Second Revised Estimate, @ First Revised Estimate
**As per the press note on Provisional Estimates of Annual National Income 2018-19 and Quarterly Estimates of Gross Domestic Product
for the Fourth Quarter (Q4) of 2018-19 released by CSO on 31st May 2019.
$ The share of public investment in GCF in agriculture and allied sectors registered an increase from 2014-15
and maintained an upward trend till 2016-17, the share of private investment in GCF (Gross Capital Formation)
showed a decline during this period.
Size Group
$ The key factors which will bring resource efficiency in smallholder agriculture in
India:
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6 By 2050, India will be in the global hot spot for ‘water insecurity ’. Therefore there is a major concern
whether the present practice of groundwater use can be sustained as the depth of the groundwater
level continues to drop.
6 Agriculture is dependent highly on water. The cropping pattern in India is highly skewed towards crops
that are water intensive. The incentive structures like MSP, heavily subsidized electricity, water and
fertilizers have played a significant role in the misalignment of crop patterns in the country. ‘The water
guzzlers, paddy and sugarcane, consume more than 60 per cent of irrigation water available in the
country, thereby reducing water availability for other crops.
6 So, appropriate mechanism needs to be framed for economical use of water among small and marginal
farmers.
What are the steps to be taken?
6 There is divergence between land productivity and irrigation water productivity in the major sugarcane
producing States in India, hence its need to focus on irrigation water productivity to raise agricultural
productivity.
6 The States like Tamil Nadu, Karnataka, Maharashtra and Andhra Pradesh which have high land
productivity tend to have very low irrigation water productivity, hence adopting improved methods of
irrigation and irrigation technologies will have a critical role in increasing irrigation water productivity
along with re-calibrating the cropping patterns.
6 The States with penetration of MI systems and improved adoption of micro irrigation systems have
almost 40 to 50 per cent savings in energy and fertiliser consumption. Therefore it needs to be examined
whether the procurement supported systems which are resource inefficient in terms of subsidies and
water use, can be replaced with MI supported cropping patterns and systems which will maximise
irrigation productivity and resource use efficiency,.
6 Combinations of measures which suit the local agro-economic context need to be applied to improve
irrigation productivity in agriculture which will reflect sustainable water use in agriculture.
6 Focus in agriculture should shift from ‘land productivity’ to ‘irrigation water productivity’.
6 Devising policies to incentivise farmers to adopt efficient ways of water use should become a national
priority to avert the looming water crisis.
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6 Paramparagat Krishi Vikas Yojana (PKVY) and Rashtriya Krishi Vikas Yojana (RKVY): To promote
organic farming in the country. In the revised guidelines of PKVY scheme during the year 2018, various
organic farming models like Natural Farming, Vedic Farming, Cow Farming, Home Farming, Zero
Budget Natural Farming (ZBNF) etc. have been included.
6 Zero Budget Natural Farming (ZBNF): The main aim of ZBNF is elimination of chemical pesticides and
promotion of good agronomic practices. ZBNF also aims to sustain agriculture production with eco-
friendly processes in tune with nature to produce agricultural produce free of chemicals. Soil fertility &
soil organic matter is restored by pursuing ZBNF. Less water is required under ZBNF and it is a climate
friendly agriculture system.
6 Some of the States which are progressively practicing ZBNF are Karnataka, Himachal Pradesh and Andhra
Pradesh. After ZBNF, Andhra Pradesh has witnessed a sharp decline in input costs and improvement
in yields.
6 Mission Organic Value Chain Development for North Eastern Region (MOVCDNER): It is a
component of National Mission for Sustainable Agriculture (NMSA) to promote organic farming.
Coffee Board has launched blockchain based coffee e-marketplace. This is a pilot project
which is likely to help integrate the farmers with markets in a transparent manner and lead
to realization of fair price for the coffee producer. It will also reduce the number of layers
between coffee growers and buyers and help farmers double their income.
India is the only country in the world where entire coffee is grown under shade, handpicked
and sun dried. Coffee is produced in India by small coffee growers, tribal farmers adjacent to
National Parks and Wildlife Sanctuaries in Western and Eastern Ghats, which are two of the
major bio-diversity hot spots in the world. Indian coffee is highly valued in the world market
and sold as premium coffee. However, the share of farmers in the final returns from coffee
is very meagre.
