Mid-Year Economic Analysis
2012-2013
Outcome of the review of the trends in receipts and expenditure
in relation to the budget at the end of the second quarter
of the financial year 2012-2013
and
Statement explaining deviations in meeting the obligations
of the Government under the Fiscal Responsibility
and Budget Management Act, 2003
(vide Section 7(1) and 7(3)(b) of the said Act)
Ministry of Finance
Department of Economic Affairs
Economic Division
MID-YEAR ECONOMIC ANALYSIS
CONTENTS
1 1 OVERVIEW OF THE ECONOMY
1 Growth and Investment
6 Agriculture
12 Industry and Infrastructure
16 Prices
19 Money and Banking
26 Capital Market
30 Trade
37 Balance of Payments
43 Social Sector: Developments and Performance of Programme
2 47 CENTRAL GOVERNMENT FINANCES
47 Review of trends in receipts and expenditure during April-September 2012
48 Receipts
53 Expenditure
56 Deficit
56 Financing of Deficit
57 Cash Management
57 Assessment vis-à-vis mid-year FRBM benchmarks
3 61 ANALYSIS AND OUTLOOK
61 Growth and Investment
64 Inflation
69 Current Account Deficit
72 Fiscal Concerns
75 Outlook for Economy
77 Annex I
77 Implementation status of Budget announcements
101 Annex II - Tables
101 Key economic indicators
102 Balance of Payments: Summary
103 Monetary survey
104 Trends in growth rates of infrastructure sector
105 Tax revenues
106 Non tax revenues
107 Capital receipts
108 Plan expenditure
113 Non-Plan expenditure
120 Resources transferred to State & UT Governments
(ii)
OVERVIEW OF THE ECONOMY 1
CHAPTER I
OVERVIEW OF THE ECONOMY
GROWTH AND INVESTMENT declined from 3.0 per cent in 2010 to 1.6 per
The Indian economy after reporting cent in 2011 and is expected to decline
fairly robust growth of over 9 per cent during further to 1.3 per cent in 2012. Even the
2005-08, moderated to a growth of 6.7 per emerging economies have slowed down
cent in 2008-09 because of the global during this period, partly as a result of the
financial crisis. Because there was fiscal and slowdown in their export markets. China's
monetary space, timely stimulus allowed the growth declined from 10.4 per cent in 2010
economy to recover fairly quickly to a growth to 9.2 per cent in 2011 and is expected to be
of 8.4 per cent in 2009-10 and 2010-11. Since 7.8 per cent in 2012. Brazil's growth dipped
then, however, the fragile global economic
from 7.5 per cent in 2010 to 2.7 per cent in
recovery and a number of domestic factors
2011 and is expected to be 1.5 per cent in
have led to a slowdown once again.
2012.
1.2 The slowdown in the Indian economy
1.3 The growth rate of the Indian
that began in the second quarter of 2011-
12, when the growth rate declined to 6.7 per economy (measured in terms of GDP at factor
cent from a level of 8.0 per cent in the first cost at 2004-05 prices) was 5.4 per cent in
quarter, continued in subsequent quarters. the first half (H1) of year 2012-13 as against
Growth has been in the range of 5.3-5.5 per 7.3 per cent in the corresponding time period
cent in the last three quarters (Q4 of 2011- of the previous year. The growth for the full
12 to Q2 of 2012-13). The slowdown is not year of 2011-12 was 6.5 per cent vis-à-vis
just confined to India.There has been a the growth rate of 8.4 per cent achieved in
general slowdown in the global economy each of the previous two years i.e. 2009-10
which has been passing through a rather and 2010-11. The slowdown has been all
prolonged phase of uncertainty. The recovery pervasive and almost all the sectors have
from the global crisis of 2008-09 in the
been affected. The growth rate has been 2.1
advanced economies has been uneven, with
per cent for agriculture and allied sectors, 3.2
a decisive resolution yet to emerge to the
per cent for industry sector and 7.0 per cent
sovereign debt problem in the Euro zone.
for the services sector in the first half of
Having achieved a GDP growth of 5.1 per
2012-13. The growth rates were 3.4 per cent,
cent in 2010, the rate of growth in the global
economy declined to 3.8 per cent in 2011 and 4.7 per cent and 9.5 per cent, for agriculture,
is expected to decline further to 3.3 per cent industry and services, respectively in H1 of
in 2012, as per the World Economic Outlook 2011-12. The growth of GDP in the first and
released by the IMF in October 2012. The second quarters of 2012-13 was 5.5 per cent
rate of growth of advanced economies and 5.3 per cent respectively (Table 1.1).
