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Economic Survey: India Ready for FDI in Green, Telecom Sectors

Foreign Direct Investment Confidence Index

The Survey said this strategy is being pursued through agreements such as the Australia-India Free Trade Agreement and the US-India Clean Energy Initiative…reports Asian Lite News

India has a well-established infrastructure to attract foreign direct investment (FDI) in sectors like greenfield projects such as renewables, digital services such as telecommunications, software and hardware, and consultancy services, the Economic Survey 2023-2024 said on Monday.

Over the medium term, India is focusing on integrating its value chain with that of the West, particularly in sectors like renewable energy and advanced technology, including AI, semiconductors, and next-generation telecommunications.

The Survey said this strategy is being pursued through agreements such as the Australia-India Free Trade Agreement and the US-India Clean Energy Initiative.

“As a result, the trading patterns within these sectors are starting to develop. For example, the tariff classifications for environmentally friendly technology, such as solar water heaters, waste recycling devices, and wind turbines, show an increase in exports to the USA from $199.2 million in FY20 to $326.9 million in FY24,” according to the Survey.

Further, leading American and European companies in the renewable energy sector, such as First Solar, Vesta, and Scatec, have established their operations in India to take advantage of the growing demand for green technologies.

India ranks second in the world in telecommunication, computer, and information services exports, sixth in personal, cultural and recreational services exports, eighth in other business services exports, 10th in transport services exports, and 14th in travel services exports.

Keeping in view India’s vision of becoming ‘Aatmanirbhar’, Production Linked Incentive (PLI) schemes for 14 key sectors were announced with an outlay of Rs 1.97 lakh crore to enhance India’s manufacturing capabilities and exports.

Over Rs 1.28 lakh crore of investment was reported until May 2024, which has led to production/sales of Rs 10.8 lakh crore and employment generation (direct & indirect) of over 8.5 lakh.

Exports were boosted by Rs 4 lakh crore, with significant contributions from sectors such as large-scale electronics manufacturing, pharmaceuticals, food processing, and telecom & networking products.

The Survey said that telecommunication is the gateway to the fast-paced growth of digital services in India.

The overall teledensity (number of telephones per 100 population) in India increased from 75.2 per cent in March 2014 to 85.7 per cent in March 2024.

The number of wireless telephone connections stood at 116.5 crore at the end of March 2024.

Currently, India is amongst the fastest-growing 5G networks in the world.

The Bharat 6G Alliance was launched in July last year as a collaborative platform of public and private companies, academia, research institutions and standards development organisations to enable India to become a leading global supplier of IP, products and solutions of affordable 5G, 6G and other future telecom solutions.

The total number of mobile towers in the country is 8.02 lakh as of June 2024 while the number of Base Transceiver Stations (BTSs) stood at 29.37 lakh and 5G BTSs were 4.5 lakh.

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India Advances on Climate Action: Economic Survey

The Survey showed that the country’s energy needs are expected to grow 2 to 2.5 times by 2047….reports Asian Lite News

Recognising its position as one of the most climate-vulnerable countries, India has made significant progress on environmental protection, according to the Economic Survey 2023-24, tabled in Parliament on Monday.

The document was tabled by Finance Minister Nirmala Sitharaman, a day ahead of the Union Budget presentation.

The Survey showed that the country’s energy needs are expected to grow 2 to 2.5 times by 2047.

The country has “successfully reduced the emission intensity vis-a-vis its Gross Domestic Product (GDP) by 33 per cent between 2005 and 2019, thus achieving the initial Nationally Determined Contributions (NDCs) target for 2030, 11 years ahead of scheduled time”.

The country has “also committed to increasing the share of non-fossil fuel-based electricity to 40 per cent and enhancing forest cover to absorb 2.5 to 3 billion tonnes of carbon dioxide by 2030”.

It showed that the country’s GDP grew with a Compound Annual Growth Rate (CAGR) of about seven per cent between 2005 and 2019. On the other hand, the emissions grew at a CAGR of about four per cent, that is, “the rate of emissions growth is lower than the rate of growth of our GDP”.