Blockchain based market place app for trading of Indian coffees is intended to bring in
transparency in the trade of Indian coffee, maintain the traceability of Indian coffee from
bean to cup so as consumer tastes real Indian coffee, the grower is paid fairly for his coffee
produced. This initiative will reduce grower's dependency of intermediaries by providing
direct access to buyers at a fair price for their produce. The initiative will also help coffee
producers find exporters within the stipulated time to meet the growing demands and in
building greater trust through increased transparency.
Coffee Board is in the process of developing Blockchain based marketplace application. This
platform has already registered a group of 15-20 coffee farmers, exporters, importers and
retailers from India and abroad. India is one of the few coffee blockchain processors for
coffee in the world, after France and Ethiopia.
The stakeholders like coffee farmers, traders, exporters register on platform to make trade
transactions. The coffee farmers register credentials like place where coffee is grown, details
of crop, elevation etc. A block is created for each lot farmer sells. The credentials of the lot
are stored on the blockchain throughout its journey and is immutable.
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/ Agricultural Credit
$ The distribution of credit is highly skewed. It is seen that the distribution of agricultural credit is low in North
Eastern, Hilly and Eastern States. The share of North Eastern States has been less than one per cent in total
agricultural credit disbursement.
$ The small and marginal holdings constitute majority (more than 85 per cent) of total operational holdings in
the eastern region, north-eastern region and central region, which warrants greater distribution of agricultural
credit disbursement to this region.
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> Characteristics of small ruminant and its importance for income generation:
6 Small ruminants have higher survival rates under drought conditions compared to large ruminants.
6 Because of their higher reproductive rates and smaller reproductive cycle flock numbers can be restored
more rapidly.
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6 With regard to goats, water economy is also an important biological feature. Due to their short
reproductive cycles (short kidding interval) and high incidence of multiple births, there is potential for
a higher annual offtake of goats than seen with cattle & buffaloes. This allows farmers/producers a
quick interval of selling part of their flock and generating cash income.
6 Sheep/goats can also efficiently survive on available shrubs and trees in adverse harsh environment in
low fertility lands where no other crop or animals can survive except some rare exceptions like camel.
$ Fisheries Sectors
! India is the second largest fish producer in the world with a total production of 13.7 million metric
tonnes in 2018-19 of which 65 per cent was from inland sector.
! The sector has been showing a steady growth in the total gross value added and accounts for 5.23 per
cent share of agricultural GDP. Fish and fish product exports emerged as the largest group in agricultural
exports in 2018-19.
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> Transferring management of fisheries in manmade reservoirs to the state fisheries departments for
scientific enhancement and efficient governance.
> Conserving and restoring ecosystem in natural wetlands.
> Bringing policies, law, and conservation programmes for development of fisheries in the Himalayan
and north-eastern states.
6 For aquaculture:
> Developing state and area-specific action plans.
> Redefining land use categories to include fisheries and aquaculture as components of agriculture.
> Developing separate programmes for small farmers.
> Simplifying requirements for registration and leasing of farms.
> Encouraging private sector in production of seed, feed and other aquaculture inputs.
> Developing the required regulatory frameworks.
6 Other policy measures:
> Making registration of all aquaculture inputs compulsory.
> Regulating exotic species.
> Improving disease surveillance.
> Diversifying species.
> Developing post-harvest and marketing infrastructure.
> Strengthening fisheries cooperatives.
> Challenges:
6 India’s food security challenges lie in the areas of low GDP per capita, sufficiency of supply, public
expenditure on R&D and protein quality.
6 India ranks No.1 in Nutritional standards. India’s overall Food Security Score is 50.1 out of 100 which
ranks India 76 out of 113 countries. This reflects the need for India to further improve the management
of food supply in various aspects.
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> Challenges:
6 According to an Evaluation Study on Minimum Support Price conducted by Development Monitoring
& Evaluation Office (DMEO), NITI Aayog (January 2016),:
> In majority of the sample states, farmers are unaware of the MSP announcement before the sowing
season. In Eastern India, in States such as Assam, West Bengal, the poor impact of the scheme could
be judged from the fact that none of the selected farmers were even aware of the existence of such
a scheme.
> In certain cases, though aware of the MSP, the absence of procurement centres in the villages,
transportation costs, reluctance of mill owners to buy small quantities from the farmers remain
stumbling blocks.
