Economic Survey 2016-17Volume 2-Analysis (Part 3)

By Shyam S Kaggod

The chapters that will be covered• Chapter 1 - State of the economy – an overview

• Chapter 2 - Fiscal Developments

• Chapter 3 - Monetary Management and Financial Intermediation

• Chapter 4 - Prices & Inflation

• Chapter 5 - Climate Change, Sustainable Development and Energy

• Chapter 6 - External Sector

• Chapter 7 - Agriculture and Food Management

• Chapter 8 - Industry and Infrastructure

• Chapter 9 - Services Sector

• Chapter 10 - Social Infrastructure, Employment and Human Development

Chapter 5 – Climate change, Sustainable Development and Energy

• India and PCA

• USA has announced its withdrawal from PCA

• It becomes the third country (Syria and Nicaragua)

• India ratified the PCA on 2nd October 2016

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Ch-5International Solar Alliance

India and Energy• Majority of the energy supplied comes from the coal/thermal

• India has set an ambitious target of generating 175 GW of RE by 2022

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India and Energy

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But!• Deprivation

• Those who do not have access

• Those who do not access to secure energy

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Use of Electricity

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Initiatives of the government

• UJJWALA Scheme (PMUY - Pradhan Mantri UJJWALA Scheme)

• UJJWALA Plus Scheme

• PAHAL/DBTL

• DDUGJY

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UJJWALA Scheme

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Thermal Vs Renewable – Social Cost Analysis

• Private costs

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Thermal Vs Renewable – Social Cost Analysis

• Social cost of carbon / Shadow price of carbon

• Health Costs

• Cost of Intermittency

• Opportunity cost of the land

• Cost of stranded assets

• Cost of the government incentives

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Cost of the government incentives

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Thermal Vs Renewable – Social Cost AnalysisCh-5

Thermal Vs Renewable – Social Cost Analysis

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Green Initiatives of the government

• NAPCC (National Action Plan on Climate Change)

• NGCO (National Green Corridor Programme)

• NGHM (National Green Highways Mission)

• FAME (Faster Adoption of Hybrid and Electrical Vehicles)

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NAPCC

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Chapter 7 – Agriculture & Food Management

• Status of agriculture

• Majority of agriculture is rain dependent

• Land fragmentation

• Farmers are price takers

• Marginal farmers go for mixed farming

• Indebtedness

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Risks in Agriculture

• Production Risks• Soil Health Card

• DBT in Fertilizers

• Weather related environmental risks• Micro-Irrigation

• PMFBY

• Credit risks• Informal credit

• Interest Subvention Scheme

• Price risks, Market and Policy Risks • Supply, demand and price volatility

• Price stabilization Fund

• e-NAM

• Model APMC Act

• Agriculture Produce trading and Development Act 2017

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Food Management

• NFSA (National Food Security Act) 2013

• DCP (Decentralized Procurement Scheme)

• OMSS (Open Market Sale Scheme)

• Food Subsidy

• Buffer Stocks

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IIP

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Chapter 8 – Industry & Infrastructure

Time bound closure of CPSEs Ch-8

Civil Aviation• Though there is a huge potential, India has not been able to capture

the market• ASK (Available Seat Kilometers) of India is 38%

• The domestic airlines could carry only 36% of international traffic (to and from India)

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Civil Aviation – The reasons for such outcome• ASA (Air Service Agreements)

• 6th Freedom of Air

• 5/20 rule (changed to 0/20 rule)

• Lesser wide bodied aircrafts

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Civil Aviation – Way Out• Privatization of Air India

• Relook at 0/20 rule

• UDAN

Civil Aviation – 6th Freedom

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UDAN – Ude Desh ka Aam NaagrikCh-8

Ports - National Waterways-Advantages

Highways Railways Inland Waterways

Movement (1 HP) 150 kgs 500 kgs 4000 kgs

Efficiency of 1 ltr fuel 24 tkm 85 tkm 105 tkm

Cost of development High Comparatively lesser than roadways

Lowest among three

Cost of transportation Rs 2.50/km Rs 1.50/km 25 paisa/km

Carbon footprint high Comparatively lesser than roadways

Lowest (50% of that of emission of trucks)