“This shows that India has successfully decoupled its economic growth from greenhouse gas emissions, reducing the emission intensity of its GDP,” the Survey said.

As per the Survey, India’s primary energy needs in 2022-23 were met with almost “84 per cent from coal, oil and natural gas combined”.

With the addition of renewables, “the share of non-fossil power capacity increased to 45.4 per cent as of May 2024 from around 32 per cent in April 2014”.

The Survey attributed these to recent initiatives such as PM-Surya Ghar Yojana, launched in February 2024, harnessing India’s 7,600 km long coastline for wind energy; and the Green Hydrogen Mission which targets five MMT of green hydrogen by 2030.

Meanwhile, India has also led several international initiatives towards climate change mitigation and building resilience. These include the International Solar Alliance (ISA), One World, One Sun, One Grid, The Coalition for Disaster Resilient Infrastructure, The Infrastructure for Resilient Island States, and the goal of Net Zero, the Leadership Group for Industry Transition.

To sustain its economic growth rate over a quarter century and do it sustainably, India needs to keep “the environment and climate in mind”, said the Survey.

It also called for “the integration of climate change strategies into national development policy and planning as not merely an environmental imperative but more, as it impacts socio-economic stability, public health, banking, and public finances.

The Economic Survey is prepared by the Economics Division of the Department of Economic Affairs of the Finance Ministry under the guidance of India’s Chief Economic Advisor (CEA).

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FM tables Economic Survey

The survey  prepared by the Economic Division of the Department of Economic Affairs gives insights into the state of the economy…reports Asian Lite News

Union Finance Minister Nirmala Sitharaman on Tuesday tabled the Economic Survey 2023-2024 in the Lok Sabha.

Earlier, Prime Minister Narendra Modi appealed to all parties to participate in the discussion in Parliament and to end bitterness for the betterment of the country.

“I would like to request all parliamentarians to participate in all discussions in the House, no matter how ideologically opposed they are. Opposite ideologies are not bad, but negative ideologies are. That is when the limit of thoughts comes to an end. The country does not need negativity,” Modi said.

Urging all MPs to have progressive ideologies, the Prime Minister said, “The country needs a progressive ideology that fuels development and takes the country to great heights.”

Asking people to rise above party lines and represent the voices of the countrymen in the Parliament, PM Modi said, “I would like to tell everyone that people have sent us here for the country and not for our respective parties. This Parliament is not for our parties but for the country. This Parliament is not just restricted to Parliamentarians but it is for 140 crore people.”

“I hope that we utilize the temple of democracy positively to fulfil the aspirations of ordinary citizens in India,” he added.

“I would like to ask all the parties to rise above party lines and dedicate themselves to the country and use this dignified platform of Parliament for the next 4.5 years. In the election year of January 2029, you can play any game, but till then we should participate for the empowerment of the farmers, youth and the country”, the Prime Minister said.

Prime Minister Modi said that it is a moment of pride for the government to present the inaugural budget for the third time after government formation after 60 years.

“It is a matter of pride that after 60 years, a government has come to power for the third time and will present the first Budget for the third time…I have been giving guarantees to the people of the country and our mission is to bring this to the ground. This Budget is important budget for Amrit Kaal. Today’s budget will decide the direction for the next 5 years of our term. This budget will also become a strong foundation of our dream of ‘Viksit Bharat’,” he said.

The Economic Survey document, prepared by the Economic Division of the Department of Economic Affairs in the Ministry of Finance and formulated under the supervision of the chief economic adviser, will give insights into the state of the economy and various indicators of 2023-24 (April-March) and some outlook for the current year.

The Economy Survey document may also give some idea about the tone and texture of the actual Budget for 2024-25, to be presented on Tuesday. The first economic survey reportedly came into existence in 1950-51, when it used to be a part of the budget documents. In the 1960s, it was separated from the Budget documents and presented the day before the Union Budget.