$ Food Subsidy
! Food subsidy comprises of two main components:
6 The first component includes subsidy provided to the Food Corporation of India (FCI) for procurement
and distribution of wheat and rice under the National Food Security Act (NFSA), 2013 and other
welfare schemes and for maintaining the buffer stock of food grains as a measure of food security.
6 The second component comprises subsidy provided to States undertaking decentralized
procurement.
6 The acquisition and distribution costs of procuring food grains for the central pool constitute the
economic cost. The difference between the per quintal economic cost and the per quintal Central Issue
Price (CIP) gives the quantum of per quintal consumer subsidy.
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Practice Question
$ What are the key factors in bringing resource efficiency in smallholders agriculture?
Also suggest some policy changes required to bring resource efficiency.
$ The Government has set a target of doubling of farmers’ income by the year 2022.
By listing major government initiatives, discuss the action plan to make the goal
achievable.
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CHAPTER: 8
INDUSTRY
& INFRASTRUCTURE
Important terms
$ Gross Value Added (GVA): Gross value added (GVA) is an economic productivity metric that measures the
contribution of a corporate subsidiary, company or municipality to an economy, producer, sector or region.
Gross value added provides a dollar value for the amount of goods and services that have been produced
in a country, minus the cost of all inputs and raw materials that are directly attributable to that production.
GVA thus adjusts gross domestic product (GDP) by the impact of subsidies and taxes (tariffs) on products.
$ Index of Industrial Production (IIP) : IIP is an index that shows the performance of different industrial
sectors of the Indian economy. The IIP is estimated and published on a monthly basis by the Central
Statistical Organization (CSO). As an all India index, it gives general level of industrial activity in the economy.
The IIP assigns a weight of 77.63 percent to manufacturing sector, 14.37 per cent to mining sector and 7.99
per cent to electricity sector.
/ Industry
$ Current Scenario of Industries in India
• The industrial sector performance during 2018-19 has improved as compared to 2017-18. As per the
provisional estimates of the Annual National Income 2018-19 released by Central Statistics Office
(CSO)
• The growth of industry real Gross Value Added (GVA) was higher at 6.9 per cent in 2018-19 as
compared to 5.9 per cent in 2017-18.
• Construction and manufacturing sectors have experienced 8.7 per cent and 6.9 per cent growth
rate respectively during 2018-19. The mining and quarrying sector has experienced sluggish growth
in 2018-19 as compared to 2017-18.
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> India is the second largest producer of crude steel in the world surpassing Japan with a global
share of 6 percent. India is the third largest consumer of the finished steel after China and
USA.
6 Problems faced by steel industry
> Pursuant to the imposition of trade restrictive measures by USA, European Union and Canada,
India’s exports have declined.
> The total export with highest volume of 9.62 million tonnes during 2017-18 fell to 6.36 million
tonnes during 2018-19.
> On the other hand, imports have gone up India remained an importer of finished steel at 7.84
million tonnes during 2018-19 as against 7.48 million tonnes during 2017-18.
6 Steps taken by government to improve this sector
> The National Steel Policy, 2017 gives broad policy directives to the industry for encouraging long-
term growth for Indian steel on both supply and demand fronts.
Growth in production of Eight Core Industries (in per cent)
Sector Weight 2016-17 2017-18 2018-19 (P)
Coal 10.3335 3.2 2.6 7.4
Crude oil 8.9833 -2.5 -0.9 -4.1
Natural Gas 6.8768 -1.0 2.9 0.8
Refinery Products 28.0376 4.9 4.6 3.1
Fertilizers 2.6276 0.2 0.03 0.3
Steel 17.9166 10.7 5.6 4.7
Cement 5.3720 -1.2 6.3 13.3
Electricity 19.8530 5.8 5.3 5.2
Overall Index 100.00 4.8 4.3 4.3
Source: Office of the Economic Adviser, DPIIT; P : Provisional
Note: The industry-wise weights indicated above are individual industry weight derived from IIP and blown up
on pro rata basis to a combined weight of Index of Core Industries equal to 100.
$ MSME
! The Micro, Small and Medium Enterprises (MSME) sector in India plays a crucial role by providing large
employment opportunities, industrialization of rural areas, reducing regional imbalances, etc. Government
is committed to supporting this important sector with better credit flow, technology upgradation, ease of
doing business and market access.
