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Highlights of the Economic Survey 2016-17 Volume-2

News and Press Release - Dated:- 11-8-2017 - Monetary Management and Financial Intermediation The fiscal outcome of the Central Government in 2016-17 was marked by strong growth in tax revenue, sustenance of the pace of capital spending and a consolidation of non-salary/pension revenue expenditure. This combination allowed the Government to contain the fiscal deficit to 3.5 per cent of GDP in 2016-17. The Union Budget for 2017-18 opted for a gradual fiscal consolidation path: the fiscal deficit .....

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enditure Framework Statement with projected expenditures (revenue and capital) for each demand for the next two financial years. Overshadowing these otherwise significant fiscal policy initiatives is the introduction of the Goods and Services Tax with effect from the 1st day of July 2017, encompassing a plethora of the Central and State level indirect taxes, paving the way for a dramatic transformation of the Indian markets and the economy. Monetary Management and Financial Intermediation The Re .....

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racted by 12.9 per cent. Credit off-take from banks continued to decelerate further. During 2016-17, gross bank credit outstanding grew at around 7 per cent on an average. The average gross bank credit to industry contracted by 0.2 per cent in the FY 2016-17. Sluggish growth and increasing indebtedness in some sectors of the economy have impacted the asset quality of banks and this is a cause for concern. The gross non-performing advances (GNPAs) ratio of SCBs rose from 9.2 per cent in September .....

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ant being decline in food. Food inflation, which was the main driver of inflation in the past, declined significantly during the year because of improvements in supply of pulses and vegetables on the back of a normal monsoon. Core inflation-indicative of underlying trends - too declined in the last few months. Convergence between CPI and WPI inflation in the last few months. Most States/UTs witnessed sharp decline in CPI inflation in 2016-17 as compared to the previous year. Both rural and urban .....

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o 40 per cent of installed electric power capacity(cumulative) by 2030, and to create an additional carbon sink of 2.5-3 Gt CO2e through additional forest and tree cover by 2030. At the multilateral level, the international community is engaged in writing the Paris rule book which includes guidelines and modalities for the implementation of the Paris Agreement for the transparency framework for action and support, features and accounting of NDCs etc. At the national level, the roadmap for implem .....

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pacity to 175 GW by 2022. This includes 100 GW of solar, 60 GW of wind, 10 GW of biomass, and 5 GW of small hydro power capacity. There is an urgent need to further increase the access of the poor to more efficient energy resources. Many schemes have been implemented by the government to tackle this like Pradhan Mantri Ujjwala Yojana, PAHAL scheme, Deen Dayal Upadhyaya Gram Jyoti Yojana. A large number of focused initiatives have been taken in various sectors of the economy to ensure a pathway o .....

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Storage costs and stranding of assets based on coal based power are major costs associated with the renewables based power. Given that the first goal for India is to provide 100 per cent energy access to its population and bridge the development deficit gap, all energy sources need to be tapped. A number of initiatives have been taken in the Indian financial sector also. In the renewable energy segment, as per the notification of the RBI in May 2016, bank loans of up to ₹ 15 crore for sol .....

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n and comfortable during 2013-14 to 2015-16, further improved in 2016-17, as a result of low and falling trade and current account deficits and moderate and rising capital inflows, resulting in further accretion of foreign exchange reserves. Reflecting the slowly improving world economic situation, India s exports turned positive at 12.3 per cent in 2016-17 after an interregnum of two years. This along with a marginal decline in imports by 1.0 per cent resulted in narrowing down of trade deficit .....

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GDP) in the previous year, mainly due to fall in NRI deposits. Gross FDI inflows to India increased significantly to US$ 60.2 billion in 2016-17 from US$ 55.6 billion in 2015-16. Net FDI inflows (i.e. net of outward FDI) at US$ 35.6 billion, however, moderated marginally by 1.1 per cent from US$ 36.0 billion in 2015-16. In 2017-18 (April-June) there was double digit export growth at 10.6 per cent with export growth continuing to be in positive territory continuously for the last eleven months. .....