2 MID-YEAR ECONOMIC ANALYSIS
Table 1.1 : Quarterly Growth in GDP (per cent)
2011-12 2012-13 2011-12 2012-13
Q1 Q2 Q3 Q4 Q1 Q2 H1 H1
Agriculture, forestry &
1 3.7 3.1 2.8 1.7 2.9 1.2
fishing 3.4 2.1
2 Industry 5.6 3.7 2.5 1.9 3.6 2.8 4.7 3.2
a Mining & quarrying -0.2 -5.4 -2.8 4.3 0.1 1.9 -2.8 0.9
b Manufacturing 7.3 2.9 0.6 -0.3 0.2 0.8 5.1 0.5
Electricity, gas & water
c 8.0 9.8 9 4.9 6.3 3.4
supply 8.9 4.8
d Construction 3.5 6.3 6.6 4.8 10.9 6.7 4.9 8.8
3 Services 10.2 8.8 8.9 7.9 6.9 7.2 9.5 7.0
Trade, hotels, transport &
a 13.8 9.5 10 7 4 5.5
communication 11.6 4.7
Financing, insurance, real
b 9.4 9.9 9.1 10 10.8 9.4
estate & business services 9.6 10.1
Community, social &
c 3.2 6.1 6.4 7.1 7.9 7.5
personal services 4.7 7.7
GDP at Factor Cost 8.0 6.7 6.1 5.3 5.5 5.3 7.3 5.4
Source: CSO.
1.4 The slowing growth rate in India during growth in the economy, particularly that of the
the first half of 2012-13 can be explained in industry sector. Finally, bottlenecks in project
terms of both global factors and domestic implementation have made financing more
factors. The slowdown in growth in advanced difficult and investors more cautious.
economies and near recessionary conditions 1.5 The reduction in the growth rate of
prevailing in Europe resulted not only in lower the services sector in the first half of current
growth of international trade but also lower year vis-à-vis the first half of 2011-12 was
capital flows. The growth rate of India's primarily due to a reduction in the growth rate
exports declined. At the same time, however, of `Trade, hotels, transport and
the international price of crude oil remained communications' sector from 11.6 per cent
high. India's trade and current account deficits in H1 of 2011-12 to 4.7 per cent in H1 of
widened. Turning to domestic factors, rainfall 2012-13. Within the services sector, this sub
in the monsoon season of 2012-13 has been sector is the most crucial and accounts for
nearly 45 to 50 per cent of the value added
below normal, particularly in the key months
of services sector. Growth in activities like
of June and July. This affected sowing and
trade, hotels and transport, etc. are linked
resulted in a lower growth rate of agriculture
with the growth of agriculture and industry
and allied sectors. The Reserve Bank of India
sectors and a slowdown in these activities
continued to follow a relatively tight monetary has had an adverse impact on the growth of
policy to control inflation, although there has the trade and transport sectors. In contrast,
been some relaxation in the recent months in the growth of financial, business and
the Statutory Liquidity Ratio (SLR) as well as community and social services in the first half
Cash Reserve Requirement (CRR). The cost of the current year was in fact, higher than
of borrowing remains at elevated levels and the growth rate for these sectors in the
this has had an impact on investment and corresponding period of 2011-12.