! Steps taken by Government to boost growth of MSME :
6 Government made various key announcements for faster growth of this sector and for promoting ease
of doing business that included ‘in-principle approval’ for loans up to Rs. 1 crore within 59 minutes
through online portal.
6 Interest subvention of 2 per cent for all GST registered MSMEs on incremental credit up to Rs. 1 crore
is also being provided and will be in operation for a period of two financial years 2018-19 and 2019-20
with an allocation of Rs. 975 crore.
6 The term loan or working capital extended by Scheduled Commercial Banks and RBI Registered
Systemically Important Non-Banking Finance Companies and Regional Rural Banks will be covered
under the Scheme.
6 The Government has undertaken a number of schemes/programmes like the Prime Minister’s
Employment Generation Programme, Credit Guarantee Trust Fund for Micro and Small Enterprises,
Credit Linked Capital Subsidy Scheme for Technology Up-gradation, Scheme of Fund for Regeneration
of Traditional Industries, and Micro and Small Enterprises- Cluster Development Programme for the
establishment of new enterprises and development of existing ones.
/ Infrastructure
$ Current Scenario of Indian Infrastructure Sector:
! SDG goal number 9 aims to “Develop quality, reliable, sustainable and resilient infrastructure,
including regional and trans-border infrastructure, to support economic development and human
well-being, with a focus on affordable and equitable access for all”.
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! India needs to spend 7-8 per cent of its GDP on infrastructure annually, which translates into annual
infrastructure investment of US$200 billion currently.
! However, India has been able to spend only about US$100-110 billion annually on infrastructure, leaving
a deficit of around US$90 Billion per annum.
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6 In 2018-19, Indian Railways carried 1221.39 million tonnes of revenue earning freight an increase of
5.33 per cent.
6 The category-wise break-up of consequential train accidents shows that the incident of train collisions
has come down to zero in the year 2018-19. The incidents of derailment have decreased from 78 in
2016-17 to 46.
6 IR has initiated a major electrification program for electrifying 100 per cent of its Broad Gauge
network.
6 IR has also made sincere efforts in the area of energy and water conservation and there is an increasing
competition among stations to obtain “Green Rating”.
! Civil Aviation
6 India’s scheduled domestic air transportation for passengers and goods has grown by 14 per cent and
12 per cent respectively in 2018-19.
6 Domestic passenger traffic in revenue passenger kilometre (RPK) recorded the fastest growth
in the world at about 20 per cent for over 50 consecutive months up to December 2018, which has
positively impacted India’s economy.
6 Total domestic and international passengers were 204 million in 2018-19. To meet the surging
demand and providing air connectivity to remote regions, new Greenfield airports are being rapidly
developed.
6 At the end of 2018-19, a total of 107 airports provided scheduled airline operations. Under “Ude
Deshka Aam Naagrik - UDAN”, a total of 719 routes have been awarded in three rounds of bidding
for regional connectivity, 182 of which are operational.
6 Impressive double-digit domestic air cargo growth of 12.1 per cent in 2018-19 over 2017-18 was
achieved and air cargo handled reached 3.6 MMT.
6 In conformance with the objectives of the holistic National Civil Aviation Policy, 2016, a number of
initiatives and measures were taken up.
6 The first National Air Cargo Policy’s outline was released at the Global Aviation Summit in January
2019.
! Shipping
6 As on January 31, 2019, India had a fleet strength of 1405 ships with dead weight tonnage (DWT) of
19.22 million (12.74 million GT) including Indian controlled tonnage, with Shipping Corporation
of India (SCI) having the largest share of around 30.52 per cent.
! Ports
6 Port sector development is very crucial for the development of any economy. Ports handle around 90
per cent of EXIM Cargo by volume and 70 per cent by value.
6 In order to meet the ever increasing trade requirements, expansion of Port Capacity has been accorded
the highest priority with implementation of well-conceived infrastructure development projects like
Sagarmala, Project Unnati etc.
6 Ministry of Shipping had identified various parameters for reducing dwell time and transaction costs
in the major ports. These include elimination of manual forms, accommodation for laboratories to
Participating Government Agencies, Direct Port Delivery, Installation of Container Scanners, E-delivery
orders, Radio Frequency Identification based Gate-automation System, etc.
! Inland Waterways
6 India’s first inland waterway multi-modal terminal (MMT) was inaugurated at Varanasi. The main
focus of MMT is to promote inland waterways as it is cheap and environment friendly.
