Economic Survey 2017 Analysis : Sectoral Analysis

Read an analysis India’s Industrial, corporate and services sector. These sectors of the Indian Economy have a large contribution to the GDP of India. An aspirant must have an analysis of these sectors of Indian economy and also have a greater chance of asking questions in IAS Exam based on such issues.

Created On: Mar 20, 2017 16:15 IST
Modified On: Mar 20, 2017 17:47 IST

Economic Survey Sectoral AnalysisThe various sectors of the Indian economy are facing a heat in terms of the level of growth and contribution towards GDP. Despite several reforms in the industrial sector, the industrial sector is registering a lower level of production which is a major concern for the policy makers.

Here, we have provided an analysis of sectors like Industrial sector, Infrastructure, Corporate and Services sector based on the analysis provided in the Economic Survey 2016-17, which is simultaneously important for IAS Exam.

Industrial, Corporate and Infrastructure sectors

  • As per the first advance estimates (AE) of the CSO, the growth rate of the industrial sector comprising mining & quarrying, manufacturing, electricity and construction are projected to decline from 7.4 per cent in 2015-16 to 5.2 per cent in 2016-17.
  • After achieving a real growth of 7.4 per cent in terms of value added in 2015-16, the growth in the industrial sector, comprising of mining & quarrying, manufacturing, electricity, gas & water supply, and construction sectors moderated in 2016-17 (see table below).
  • After achieving a real growth of 7.4 per cent in terms of value added in 2015-16, the growth in industrial sector, comprising of mining & quarrying, manufacturing, electricity, gas & water supply, and construction sectors moderated in 2016-17 (see table below).
  • The contraction in mining and quarrying largely reflects slowdown in the production of crude oil and natural gas.

Indian Economy

External Debt of India

  • During April-November 2016-17, a modest growth of 0.4 per cent has been observed in the Index of Industrial Production (IIP) which is a volume index with the base year of 2004-05 which was the combined effect of a strong growth in electricity generation and moderation in mining and manufacturing (see table below).
  • In terms of use-based classification, basic goods, intermediate goods and consumer durable goods attained moderate growth while conversely; the production of capital goods declined steeply and consumer non-durable goods sectors suffered a modest contraction during April-November 2016-17.
  • Indian Economy
    The eight core infrastructure supportive industries, viz. coal, crude oil, natural gas, refinery products, fertilizers, steel, cement and electricity that have a total weight of nearly 38 per cent in the IIP registered a cumulative growth of 4.9 per cent during April-November, 2016-17 as compared to 2.5 per cent during April-November, 2015-16.
  • The production of refinery products, fertilisers, steel, electricity and cement increased substantially, while the production of crude oil and natural gas fell during April-November, 2016-17 and Coal production attained lower growth during the same period.
  • Most indicators of infrastructure-related activities showed expansion during the first half of 2016-17.
  • The thermal power with a growth of 6.9 per cent boosted overall power generations while hydro and nuclear power generation contracted marginally during April-September 2016.

Indian Economy

  • The performance of corporate sector as per the data released by Reserve Bank of India, January 2017 highlighted that the growth in sales was 1.9 per cent in Q2 of 2016-17 as compared to near stagnant growth of 0.1 per cent in Q1 of 2016-17.
  • The growth of operating profits decelerated to 5.5 per cent in Q2 of 2016-17 from 9.6 per cent in the previous quarter.
  • The Y-o-Y growth in interest expenses remained flat in Q2 of 2016-17, as compared to 5.8 per cent in the previous quarter while the growth in net profits registered a remarkable growth of 16.0 per cent in Q2 of 2016-17, as compared to 11.2 per cent in Q1 of 2016-17.
  • During April-September 2016-17, FDI equity inflows were US$ 21.7 billion as compared to total FDI inflows of US$ 16.6 billion during April-September 2015-16 showing 30.7 per cent surge.

Analysis of Balance of Payments

  • FDI Policy of the Government:
    • The Government has liberalised and simplified the foreign direct investment (FDI) policy in sectors like defence, railway infrastructure, construction and pharmaceuticals, etc.
    •  Sectors like services sector, construction development, computer software & hardware and telecommunications have attracted highest FDI equity inflows.
  • The government has also many new initiatives in order to facilitate investment and ease of doing business in the country and the new initiatives such as Make-in-India, Invest India, Start Up India and e-biz Mission Mode Project under the National e-Governance Plan.
  • Measures to facilitate 'ease of doing' business include:
    • Online application for Industrial License and Industrial Entrepreneur Memorandum through the eBiz website 24x7 for entrepreneurs
    • Simplification of application forms for Industrial Licence and Industrial Entrepreneur Memorandum
    • Limiting documents required for export and import to three by Directorate General of Foreign Trade
    • Setting up of Investor Facilitation Cell under Invest India to guide, assist and handhold investors during the entire life-cycle of the business.

Current Affairs for IAS Prelims 2017- February 2017

Services Sector

  • As per the first advance estimates (AE) of the CSO, growth rate of the services sector is projected to grow at 8.8 per cent in 2016-17, almost the same as in 2015-16 (See the first above).
  • According to the data released by WTO, India’s commercial services exports increased from US$ 51.9 billion in 2005 to US$ 155.3 billion in 2015.
  • The share of India’s commercial services to global services exports increased to 3.3 per cent in 2015 from 3.1 per cent in 2014 despite negative growth of 0.2 per cent in 2015 as compared to 5.0 per cent growth in 2014 which was due to the relatively greater fall in world services exports by 6.1 per cent in 2015.
  • As per RBI’s Balance of Payment (BoP) data, India’s services exports declined by 2.4 per cent in 2015-16 as a result of slowdown in global output and trade, however, in the first half of 2016-17, services exports increased by 4.0 per cent compared to 0.3 per cent growth in the same period of previous year.
  • The growth of net services, which has been a major source of financing India’s trade deficit in recent years, was (-) 9.0 per cent in 2015-16 and (-) 10.0 per cent in the first half of 2016-17 due to relatively higher growth in imports of services.
  • The growth of software exports which accounted for 48.1 per cent share in services exports was 1.4 per cent in 2015-16 and 0.1 per cent in the first half of 2016-17.
  • India’s tourism sector witnessed a growth of 4.5 per cent in terms of foreign tourist arrivals (FTAs) with 8.2 million arrivals in 2015, and a growth of 4.1 per cent in foreign exchange earnings (FEEs) of US$ 21.1 billion.
  • In 2016 (Jan. to Dec.), FTAs were 8.9 million with a growth of 10.7 per cent and FEE (US$ terms) were at US$ 23.1 billion with a growth of 9.8 per cent.
  • The Nikkei/Markit Services PMI for India was at a high of 57.5 in January of 2013 while it fell to 46.7 in November 2016 from 54.5 in October 2016.
  • However, it increased marginally to 46.8 in December 2016 and the Baltic dry index (BDI) an indicator of both merchandise trade and shipping services, which showed some improvement up to 18 November 2016 declined somewhat to 910 on 13 January 2017.

ECONOMIC SURVEY 2016-17 in Detail

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