OVERVIEW OF THE ECONOMY 3
Table 1.2 : Sectoral Contribution of GDP at factor cost (per cent)
2011-12 2012-13 2011-12 2012-13
Q1 Q2 Q3 Q4 Q1 Q2 H1 H1
Agriculture, forestry &
1 fishing 13.5 11.1 17.2 13.9 13.2 10.7 12.3 12.0
2 Industry 27.7 27.5 26.1 26.7 27.2 26.9 27.6 27.1
a Mining & quarrying 2.1 2.0 2.0 2.2 2.0 1.9 2.0 2.0
b Manufacturing 15.8 15.7 14.6 15.0 15.0 15.0 15.8 15.0
Electricity, gas & water
c supply 2.0 2.0 1.8 1.8 2.0 2.0 2.0 2.0
d Construction 7.8 7.9 7.6 7.8 8.2 8.0 7.9 8.1
3 Services 58.8 61.3 56.7 59.4 59.6 62.4 60.0 61.0
Trade, hotels, transport &
a communication 28.9 28.5 27.1 28.1 28.5 28.6 28.7 28.5
Financing, insurance, real
b estate & business services 18.2 18.7 17.4 17.4 19.1 19.4 18.4 19.3
Community, social &
c personal services 11.7 14.1 12.1 13.9 12.0 14.4 12.9 13.2
Source: CSO.
1.6 The sectoral composition of the GDP services sector in the last two decades. In fact,
(in terms of its relative shares) undergoes a since 2008-09 the contribution of services
change depending on the relative sector in the increase in GDP has been 73 per
performance of different sectors. The cent (Fig 1.1).
sectoral composition of GDP is shown in
1.8 The growth rate in terms of GDP at
Table 1.2. The quarterly shares reflect
seasonal aspects also and may not change market prices fell even more sharply in the
significantly in the short run. However, the first half of 2012-13. The growth declined from
long-term trends clearly show that the share 7.9 per cent in H1 of 2011-12 to 3.4 per cent
of agriculture sector has been declining. This in H1 of 2012-13.Almost all the major
is to be expected agriculture declines as a components of GDP at market prices viz.
share of GDP as countries grow. In India,
private final consumption expenditure, gross
however, the services sector became the
fixed capital formation, exports as well as
dominant sector, without a significant
increase in industrial sector. In fact, the share imports declined significantly. The exception
of the industrial sector in GDP has remained has been government final consumption
in the range of 25-29 per cent since the late expenditure that registered an increase. The
1960s. A decline in the share of the sectoral composition of expenditure side of
agricultural sector has been offset by an GDP is shown in Table 1.3.
increase in services sector since then.
1.9 The rate of growth of GDP at factor
1.7 The contribution of services sector to cost and at market prices have differed
incremental growth has been significantly
significantly over recent quarters. In
increasing over time. Nearly 60 per cent of the
2008-09 and in the first two quarters of 2009-
increase in GDP is accounted for by the
10, growth of GDP at market prices was
4 MID-YEAR ECONOMIC ANALYSIS
Fig 1.1: Point contribution of three sectors to GDP Growth
Table 1.3 : Sectoral Composition of GDP at Current Market Prices
2011-12 2012-13 2011-12 2012-13
Items Q1 Q2 Q3 Q4 Q1 Q2 H1 H1
1. Total final
consumption expenditure 66.7 68.8 71.3 64.3 67.6 70.1 67.8 68.8
1.1 Private final
consumption expenditure 55.8 57.8 58.5 52.5 56.0 58.3 56.8 57.1
1.2 Government final
consumption expenditure 11.0 11.0 12.8 11.8 11.7 11.8 11.0 11.7
2. Gross capital
formation 37.9 37.6 33.6 33.7 34.8 36.5 37.7 35.7
2.1 Gross fixed capital
formation 31.2 30.9 27.8 28.6 29.9 30.6 31.0 30.3
2.2 Changes in stocks 3.4 3.3 3.0 3.1 3.2 3.3 3.4 3.2
2.3 Valuables 3.3 3.4 2.7 1.9 1.7 2.6 3.4 2.2
3. Exports 23.0 24.2 23.1 27.8 24.4 24.5 23.6 24.5
4. Less Imports 29.5 32.9 31.8 25.8 30.8 34.3 31.2 32.5
GDP at 2004-05 market
prices 100 100 100 100 100 100 100 100
Source: Compiled from CSO data.