6 To enhance the access and establish alternative connectivity to the North-East through Indo- Bangladesh
Protocol route, dredging works between Ashuganj and Zakiganj and Sirajganj and Daikhawa in
Bangladesh through 80:20 sharing (80 per cent by India and 20 per cent by Bangladesh) have been
awarded. It will help to improve cross border waterways connectivity.
! Telecom Sector
6 From a low of 93.30 crore in 2013- 2014, total telephone connections in India touched 118.34 crore in
2018-19, registering a growth of 26.84 percent.
6 The wire-less telephony now constitutes 98.17 per cent of all subscriptions whereas share of landline
telephones now stands at only 1.83 percent.
6 The mobile industry supports about 6.5 percent of India’s GDP. Telecom industry contribution to GDP
is expected to reach 8.2 per cent by 2020.
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6 The wider mobile ecosystem also supported a total of 32 million jobs (directly and indirectly) and
made a substantial contribution to the funding of the public sector.
6 During 2018-19 FDI equity inflow touched US$2.67 billion more than double rise from the level of
US$1.3 billion witnessed in 2015-16.
Practice Question
$ “India’s Telecom sector has risen sharply with growth in customer base of about 27% and
contribution of about 6.5% in India’s GDP”. Discuss the proactive role played by government
in India’s telecom revolution.
$ “India’s scheduled domestic air transportation for passengers and goods has grown by 14
per cent and 12 per cent respectively along with domestic passenger traffic in revenue
passenger kilometre (RPK) recorded the fastest growth in the world at about 20 per cent
for over 50 consecutive months.” Discuss the different factors which contributed in rise of
India’s domestic aviation sector.
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CHAPTER: 9
SERVICES SECTOR
/ Introduction
$ Services sector (excluding construction) has a share of 54.3 per cent in India’s GVA and contributed more
than half of GVA growth in 2018-19.
$ The services sector growth declined marginally to 7.5 per cent in 2018-19 from 8.1 per cent in 2017-18.
! Accelerated sub-sectors: Financial services, real estate and professional services.
! Decelerated sub-sectors: Hotels, transport, communication and broadcasting services.
$ Services share in employment is 34 per cent in 2017. India’s services sector does not generate jobs in
proportion to its share in GVA.
Services Sector Performance in India’s GVA
! State-Level Services Sector Performance: Services Sector Share in GSVA in2017-18 (percent)
> State with maximum service sector share in state GDP: Chandigarh (88%), Delhi (84%) Karnataka
(65%)
> State with least service sector share in state GDP: Gujarat (35.5%), MP (35.3%), Sikkim (30.3%)
! Trade in Services Sector
> Computer & ICT services, business services and travel services account for about 75 per cent of the
total services exports.
> The rising services trade surplus has helped finance nearly 50 per cent of India’s trade deficit as of
2017-18.
> According to the WTO data, India is among the world’s top 10 exporters and importers of commercial
services, ranking eighth in exports and tenth in imports in 2017.
! Steps taken by Government to boost Services Export
> In order to boost services exports, the Service Exports from India Scheme (SEIS) launched which
covers business services, education services, health services, tourism and travel related services,
transport services etc.
> Government has also created a dedicated fund of Rs. 5,000 crore for financing sectoral initiatives
under the Champion Services Sector Scheme.
> Under this scheme, various domestic policy reforms critical to enhance the competitiveness of
services exports, including on data privacy/security and e-commerce, would be pursued through
the Ministries concerned.
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CHAPTER: 10
SOCIAL INFRASTRUCTURE,
EMPLOYMENT
& HUMAN DEVELOPMENT
Important terms
Gender Budgeting:
$ The Ministry of Women and Child Development (MoWCD) as the Nodal agency has adopted the mission
strategy of ‘Budgeting for Gender Equity’ to ensure that government budgets are planned according
to the differential needs of women and men and accordingly prioritized. Gender Budgeting is concerned
with gender-sensitive formulation of legislation, policies, plans, programmes and schemes; allocation and
collection of resources; implementation and execution; monitoring, review, audit and impact assessment of
programmes and schemes; and follow-up corrective action to address gender disparities. It is undertaken
through several institutional mechanisms such as Gender Budget Statement, Gender Budget Cells, as well
as various schemes/programmes for women and girls.