The most important feature that many will look out for is its central theme. In 2022, the central theme was ‘Agile Approach’, which emphasized on India’s economic response to the COVID-19 pandemic shock. In 2023, it was ‘recovery complete’, when the economy staged a broad-based recovery from pandemic-induced contraction, Russian-Ukraine conflict, and inflation, and ascended to the pre-pandemic growth path.

Typically, along with the sectoral chapters, the Survey document also adds new need-based chapters that need focus. All eyes will be on the major announcements made by the finance minister and the government’s forward-looking guidance about the overall economy.

With this upcoming budget presentation, Finance Minister Nirmala Sitharaman will surpass the record set by former Prime Minister Morarji Desai, who presented five annual budgets and one interim budget between 1959 and 1964 as finance minister. Sitharaman’s upcoming budget speech will be her seventh. (ANI)

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Eco Survey calls for reverse flipping’ of Indian startups

Govt goes bullish on startups with ESOP holiday, tax relief.

The Economic Survey noted that the flipping phenomenon “reflects startups venturing out for short-term gains in the dynamic, uncertain geopolitical world”…reports Asian Lite News

As external support from the government has made it relatively easier than before for entrepreneurship to thrive, there are several inherent challenges faced by startups, like ever-elusive funding, revenue generation struggles, lack of easy access to supportive infrastructure, or wading through the regulatory environment and tax structures, the Economic Survey for 2022-23 said on Tuesday.

As per the Survey, tabled in Parliament by Finance Minister Nirmala Sitharaman, it has also been observed that many Indian companies have been getting headquartered overseas, especially in destinations with favourable legal environments and taxation policies.

“The technical jargon for this may be identified as ‘Flipping’, which is the process of transferring the entire ownership of an Indian company to an overseas entity, accompanied by a transfer of all IP and all data hitherto owned by the Indian company,” the document read.

The Economic Survey noted that the flipping phenomenon “reflects startups venturing out for short-term gains in the dynamic, uncertain geopolitical world”.

“However, the flip can be reversed with the collective action by the government related regulatory bodies and other stakeholders. With solution-oriented strategies, startups will continue to be the messengers of India’s entrepreneurial dynamism,” it added.

To accelerate the process of “reverse dipping”, certain measures are possible like simplifying the process for grant of “Inter-Ministerial Board (IMB) certification” for startups, further simplification of taxation of Employee Stock Options (ESOPs), simplifying multiple layers of tax and uncertainty due to tax litigation and the procedures for capital flows.

The government and other stakeholders should also facilitate improved collaboration and partnerships with established private entities to develop best practices and state-of-the-art startup mentorship platforms, said the Survey.

In the current scenario, the Economic Survey for 2022-23 said that more than 9 lakh direct jobs have been created by the Department for Promotion of Industry and Internal Trade (DPIIT)-recognised startups, with a notable 64 per cent increase in 2022.

As per the Survey, the number of recognised startups in the country has increased from 452 in 2016 to 84,012 in 2022.

“About 48 per cent of our startups are from Tier II and III cities, a testimony of our grassroots’ tremendous potential,” read the Eco survey.

“India ranks among the largest startup ecosystems in the world. various targeted initiatives of the government have given a major boost to start-ups,” the document said.

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Economic Survey reveals India’s economic resilience

Despite the downward revision, the growth estimate for FY23 is higher than for almost all major economies..reports Asian Lite News

Despite strong global headwinds and tighter domestic monetary policy, if India is still expected to grow between 6.5 and 7.0 per cent, and that too without the advantage of a base effect, it is a reflection of India’s underlying economic resilience; of its ability to recoup, renew and re-energise the growth drivers of the economy, Economic Survey 2022-23 has noted.

Monetary tightening by the RBI, the widening of the Current Account Deficit (CAD), and the plateauing growth of exports have essentially been the outcome of geopolitical strife in Europe.