Totals may not add up to hundred due to discrepancies.
lower than the growth of GDP at factor cost. quarters, the growth of GDP at market prices
This was largely due to the stimulus package exceeded the growth of GDP at factor cost.
and a decline in the ratio of taxes to GDP In last two quarters (Q1 and Q2 of 2012-13)
(indirect taxes are subtracted from GDP at the growth of GDP at market prices has been
market prices and subsidies are added to lower than the growth of GDP at factor costs
obtain GDP at factor cost). In the next seven largely because of the increase insubsidies
OVERVIEW OF THE ECONOMY 5
(Fig 1.2). Higher growth of GDP at market half of 2012-13 as compared to its share in
prices relative to the growth of GDP at factor 2011-12.A detailed examination of the
cost has occurred in the quarters which had contribution of various components of GDP to
a positive growth of net indirect taxes and growth (Fig 1.3) suggests a decline in the
vice versa. contribution of investment (gross fixed capital
1.10 The share of private final consumption formation, inventories and valuables)
expenditure has generally been in the range beginning with Q2 of 2011-12.
of 55 to 60 per cent. The share of gross fixed
capital formation has been lower in the first
Fig 1.2 : Rate of growth of GDP at factor cost and at market prices
Fig 1.3: Point Contribution of GDP at market prices
6 MID-YEAR ECONOMIC ANALYSIS
AGRICULTURE for which rainfall data were available, 62
districts (10 per cent) received excess rainfall,
1.11 Rainfall during the South West
303 (48 per cent) received normal rainfall, 235
Monsoon (01st June 30th September) in 2012
(37 per cent) received deficient rainfall and 28
has been both erratic and uneven. It was
districts (5 per cent) received scanty rainfall.
deficient by 28 per cent in June, 2012 and 13
per cent in July, 2012 as compared to the Agricultural Growth
respective monthly Long Period Averages
1.12 As per the National Accounts Statistics,
(LPA). With better rainfall in August and
September, the deficiency declined. During the the agriculture and allied sector registered a
monsoon season, the country as a whole growth of 2.1 per cent during the first half of
received 819.8 mm of rainfall against a normal 2012-13 which is lower than the growth rate of
rainfall of 887.5 mm which represents a 3.4 per cent in the first half of 2011-12.
deviation of 8 per cent from the LPA. (Table
Kharif Sowing
1.4). At the meteorological sub-division level,
23 out of 36 met sub-divisions received excess 1.13 Due to erratic and deficient rainfall,
or normal rainfall and 13 met sub-divisions area coverage under kharif crops has declined
received deficient rainfall. Out of 628 districts as compared to last year (Table 1.5). Coarse
Table 1.4: Rainfall Pattern in Monsoon(June to September) 2012
Regions Actual Rainfall(mm) LPA Percentage deviation from
LPA
(mm)
Central India 935.5 975.5 4
Northwest India 569.3 615.0 7
South Peninsula 643.9 715.5 10
North East India 1275.3 1438.3 11
All India 819.8 887.5 8
Source: 2012 South West Monsoon End of Season Report.
Table 1.5: Crop wise area sown during kharif 2012 (Lakh hectares)
Crops Area Sown(Kharif) Increase/ decrease over last year(+/-)
Major cereals crops 2012 2011
Paddy 391.62 400.68 -9.06
Coarse Cereals 178.17 206.73 -28.56
Jowar 24.12 25.96 -1.84
Bajra 65.11 86.95 -21.84
Maize 71.92 73.88 -1.96
Pulses 95.24 113.45 -18.21
Arhar 36.86 40.4 -3.54
Urad 22.86 24.15 -1.29
Moong 19.63 26.78 -7.15
Total Foodgrains 665.03 720.86 -55.83
Oilseeds 175.09 184.91 -9.82
Groundnut 37.81 42.97 -5.16
Soyabean 105.88 101.79 4.09
Sesamum 17.12 19.17 -2.05
Other crops
Cotton 116.14 121.78 -5.64
Sugarcane 51.00 50.87 0.13
Jute 7.76 8.09 -0.33
Source: Department of Agriculture & Cooperation
OVERVIEW OF THE ECONOMY 7
cereals and pulses, grown mostly in rainfed production in 2011-12. First advance
conditions, have suffered a major decline in estimates (which cover the kharif crops)
their area under cultivation. These accounted indicate a decline in production across all
for nearly 83 per cent of the total decline in major crop groups (Table 1.6).
area under food crops. Sugarcane, largely 1.15 Given the limited possibility of increasing
because it is an irrigated crop, and soyabean, area, improvements in productivity of major
however, witnessed an increase in acreage. agricultural crops is the only long term solution
Agriculture Production to bridge the gap between demand and supply.