$ In the Gender Budget Statement of 2019-20, 30 Ministries/Departments reported having schemes with women’s
component, amounting to approximately 5 percent (Rs. 1,31,699.52 Crore) of the total Union Budget.
/ Introduction
India is committed to achieve SDGs anda strong social infrastructure is a key to achieve them. The Government
has been focusing on provisioning of assets such as schools, institutes of higher learning, hospitals, access to
sanitation, water supply, road connectivity, affordable housing, skills and livelihood opportunities. This gains
significance given the fact that India is home to the world’s youngest population as half of its population is below
the age of 25. It has also been estimated that demographic advantage in India is available for five decades from
2005-06 to 2055-56, longer than any other country in the world (UNFPA, 2018). This demographic advantage can
be reaped only if education, skilling and employment opportunities are provided to the young population.
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$ SDGs Targets and Achievements in Health - Goal 3: Good Health & Well-Being
1 By 2030, reduce the global MMR to less India’s MMR during 2014-16 was 130.
than 70 per 100,000 live births.
1 By 2030, ensure that all girls and boys U-DISE provisional data shows that the
complete free, equitable and quality all India gross enrolment ratio (GER)
primary and secondary education under elementary education is 93.55 per
leading to relevant and effective learning cent during 2016-17, while it is 79.35 per
outcomes. cent in secondary education.
2 By 2030, ensure equal access for all India’s GER is significantly lower in higher
women and men to affordable and education. The MHRD provisional data
quality technical, vocational and tertiary for the year 2017-18 indicates that the
education, including higher education. GER in higher education is 25.8 per cent
(18-23 years).
3 By 2030, eliminate gender disparities in India’s gender parity index (GPI) shows
education and ensure equal access to an improvement in girls’ education at
all levels of education and vocational all levels of education, except higher
training for the vulnerable, including education. In the case of Scheduled
persons with disabilities, indigenous Tribe (ST) students, the GPI value is<1
peoples and children in vulnerable indicating disparity between girls and
situations. boys in primary education.
4 By 2030, ensure that all youth and a The total literacy rate is 73.0 per cent
substantial proportion of adults, both in 2011 for the age group 7 and above
men and women, achieve literacy and having 80.9 per cent and 64.6 per cent
numeracy. for male and female respectively.
/ Gender Issues
$ As the World aspires to achieve the SDGs by 2030, one of the most important factors which will determine
whether countries achieve their targets set under SDGs will be ‘gender equality’ (SDG-5).
$ The Government of India has initiated several programmes like Beti Bachao, Beti Padhao (BBBP), Ujjwala
Scheme, Poshan Abhiyaan, Pradhan Mantri Matra Vandana Yojana etc., to mainstream women and make
women active agents of change in the society.
$ As far as financial inclusion in India is concerned, significant progress has been made during the last decade.
At all India level, the proportion of women having a bank or saving account that they themselves use have
increased from 15.5 percent in 2005-06 to 53 percent in 2015-16.
$ As per NFHS-4, participation of currently married women in household decision-making has increased from
76.5 percent in 2005-06 to 84 percent in 2015-16 at all India level. States like Chhattisgarh, Goa, Himachal
Pradesh, Kerala, West Bengal and North Eastern States are front runners in terms of women’s participation in
household decision making compared to other States.
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(Rs. in crore)
As percentage to GDP
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$ Social services include, education, sports, art and culture; medical and public health, family welfare; water
supply and sanitation; housing; urban development; welfare of SCs, STs and OBCs, labour and labour welfare;
social security and welfare, nutrition, relief on account of natural calamities etc.
$ Expenditure on ‘Health’ includes expenditure on ‘Medical and Public Health’, ‘Family Welfare’ and ‘Water
Supply and Sanitation’.
$ Expenditure on ‘Education’ pertains to expenditure on ‘Education, Sports, Arts and Culture’.
$ The ratios to GDP at current market prices are based on 2011-12 bases.
Atal Pension Yojana, Pension scheme targeted at In 2017-18, total subscribers enrolled
2015 the Unorganized sector. were 97.05 lakh
Pradhan Mantri Fasal A Crop Insurance Scheme. Kharif 2017: 13.7 million farmers
Bima Yojana, 2016 Replaces the existing two received compensation of Rs.
schemes National Agricultural 17209.94 crore.