As these developments posed downside risks to the growth of the Indian economy in FY23, many agencies worldwide have been revising their growth forecast of the Indian economy downwards.

These forecasts, including the advance estimates released by the National Statistical Office (NSO), now broadly lie in the range of 6.5-7.0 per cent. Despite the downward revision, the growth estimate for FY23 is higher than for almost all major economies and even slightly above the average growth of the Indian economy in the decade leading up to the pandemic, the Survey said.

IMF estimates India to be one of the top two fast-growing significant economies in 2022. India’s economic resilience can be seen in the domestic stimulus to growth seamlessly replacing the external stimuli.

The growth of exports may have moderated in the second half of FY23. However, their surge in FY22 and the first half of FY23 induced a shift in the gears of the production processes from mild acceleration to cruise mode.

Manufacturing and investment activities consequently gained traction. By the time the growth of exports moderated, the rebound in domestic consumption had sufficiently matured to take forward the growth of India’s economy.

Private Consumption as a percentage of GDP stood at 58.4 per cent in Q2 of FY23, the highest among the second quarters of all the years since 2013-14, supported by a rebound in contact-intensive services such as trade, hotel and transport, which registered sequential growth of 16 per cent in real terms in Q2 of FY23 compared to the previous quarter.

Although domestic consumption rebounded in many economies, the rebound in India was impressive for its scale, the Survey said.

It contributed to a rise in domestic capacity utilisation. Domestic private consumption remains buoyant in November 2022, as indicated by Motilal Oswal’s Economic Activity Index. The index estimates that private consumption grew at a five-month high pace of 5.6 per cent YoY, driven by auto sales and broad-based expansion of services.

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Economic Survey: India’s growth inclusive with focus on job creation

Citing a UNDP report of July 2022, the survey stated that the recent inflationary episode in India would have a low poverty impact due to well-targeted support…reports Asian Lite News

The Economic Survey for 2022-23, which was laid in Parliament by Finance Minister Nirmala Sitharaman on Tuesday, has underlined that India’s growth has been inclusive as it has focussed on job creation.

India is the third-largest economy in the world in public-private partnership (PPP) terms and the fifth-largest in market exchange rates. “As expected of a nation of this size, the Indian economy in FY23 has nearly recouped what was lost, renewed what had paused, and re-energised what had slowed during the pandemic and since the conflict in Europe,” the survey noted.

“Both official and unofficial sources confirm that employment levels have risen in the current financial year, as the Periodic Labour Force Survey (PLFS) shows that the urban unemployment rate for people aged 15 years and above declined from 9.8 per cent in the quarter ending September 2021 to 7.2 per cent a year later (quarter ending September 2022). This is accompanied by an improvement in the labour force participation rate (LFPR) as well, confirming the emergence of the economy out of the pandemic-induced slowdown early in 2022-23,” the survey noted in its chapter on India’s inclusive growth.

In 2020-21, the Government had announced the emergency credit line guarantee scheme (ECLGS), which succeeded in shielding micro, small and medium enterprises from financial distress, the document said.

Citing a recent CIBIL report, the economic survey said that ECLGS has supported MSMEs in facing the Covid shock, with 83 per cent of the borrowers that availed of the ECLGS being micro-enterprises. Among these micro units, more than half had an overall exposure of less than Rs 10 lakh.

Furthermore, the CIBIL data also shows that ECLGS borrowers had lower non-performing asset rates than enterprises that were eligible for ECLGS but did not avail of it. Further, the GST paid by MSMEs after declining in 2020-21 has been rising since and now has crossed the pre-pandemic level of FY20, reflecting the financial resilience of small businesses and the effectiveness of the pre-emptive government intervention targeted towards MSMEs, the survey noted.

Moreover, MGNREGA has been rapidly creating more assets in respect of “Works on individual’s land” than in any other category. In addition, schemes like PM-KISAN, which benefits households covering half the rural population, and PM Garib Kalyan Anna Yojana have significantly contributed to lessening impoverishment in the country, it outlined.