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d better than many other EME-currencies in 2016-17. During 2016-17, while on an average (on a y-o-y basis), the Indian rupee depreciated by 2.4 per cent against the US dollar, in terms of the nominal effective exchange rate (NEER) against a basket of 6 and 36 currencies, the rupee depreciated by 0.5 per cent and 0.1 per cent, respectively. However, in terms of the real effective exchange rate (REER) against a basket of 6 and 36 currencies, it appreciated by 2.7 per cent and 2.2 per cent, respect .....

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tio fell to 8.3 per cent from 8.8 per cent and ratio of concessional debt to total external debt increased to 9.3 per cent from 9.0 per cent. Short term debt (residual maturity) to total external debt fell to 41.5 per cent from 42.7 per cent. Short term debt (residual maturity) to forex reserves also fell to 52.9 per cent from 57.4 per cent. Cross country comparison of external debt indicates that India continues to be among the less vulnerable countries. Some green shoots have started to appear .....

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yields of various crops as a means to increase incomes of farmers. Credit is an important mediating input for agriculture to improve productivity. The predominance of informal sources of credit for farmers is a concern. There is regional disparity in the distribution of agricultural credit which also needs to be addressed. The key challenge that the horticulture sector faces in India are post-harvest losses, availability of quality planting material and lack of market access for horticultural pr .....

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rt Price (MIP) to counter dumping of Steel into Indian markets. Steps taken by the government have borne fruit since imports of Steel by India have declined by 36.2 percent while exports have risen by 102 percent in 2016-17. The apparel sector is a highly employment intensive industry especially for women. The Government on 22nd June 2016 approved ₹ 6,000 crore special package for textile & apparel sector. Post the release of funds in November 2016, there has been a marked rise in clot .....

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he year. Passenger earnings at ₹ 46280 crore (P) registered an increase of 4.5 per cent during 2016-17. Indian domestic airlines have a very lower share in international traffic to and from India. Factors like foreign airlines utilising the 6th freedom of the air, expansion of capacity entitlements under bilateral air service agreements with foreign countries, lower utilisation of India s own capacity entitlements, the 0/20 rule and fleet constraints are responsible for the same. The Gover .....

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17 from 21.1 per cent in FY 2016; billing efficiency has been increased by 2 per cent from 81 per cent in 2015-16 to 83 per cent in 2016-17 at all India level and 15 states have issued tariff-revisions for FY 2017-18. Under Smart Cities Mission, 57 projects worth ₹ 941 crore have already been completed as of April 2017. An estimated additional 462 projects worth ₹ 15307 crore are likely to be completed through 2018 provided all the projects that have commenced implementation and thos .....

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due to deceleration in growth in two services categories- trade, hotels, transport, communication and services related to broadcasting (7.8 per cent), and financial, real estate & professional services (5.7 per cent). The share of services sector in total gross capital formation (GCF), at current prices has increased consistently over the last four years from 53.3 per cent in 2011-12 to 60.3 per cent in 2015-16. There has been a significant growth in FDI equity inflows in 2014-15 and 2015-16 .....

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export growth. In 2016-17, services exports recorded a positive growth of 5.7 per cent with pick up in some major sectors like transportation, business services and financial services; and good growth in travel. However, Software services exports, accounting for around 45.2 per cent of total services, declined though marginally by 0.7 per cent. The performance of India s Services Sector has been subdued in 2016-17 in line with the global trend. However, some services continue to be key drivers .....

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gs (FEEs) through Tourism, in US$ terms, grew by 8.8 per cent. Various initiatives have been taken by the Government to promote tourism sector of the country that include e-Visa for the citizens of 161 countries, promotion of India as a 365 days destination, launching of Multilingual Tourist Infoline, and Swachh Paryatan Mobile App. As per NASSCOM, in 2016-17 India s total revenue (exports plus domestic) of the IT-BPM sector including and excluding hardware is expected to touch US$154 billion an .....

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. The growth of this sector decelerated in the last three years from 7.5 per cent in 2013-14 to 6.7 per cent in 2014-15 and further to 4.5 per cent in 2015-16. Despite the subdued demand, residential prices did not fall with the NHB RESIDEX, showing increase in prices in 33 cities out of 50 cities in 2016-17 Q4 over 2015-16 Q4. Satellite mapping and launching services are two areas in which India is making a mark and has huge potential for the future. The foreign exchange earned by India from sa .....

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