Insurance Scheme as well as
the Modified NAIS.
Atal Bimit Vyakti Kaly- For Insured Persons (IP) To benefit 3 crore insured persons
an Yojana, 2018 covered under the Employees’ under ESIC coverage
State Insurance Act, 1948.
Relief payable in cash in
case of unemployment and
while they search for new
engagement.
PM Shram-Yogi Offers every individual with As on 20th June, 2019 30.67 lakh
Mandhan Yojana, a regular pension after they subscribers
2019 attain 60 years. Beneficiaries in
unorganized sector workers.
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PM-KISAN, 2019 Offers income support of As on 23rd April, 2019, around 3.10
Rs. 6000 per annum in three crore small farmers have received the
equal instalments to all first tranche of Rs. 2,000 and 2.10 crore
eligible farmers irrespective of farmers have got the second
land holdings. instalment.
Ayushman Bharat, Umbrella scheme of two major As on 11th January, 2019, 4503HWCs
2018 health initiatives: operationalized.
(i) Health & Wellness Centres PMJAY: as on 30th Dec, 2018, no.
to provide to comprehensive of hospitals empaneled: 16,112,
primary health care. beneficiaries admitted: 6.81 lakh,
(ii) PMJAY aims to cover 10.74 e-cards issued: 39.48 lakh.
crore poor & vulnerable
families providing health
coverage upto Rs. 5 lakh per
family per year for secondary
& tertiary hospitalization.
Mission Indra- To vaccinate unreached/ As of 12th April, 2019, 3.39 crore children
dhanush (MI) and partially reached pregnant immunized of which 81.79 lakh fully
Intensified Mission women and children so as to immunized. Under IMI, full
Indradhanush (IMI) reduce vaccine preventable immunization coverage in 190
under-5 mortality rate. districts increased from 50.5
The drive is focused on percent to 69 percent as per Coverage
pockets of low immunization Evaluation Survey, 2018 conducted
average and hard to reach by WHO and UNDP.
areas where proportion of
unvaccinated and partially
vaccinated children and
pregnant women is high.
Pradhan Mantri Awas Housing for All by 2022 PMAY - Urban: 80.96 lakh houses
Yojana-Rural & Urban sanctioned and 25.69 lakh houses
completed as on 27th May, 2019.
90lakh houses completed in PMAY
Gramin during 2017-19.
Swachh Bharat 100 per cent open defecation Urban areas of 21 States/UTs
Mission-Urban +Rural free by 2019 declared ODF 5.33 lakh villages in 25
States/UTs declared ODF.
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$ GER (per cent), Drop-out Rate (per cent) and Pupil Teacher Ratio at levels of
Schooling
/ Skill Development
According to NSSO Report 2011-12, only 2.3 percent of the total workforce in India had formal sector skill training.
Keeping in view the predominance of young population, the Government had formulated the National Policy on
Skill Development & Entrepreneurship, 2015 under which the Skill India Mission by 2022 was formulated.
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To promote apprenticeship.
National Appren- Till June 2019, 11.87 lakhs candidate
Consists of Basic Training and
ticeship Promotion registered. 76,860 establishments
On-the-Job Training/Practical
Scheme,2016 registered under the scheme.
Training at workplace.
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/ Employment Scenario
$ The Periodic Labour Force Survey (PLFS) has been designed to yield annual estimates of the labour force
on employment and unemployment along with quarterly estimates for the urban areas.
$ The first annual PLFS (2017-18) provides quarterly employment statistics for urban areas on Current Weekly
Status (CWS) basis and annual estimates of employment indicators both in rural and urban areas on CWS
and usual status basis.
$ As per PLFS estimates, Labour Force Participation Rate (LFPR) in India has declined to 36.9 per cent in
2017-18 from 39.5 per cent in 2011-12 (NSSO) as per usual status. In rural areas, it has declined by 3.6
percentage points while it has declined by 0.1 percentage points in urban areas.
$ The Worker Population Ratio (WPR) has also shown similar trend. As per usual status, WPR in India has
declined to 34.7 per cent in 2017- 18 from 38.6 per cent in 2011-12 (NSSO). The WPR has declined by 4.9
percentage points in rural areas while it has declined by 1.6 percentage points in urban areas.