Citing a UNDP report of July 2022, the survey stated that the recent inflationary episode in India would have a low poverty impact due to well-targeted support. In addition, the National Family Health Survey (NFHS) in India shows improved rural welfare indicators from 2015-16 to 2019-20, covering aspects like gender, fertility rate, household amenities, and women empowerment.

“So far, India has reinforced the country’s belief in its economic resilience as it has withstood the challenge of mitigating external imbalances caused by the Russia-Ukraine conflict without losing growth momentum in the process. India’s stock markets had a positive return in CY22, unfazed by withdrawals by foreign portfolio investors. India’s inflation rate did not creep too far above its tolerance range compared to several advanced nations and regions,” the survey said.

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Economic Survey showcases country’s development via satellite imagery

The images show that Kharif sowing cycle has shifted ahead by around two-to-three weeks causing the Kharif harvest to almost coincide with Rabi sowing in November…reports Asian Lite News

An important theme of this year’s Economic Survey is the use of new forms of data and information for tracking economic activity and development.

The Survey looks at the use of a new kind of data – geo-spatial data and cartographic techniques – to track, compare and represent longer term developments.

Geospatial maps not only lets users visualise the data, but also helps users to better understand trends, relationships and patterns. The use of maps is not entirely new and previous Economic Surveys have used them for years, but there is now a plethora of information from satellites, drones, mobile phones and other sources.

Using satellite images, India’s night-time luminosity is compared between 2012 and 2021. Night-time luminosity provides an interesting representation of the expansion of electricity supply, the geographical distribution of population and economic activity, urban expansion as well as growth of ribbon developments between urban hubs.

Similarly, using geospatial and cartographic techniques, the subsequent maps show the extent of physical as well as financial infrastructure development in India.

This includes expansion of national highways, airports, commercial bank branches, metros, etc. The maps depict change in net sown area of India over the last 15 years. The maps have been created by combining satellite data over the course of a 12-month period in each year.

The images compare the Kharif crop cycle in Moga district, Punjab, during 2005 and 2021. The images show that Kharif sowing cycle has shifted ahead by around two-to-three weeks causing the Kharif harvest to almost coincide with Rabi sowing in November.

The closing of the gap is a likely factor that encourages farmers to burn stubble and may be related to restrictions on early transplanting of Kharif paddy. These restrictions were introduced in 2009 in order to reduce pumping of ground-water, but may have had the unintended consequence of damaging air quality.

Satellite imagery is used to show annual water storage cycle at Stanley Reservoir, Tamil Nadu.

Using new geo-spatial methods, population density of select Indian cities is compared over time, showing the extent of urban expansion in Delhi-NCR and Bengaluru between 2001 and 2021. Using satellite imagery, illustrations are given for wasteland redeployment in Andhra Pradesh and Gujarat.

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Service sector rebounds amid pandemic threats: Economy Survey

During the first half of 2021-22, the services sector received over $16.7 billion FDI accounting for almost 54 per cent of the total FDI inflows into the country…reports Asian Lite News

The services sector’s sub-sector, which is contact-intensive in nature, is still below the pre-pandemic level, the Economy Survey 2021-22 said.

Those sub-sectors are trade, hotels, transport, communication and services related to broadcasting, it said.

“The services sector, as a whole, has mostly recovered from the impact of the nationwide lockdown imposed during March-May 2020 and localised lockdowns during the second Covid wave in April-May 2021, although some of the sub-sectors continue to be impacted.”

During the first half of FY22, the services sector grew by 10.8 per cent.

During the first half of 2021-22, the services sector received over $16.7 billion FDI accounting for almost 54 per cent of the total FDI inflows into the country.

The overall services sector, in terms of Gross Value Added, is expected to grow by 8.2 per cent in FY22, although the spread of Omicron variant brings in a degree of uncertainty for the near term, especially in segments that require human contact.

