Context-The Survey 2020 focuses on the theme of integrating old with new through Trust in the economy; promoting pro-business policies and creating wealth and job opportunities. The Survey projects India's GDP growth at 6-6.5 percent in 2020-21. The Survey 2020 throws light on new ideas to boost growth and accelerate wealth creation.

India’s Overall Economic Performance in 2019-20: GDP, Inflation, Fiscal Developments, GST

• India witnessed a GDP growth of 4.8% in the first half of 2019-20 amidst weakened global trade and demand
• Growth of Agriculture and allied activities & Public administration, defence, and other services’ was higher in the first half of 2019-20 in comparison to second half 2018-19.
• Current Account Deficit (CAD) contracted to 1.5% of GDP in H1 of 2019-20
• Remarkable Foreign Direct Investment (FDI) and increase of foreign exchange reserves
• Headline inflation mounted from 3.3% in the first half of 2019-20 to 7.35% in December 2019-20 due to food inflation rise
• Survey predicts 5% GDP growth for 2019-20 overall based on CSO’s first Advance Estimates
• Revenue Receipts registered higher growth in H1 of 2019-20
• Gross GST monthly collections crossed Rs 1 lakh crore for five times in 2019-20 till December 2019

GDP Growth in 2020-21: Economic Survey 2019-20 projects the GDP Growth of 6% - 6.5% in fiscal 2020-21.

Wealth Creation: Invisible Hand Supported by Hand of Trust

The Economic Survey talks about the need to bring openness in the market for the creation of wealth through increased investment. In light of this, the survey points towards an Invisible Hand that is supported by the Hand of Trust. It presents an amalgamation of old and new; old in terms of ancient Indian tradition and new suggests the use of FinTech in Indian Public Sector Banks. It calls for strengthening this invisible hand through:

• Equal opportunities for new entrants
• Fair competition & ease doing business
• Trade for job creation
• Scaling up of the banking sector
• Introduction of the idea of trust as a public good

Entrepreneurship and Wealth Creation

The Survey calls for the creation of wealth through:

• Entrepreneurship of the working class
• Pro-business policies to test the power of competitive markets
• Elimination of policies that weaken the markets
• Integration of Assemble in India into Make in India
• Scaling up of the banking sector
• Privatization to foster efficiency

Pro-business versus Pro-markets

• The Economic Survey says that India needs more of pro-business policies and break away from pro-crony policies to become a USD 5 trillion economy. The Survey says that till 2011, several Pro-Crony policies were followed such as preferential allocation of natural resources. These pro-crony policies majorly led to willful defaults which drained off the banks.

Undermining Markets: Is Government Intervention required?

The Survey suggests restricted government intervention in the markets. It lists out several instances where the intervention of Government has adversely affected the market such as imposing stock limits under Essential Commodities Act (ECA), 1955 that led to increase in onion prices in 2019; regulation of drug prices under ECA; intervention in the food grain market and so on. The government must analyse and then decide whether its intervention is even required in a particular market. This will directly benefit by encouraging investments and economic growth.

Creation of Jobs and Growth

•  The Economic Survey calls for the integration of “Assemble in India” with “Make in India” to create more jobs and accelerate growth. The survey seeks to:
• Increase export market share to 3.5% by 2025 and 6% by 2030
• Creation of over 4 crore rewarding jobs by 2025 and over 8 crore jobs by 2030
• This can be achieved by adopting China-like policies such as export of goods majorly to rich markets.

Targeting Ease of Doing Business

• India was ranked at 63rd position in World Bank’s Doing Business 2019 rankings, a jump of 79 positions from 142^nd rank in 2014. However, the economy is still trailing in several parameters such as Ease of Starting Business, Paying Taxes, Registering Property and Enforcing Contracts.
• The Economic Survey calls for close coordination between the Logistics Divisions of Union Ministry of Commerce and Industry, Union Ministry of Shipping, Central Board of Indirect Taxes and Customs and the port authorities. There are some sectors that require a more focused approach such as the tourism sector, manufacturing sector and others.

