Current Affairs Questions on The Economy Survey 2018-19

The Government has projected the real GDP growth for the year 2019-20 at 7 percent, on the back of the anticipated pickup in the growth of investment and acceleration in the growth of consumption.

The Union Minister for Finance and Corporate Affairs, Smt Nirmala Sitharaman tabled the Economic Survey 2018-19 in Parliament today (04th July 2019), which clearly stated that the year 2019-20 has delivered a huge political mandate for the government, which augurs well for the prospects of
high economic growth.

Report projecting a decline in growth of world output and that of Emerging Market and Developing Economies (EMDEs) by 0.3 and 0.1 percentage points respectively.

India continues to remain the fastest growing major economy in the world in 2018- 19, despite a slight moderation in its GDP growth from 7.2 percent in 2017-18 to 6.8 percent in 2018-19.

The world output growth declined from 3.8 percent in 2017 to 3.6 percent in 2018.

India’s growth of real GDP has been high with average growth of 7.5 per cent in the last 5 years (2014-15 onwards). The Indian economy grew at 6.8 per cent in 2018-19, thereby experiencing some moderation in growth when compared to the previous year.

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 (Indian basket).

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 (Indian basket). The trade deficit increased from US$ 162.1 billion in 2017-18 to US$ 184 billion 2018-19.

Merchandise imports reduced from 21.1 per cent to 10.4 per cent. Growth in service exports and imports in dollar terms declined to 5.5 per cent and 6.7 per cent respectively in 2018-19, from 18.8 per cent and 22.6 per cent respectively in 2017-18.

Rupee depreciated by 7.8 per cent vis-à-vis UD 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 end-March 2019 over end-March 2018.

Net Foreign Direct Investment (FDI) inflows grew by 14.2 per cent in 2018-19.

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.

Decline in investment rate and fixed investment rate since 2011-12, seems to have bottomed out with some early signs of recovery since 2017-18. Fixed investment growth picked up from 8.3 per cent in 2016-17 to 9.3 per cent in 2017-18 and further to 10.0 per cent in 2018-19. The decline in fixed investment until 2016-17 was mainly by the household sector, with fixed investment by public sector and private corporate sector remaining almost at same levels.

Gross Value Added (GVA) reflected a decline in economic activity, registering a growth of 6.6 percent in 2018-19, lower than 6.9 percent in 2017-18. Growth of net indirect taxes was 8.8 percent in 2018-19, lower than that of 2017-18 on account of loss of momentum of economic activity.

Service sector is the most dynamic sector in the economy and has remained the key driver of economic growth along with being a major contributor to GVA and export basket of the Indian Economy. Service exports has become one of the mainstay of India’s total exports increasing manifold, from Rs. 0.746 lakh crore in 2000-01 to Rs. 14.389 lakh crore in 2018-19, raising its share in total exports from 26.8 per cent to 38.4 per cent. Share of India in world service exports has also increased from 2 per cent in 2005 to 3.5 per cent in 2017. This share is much higher than that of manufacturing exports which stands at 1.8 per cent in 2017.

Real growth in ‘Agriculture & allied’ sector was lower in 2018-19 at 2.9 percent, after two years of good agriculture growth. As per the 3rd Advance Estimates released by Ministry of Agriculture & Farmers Welfare, the total production of foodgrains during 2018-19 is estimated at 283.4 million tones in 2017-18 (final estimate). There was a significant decline in food prices in 2018-19 as indicated by nearly zero per cent consumer food price inflation in 2018-19 with price contraction straight for five months in the year.

The ‘Financial, real estate and professional services’ sector grew at 7.4 percent in 2018-19, higher as compared to 6.2 percent in 2017-18. This sector amounts for more than 20 percent of overall GVA of the economy.

The Economic Survey 2019 has proposed a change in the Beti Bachao Beti Padhao (BBBP) scheme. The campaign, to be labelled BADLAV (Beti Aapki Dhan Lakshmi Aur Vijay Lakshmi), will be used to represent the change towards gender equality. BBBP is a government scheme launched to end female foeticide, infanticide and help promote the education of the girl child. It was launched in 2015.

The growth in manufacturing sector picked up in 2018-19, although the momentum slowed down towards the end of the financial year with a growth of 3.1 percent in fourth quarter of the year, as compared to 12.1 per cent, 6.9 percent and 6.4 percent in first, second and third quarter respectively. The growth rate in Q4 of 2018-19 moderated considerably, on account of lower NBFC lending, which in part led to sales in the auto sector.