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Ports - Waterways – India Vs China

China India

Length of navigable water Over 1,00,000 Kms Around 14,500 Kms

Transportation through waterways

47% 03%

Number of vessels Over 2,00,000 Over 1,000

Carrying capacity in a single voyage

Around 40,000 tonnes Around 1,500 tonnes

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Power – UDAY

• State government to take up 75% of the debt of the discoms (50% in first year and 25% in the second year)

• The state government can issue bonds in the market

• Future losses to be taken in a graded manner

• Banks to stop issuing advances for discoms to finance their losses

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Power - UDAY (contd…)

• Targets

• AT&C losses must be brought down to 15% by 2018-19

• The gap between average cost and tariff must be bridged

• Benefits to states

• Receive additional benefits from the central government

• Additional/priority funding through certain schemes

• Supply of additional coal at specified prices

• Procurement of low cost power

• Worry for the states-increase in the fiscal deficit

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Power – UDAY - Evaluation

• 27 states/UTs have signed up for UDAY

• 15 states have issued UDAY bonds

• Many of the states have revised their tariffs

• The FD of the states has reached to 3.6% (it could have been 2.9% if UDAY was not implemented)

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Power – UDAY - Evaluation

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Petroleum and Natural Gas

• HELP (Hydrocarbon Exploration and Licensing Policy)• Uniform License

• Open Acreage Policy

• Change in revenue sharing model (profit sharing to revenue sharing)

• Freedom to price

• Discovered Small Fields Policy• Production to start at the earliest in the discovered blocks

• New revenue sharing model

• 100% FDI

• Single license

• PAHAL/DBTL

• PMUY (Pradhan Mantri Ujjwala Yojana)

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Chapter 9 – Services Sector – TFS (Trade Facilitation in Services)

• It is a proposal on the similar lines of TFA (Trade Facilitation Agreement)

• Some of the proposals under TFS are• Social security portability

• Visa fees must be transparent, reasonable and non-restrictive

• Single window mechanism for foreign investment mechanism

• Cross-border insurance to boost medical tourism

• All modes of service supply in cross-border trade must be covered

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Tourism• In case of tourism, India has not been able to perform

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Tourism

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Tourism – World Heritage Sites

Tourism - Initiatives

• e-Visa

• Swachh Paryatan App

• Tourist Infoline

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Real Estate – Reforms – RERA Ch-9

Real Estate – Reforms – Benami Transactions (Prohibition) Amendment Act 2016

• Was introduced in Lok Sabha in May 2015

• The Bill seeks to amend the Benami Transactions Act, 1988

• The Act prohibits benami transactions and provides for confiscating benami properties

• The amended definition will include

• If the transaction is made in a fictitious name

• The owner is not aware of denies knowledge of the ownership of the property

• The person providing the consideration for the property is not traceable.

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• The act establishes four authorities to conduct inquiries or investigations regarding benami transactions• Initiating Officer • Approving Authority • Adjudicating Authority• Administrator

• Appellate Tribunal

• Penalty Provisions

Real Estate – Reforms – Benami Transactions (Prohibition) Amendment Act 2016 (Contd…)

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Chapter 10 – Social Infrastructure, Employment and Human Development

Education

• Primary Education

• Secondary Education

• Higher Education

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Primary Education

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Education – Programme Interventions

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Health

National Health Policy 2017

• Promote universal access to quality healthcare

• Increase the public spending to 2.5% of GDP by 2025

• Create PHMC (Public Health Management Cadre)

• Intervention at early detection from the childhood

• National Healthcare Standards Organization

• To increase the life expectancy to 70 years (presently 67.5 years)

• To promote local production/manufacturing incentives will be provided

• Indigenous medical equipment and technology to reduce costs

• In terms of remedies-providing multiple options such as AAYUSH

• Provide redressal mechanism-Tribunals

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