$ The unemployment rate (UR) in India stood at 6.1 percent with 5.3 percent in rural areas and 7.8
percent in urban areas as per usual status. As per CWS, the UR was 8.9 percent with 8.5 percent in rural areas
and 9.6 per cent in urban areas.
$ General education of youth has improved to 65.4 per cent for urban females and 65.8 per cent for urban
males. However, 94.3 per cent of those aged 15 or over in urban areas do not have technical education. The
proportion of urban youth who received formal vocational training has improved to 4.4 per cent in 2017-18.
$ PLFS found on average, a male employee earned nearly 1.2-1.3 times the earnings of female regular salaried
worker in 2018. However, self-employed male workers earned 2 times more than the earnings of self-employed
female workers in urban areas in 2018.
$ The net employment generation in the formal sector was higher at 8.15 lakh in March 2019 against 4.87 lakh
in February, 2018. The trend line reflects a positive trend in terms of employment in the formal sector.
/ Status of Health
$ Maternal Health
! Maternal Mortality Ratio (MMR) of India has declined by 37 points from 167 per lakh live births in 2011-
13 to 130 per lakh live births in 2014-16, in a span of three years. Between 1990 and 2015, MMR in India
has declined by 77 percent as compared to 44 percent decline in global average.
$ Child Health
! As per the latest Sample Registration System, 2016 report, the:
6 Under Five Mortality Rate in India is 39 per 1000 live births,
6 Infant Mortality Rate is 34 per 1000 live births, and
6 Neonatal Mortality Rate is 24 per 1000 live births.
! The U5MR has declined at a faster pace in the period 2008-2016, registering a compound annual decline
of 6.7 per cent per year, compared to 3.3 percent compound annual decline observed over 1990-2007.
/ Expenditure on Health
$ As per the National Health Accounts Estimates during 2013-14 to 2015-16, there is an encouraging trend
of decreasing Out of Pocket Expenditure (OOPE) and an increase in public health expenditure out of Total
Health Expenditure (THE).
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$ Public health expenditure (Centre, States and Local Bodies), as a percentage of Total Health Expenditure (THE)
increased from 22.5 percent in 2004-05 to 30.6 percent in 2015-16.
$ Affordability is a key issue in healthcare. In terms of the costs to the Government and for the individuals who
seek healthcare in a country like India, the potential of AYUSH (Ayurveda, Yoga or Naturopathy Unani,
Siddha and Homoeopathy) in reducing health expenses is immense. This aspect has been rightly recognised
by the National Ayush Mission (NAM).
$ ‘JANANI’ scheme of Government of Kerala is an exemplar which has popularised the system of homeopathy
treatment for infertility in public health facilities6. In July to December 2012, the launch year of the pilot
project JANANI, the number of cases at Kannur district was less than 100. However, over time there has
been exponential growth in the number of infertility cases being registered and treated at Kannur District
Homeopathy Hospital.
/ Rural Development
$ Rural Connectivity:
! The Pradhan Mantri Gram Sadak Yojana launched in 2000 aims to provide funds to States to construct rural
roads to connect villages by all-weather roads. Since 2014, around 190,000 km of rural roads has been
constructed.
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! PMGSY is aggressively encouraging use of “Green Technologies” and non-conventional materials like
waste plastic, cold mix, geo-textiles, fly-ash, iron and copper slag etc. in rural roads. This is to reduce the
“Carbon Footprint” of rural roads, reduce environmental pollution, increase the working season and bring
cost effectiveness. Using “Green Technologies”, 28,619 km of roads have been constructed and a record
road length of 14,756 km was constructed in 2018-19.
! 62 million tonnes of solid waste is generated daily in India and 8 per cent of this is plastic waste. Recycling
is the best way to manage plastic waste. PMGSY is recycling waste plastics in a novel way by constructing
roads out of recycled plastics. 12,666.52 kms of roads have been constructed across the country using
waste plastic.
Practice Question
$ The role of women is critical not only across agriculture and industrial sectors but also in
governance, education and health services. In this regard, analyze the various steps taken by
the Government of India to mainstream women and make women active agents of change
in the society.
$ The schooling system improves the educational level of the population. It is skill training
that equips the youth to enter the labour market and improves their employability. But
there is disconnect in the skilling ecosystem. Suggest measures to bridge this disconnect.
$ Discuss on how Pradhan Mantri Gram Sadak Yojana has contributed in the rural connectivity
and in managing plastic waste.
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