In fact, the country achieved significant
1.14 In 2011-12 food grain production was
improvements in the yield levels of major
a record 257.4 million tonnes (4th Advance
agricultural crops (Table 1.7). Notwithstanding
Estimates) primarily due to a good monsoon
the increase in yield levels in food crops, there
and supportive government policies. This
still exists considerable gap between potential
level of production was higher by 12.7 million
and actual yields even in high productivity
tonnes as compared to the previous record
irrigated areas with the current technology
food grain production of 244.8 million tonnes
(Final Estimates) achieved during 2010-11. (Table 1.8). For these areas, balanced use of
It comprised 129.9 million tonnes of kharif fertilizers and micro nutrients, and water and
foodgrains and 127.5 million tonnes of rabi soil saving technology may need to be
food grains. Production of oilseeds was considered. In case of wheat, at national level
estimated at 30.0 million tonnes, sugarcane actual average yield (2.79 t/ha) is significantly
at 357.7 million tonnes, which is an all-time lower than the yields demonstrated on farmers'
record. Production of cotton at 35.2 million fields (3.32 t/ha) and yields under research
bales of 170 kg each in 2011-12. In fact, the conditions (4.2 t/ha). Much larger gaps exist in
record production of rice and wheat at 104.3 case of Bihar and Madhya Pradesh. Major yield
million tonnes and 93.9 million tonnes, gaps are reported to be due to deficiencies in
respectively largely contributed to the record crop management practices.
Table 1.6 : Kharif production in 2011-12 and 2012-13 (Million tonnes)
Crop 2011-12 2012-13 Absolute difference Percentage
th (col3-2)
(4 advance (1st advance
estimate) estimate)
Foodgrains 129.94 117.18 -12.76 -9.82
Oilseeds 20.79 18.78 -2.01 -9.67
Sugarcane 357.67 335.33 -22.34 -6.25
Cotton@ 35.20 33.40 -1.80 -5.11
@Production in million bales of 170 kg each.
Source: Department of Agriculture & Cooperation
Table 1.7: Area, Production and Yield of major Crops
Crops Area Production Yield
(lakh hectare) (million Tonnes) (kg/hectare)
2009-10 2010-11 2011-12* 2009-10 2010-11 2011-12* 2009-10 2010-11 2011-12*
Foodgrains 1213.3 1267.7 1250.3 218.1 244.8 257.4 1798 1931 2059
Oilseeds 259.6 272.2 264.4 24.9 32.5 30.0 958 1193 1135
Sugarcane 41.8 48.9 50.9 292.3 342.4 357.7 70020 70091 70317
Cotton@ 101.3 112.4 121.8 24.0 33.0 35.2 403 499 491
*4th advance estimates @production in million bales of 170 kg each.
Source: Department of Agriculture & Cooperation
8 MID-YEAR ECONOMIC ANALYSIS
Table 1.8: Yield gaps in cereal crops in major States
State Cereal Stimulated Max attainable Average Total Yield Management
Crops Potential Experienced Yield(t/ha) Gap I (%) Yield Gap II (%)
Yield(t/ha) yield(t/ha)
A B C {100(AC)/A} {100(B-C)/B}
Punjab Rice 8.8 7.0 4.0 54.5 43.1
Wheat 6.5 5.2 4.3 33.8 17.3
Haryana Rice 8.7 7.0 2.8 67.8 59.9
Wheat 5.6 4.5 3.8 32.1 14.2
UP Rice 7.2 5.2 3.8 47.2 26.9
Wheat 5.4 4.6 2.4 55.6 47.4
Bihar Rice 8.7 7.0 2.1 75.9 70.5
Wheat 5.5 4.4 2.3 58.2 47.7
Tamil Nadu Rice 8.4 6.7 2.1 75.0 69.0
Source- Twelfth Five Year Plan
Rabi prospects Price Policy of Agricultural Produce
1.16 Though kharif output in 2012-13 is 1.17 Agricultural production in the country
estimated to be lower for major agricultural is greatly influenced by policies such as pricing,
crops, it is expected that this would partly be procurement, storage, etc. The Minimum
made up by higher rabi production through Support Prices (MSPs) for major crops have
additional coverage under rabi crops, greater been raised substantially by the Government
soil moisture, as well as through adequate in 2012, in line with the objective of ensuring
remunerative prices to farmers for their
and timely supply of inputs (fertilizers and
produce and with a view to encouraging higher
seeds) and better extension services.