Further, domestic air and rail passenger traffic also increased gradually, while the global issue of container shortage impacted port traffic.

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Economic Survey pegs growth at 8 to 8.5% for new financial year

According to the Survey, the supply-side reforms undertaken by the government in the last two years include deregulation of numerous sectors, simplification of processes, removal of legacy issues like ‘retrospective tax’, privatisation, production-linked incentives and so on, reports Asian Lite News

With the number of Covid-19 infections coming down, the Economic Survey has projected the Indian economy to grow between 8.0-8.5 per cent in 2022-23 as it expects the economic momentum to come back while reaping the benefits of the supply-side reforms announced by the government in the last two years.              

“This projection is also based on the assumption that there will be no further debilitating pandemic related economic disruption, monsoon will be normal, withdrawal of global liquidity by major central banks will be broadly orderly, oil prices will be in the range of US$70-$75/bbl, and global supply chain disruptions will steadily ease over the course of the year,” said the Economic Survey.

According to the Survey, the supply-side reforms undertaken by the government in the last two years include deregulation of numerous sectors, simplification of processes, removal of legacy issues like ‘retrospective tax’, privatisation, production-linked incentives and so on.

While the projected GDP growth for 2022-23 will make India the fastest growing economy in the world even next year, it is still below the International Monetary Fund’s projections for India’s growth at 9 per cent for 2022-23.

The annual Economic Survey gives projections for the forthcoming year and gives a review of the year gone by. The survey was tabled in Parliament today ahead of the presentation of the Union Budget for 2021-22 on Tuesday.

The GDP growth in the current financial year (2021-22) is expected at 9.2 per cent, according to the National Statistics Office, while the Reserve Bank of India has forecast it to grow at 9.5 per cent.

At 9.2 per cent, India’s GDP growth in 2021-22 will be the fastest in at least 17 years. It had contracted by a record 7.3 per cent in 2020-21.

“Overall, macroeconomic stability indicators suggest that the Indian economy is well-placed to take on the challenges of 2022-23,” said the Survey.

Growth in government revenues will help in meeting fiscal targets

The Economic survey has said that with the strong rebound in tax revenues in 2021-22, the government will be able to provide additional fiscal support if necessary. 

“The fiscal support given to the economy as well as to the health response caused the fiscal deficit and government debt to rise in 2020-21. However, a strong rebound in government revenues in 2021-22 has meant that the government will comfortably meet its targets for the year while maintaining the support, and ramping up capital expenditure,” the Survey said.

The Centre’s fiscal deficit declined 35.3 per cent as against last year to Rs 6.9 lakh crore in April-November period, accounting for 46.2 per cent of the Budget target for the full year, data released by the Controller General of Accounts showed.

Fiscal deficit in the same period last year had accounted for 135.1 per cent of the full year’s target as the pandemic-induced lockdowns had fractured the government’s finances. The government’s financial position is substantially better in the current financial year, primarily on account of the sharp increase in receipts.

The fiscal deficit target for 2021-22 is Rs 15 lakh crore, or 6.8 per cent of the GDP.

The sharply higher-than-projected nominal GDP at 17.6 per cent in 2021-22 will also help the government to project a lower fiscal deficit as a ratio of GDP.

According to a back-of-the-envelope calculation, the fiscal deficit in 2021-22 will fall 6.5 per cent of GDP from the budgeted 6.8 per cent because of the higher nominal GDP projected by the statistics office.                 

Need to be wary of global energy prices

According to the Economic Survey, inflation has reappeared as a global issue in both advanced and emerging economies and India needs to be wary of imported inflation especially from global energy prices.

India’s headline inflation rate based on the Consumer Price Index (CPI) surged to a five-month high of 5.6 per cent in December, primarily on account of the statistical effect of a low base. Retail inflation was 4.91 per cent a month ago.

With this, CPI inflation has averaged 5 per cent for the October-December period, marginally below the RBI’s forecast of 5.1 per cent.

Wholesale price inflation, however, has been running in double-digits.

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