Golden jubilee of Bank Nationalisation

The year 2019 marked the golden jubilee year of Bank Nationalisation. The Survey points out that the growth of Indian Banking Sector has not been proportionate with the overall growth of the economy. So far, only one Indian bank has made it to the list of Global Top 100 Banks. In 2019, a Rupee investment in public sector banks (PSBs) led to a loss of 23 paise on an average. The Survey calls for making PSBs more efficient through:

• Employee Stock Ownership Plan (ESOP) for employees of banks
• Creation of an entity similar to that of GSTN to aggregate data from all PSBs and ensure better monitoring of borrowers through artificial intelligence and machine learning

Privatisation and Wealth Creation

• The Economic Survey 2020 calls for privatization to boost job and wealth creation. It examines the before and after the performance of over 10 CPSEs that underwent strategic disinvestment. The Strategic disinvestment in BPCL has led to an increase of over Rs. 30,000 crore wealth in India. Collectively, the net profit, net worth, return on assets (ROA) & equity (ROE) have improved notably. The more aggressive disinvestment is suggested for higher profitability.

Thalinomics: Economics of Plate of Food in India

• This year, the Survey throws a light upon the price paid by a person for a Thali in India anywhere. The prices of a vegetarian Thali have declined sharply since 2015-16; however, this price increased in 2019-20. During 2006 – 2020, the affordability of Indian vegetarian Thalis improved by 29% and affordability of non-vegetarian Indian Thali improved by 18%. 

Monetary Policy & Financial Intermediation

• RBI’s Monetary policy stance remained “accommodative” in 2019-20
• The Repo rate was cut by 110 basis points in 2019-20 due to slower growth & lower inflation.
• Non Performing Advances (NPA) ratio remained unchanged for Commercial banks at 9.3% during March-September 2019
• Credit growth declined of banks & NBFCs declined.

Prices and Inflation

• CPI inflation increased to 4.1% in 2019-20 from 3.7% in 2018-19
• WPI inflation declined to 1.5% in 2019-20 from 4.7% in 2018-19
• The major drivers of CPI inflation in 2019-20 were food and beverages, particularly vegetables and pulses

Sustainable Development and Climate Change

• The Survey acknowledges that India is rightly moving forward on the path of Sustainable Development Goals (SDG) implementation. The states like Himachal Pradesh, Chandigarh, Kerala, and Tamil Nadu came out as front runners in SDG India Index 2019.
• Apart from this, India hosted COP-14 of UNCCD which resulted in the adoption of “Delhi Declaration”
• India strongly committed itself to implement the Paris Agreement at COP-25 of UNFCCC at Madrid, Spain.
• Indian Forest and tree cover increased to 80.73 million hectare
• One of the major concerns is still burning of agricultural residues that lead to high pollution levels and deteriorates air quality.
• International Solar Alliance (ISA)

Agriculture and Food Management

• The Economic Survey states that the largest proportion of the Indian population depends on agriculture for job opportunities. However, the share of agriculture and allied sectors in Gross Value Added (GVA) of India is continuously declining due to higher growth of non-agricultural sectors.
• The GVA at Basic Prices of ‘Agriculture, Forestry and Fishing’ sector expected to grow by 2.8% for 2019-20.
• Livestock sector has grown at 7.9% CAGR in the last five years. The income from Livestock has become a secondary source of income for rural families.
• The Survey stresses on the sustainability of food security by addressing the growing food subsidy bill and revising the rates and coverage under NFSA.

Industry and Infrastructure

• The industrial sector has registered a 0.6% growth in 2019-20 and 5% in 2018-19
• Fertilizer sector showcased a growth of 4% in 2019-20
• Steel sector registered a growth of 5.2% in 2019-20
• Over 119 crore telephone connections were provided until September 2019
• Report on National Infrastructure Pipeline projects total investment of Rs 102 lakh crore on infrastructure from 2020 to 2025 in India
• Industrial growth is estimated at 2.5% of fiscal 2019-20.

Employment, Social Infrastructure and Human Development

• The Government’s expenditure on social services such as health & education as a proportion of GDP increased to 7.7% in 2019-20.
• India improved its position in the Human Development Index by fetching 129^th rank in 2018 from 130^th in 2017.
• Total formal employment increased to 9.98% in 2017-18 from 8% in 2011-12.
• Gender disparity widened in the labour market due to a decrease in the female labour force.
• Citizens’ access to health services improved through Ayushman Bharat and Mission Indradhanush.
• Over 3.30 crore children & 87.18 lakh pregnant women have been vaccinated under Mission Indradhanush.
• In terms of houses, over 76% of households in rural and 96% in urban areas had pucca houses.

Check out Video for UPSC specific analysis of budget 2020 by MR. abhishek