investment and production in the sector (Table
Average annual growth of foodgrain
1.9). This policy also resulted in higher
production in rabi season during 2000-01 to procurement of foodgrains by Food
2011-12 at 2.7 per cent has also been Corporation of India (FCI) and the State
significantly higher than the growth of agencies. The procured foodgrains are being
production during kharif season, which has made available to the consumers under the
averaged 1.2 per cent only (Fig 1.4). This targeted public distribution system (TPDS) at
has been due to the dominance of irrigated central issue prices(CIPs) that are much less
wheat and rice in Rabi crops and a smaller than the economic costs to the procuring
share of area under coarse cereals. agencies. Needless to say, this policy puts
Fig 1.4: Production of foodgrains during Kharif and Rabi seasons (Million tonnes)
OVERVIEW OF THE ECONOMY 9
Table 1.9: Minimum Support Prices (Per quintal and increase in per cent)
Kharif Crops 2008-09 2009-10 2010-11 2011-12 2012-13 Average Annual Increase in
Increase 2012- 2012-
13/2008-09 13/2011-12
Paddy (common) 900 1000 1000 1080 1250 8.6 15.7
Paddy (Gr.A) 930 1030 1030 1110 1280 8.3 15.3
Jowar (Hybrid) 840 840 880 980 1500 15.6 53.1
Jowar (Maldandi) 860 860 900 1000 1520 15.3 52.0
Bajra 840 840 880 980 1175 8.8 19.9
Maize 840 840 880 980 1175 8.8 19.9
Ragi 915 915 965 1050 1500 13.2 42.9
Arhar (Tur) 2000 2300 3500 3700 3850 17.8 4.1
Moong 2520 2760 3670 4000 4400 15.0 10.0
Urad 2520 2520 3400 3800 4300 14.3 13.2
Groundnut in shell 2100 2100 2300 2700 3700 15.2 37.0
Sunflower 2215 2215 2350 2800 3700 13.7 32.1
Soyabean (black) 1350 1350 1400 1650 2200 13.0 33.3
Soyabean (yellow) 1390 1390 1440 1690 2240 12.7 32.5
Sesamum 2750 2850 2900 3400 4200 11.2 23.5
Nigerseed 2405 2405 2450 2900 3500 9.8 20.7
Cotton (medium 2500 2500 2500 2800 3600 9.5 28.6
staple)
: Inclusive of bonus wherever applicable.
Note
substantial claims on the exchequer in the form enhancing the efficiency of procurement and
of food subsidy provided to procuring agencies. distribution and encouraging local procurement
Procurement, Storage and Distribution thereby extending the benefits of MSP to local
farmers. The State Governments presently
1.18 A significant proportion of marketable undertaking decentralised procurement are
surplus of foodgrains is procured at the
West Bengal, Madhya Pradesh, Chhattisgarh,
Minimum Support Price (MSP) fixed by the
Uttarakhand, Andaman & Nicobar Islands,
Government. Higher procurement prices have
resulted in large build-up of stocks of rice and Odisha, Tamil Nadu, Gujarat, Karnataka and
wheat and raise the concerns for its safe Kerala. Andhra Pradesh has agreed to adopt
storage. The Scheme of Decentralised the DCP scheme with effect from Kharif
Procurement of foodgrains was introduced by marketing season 2012-13. Procurement of
the government in 1997-98 with a view to rice and wheat in different states is indicated
effecting savings in the outgo of food subsidy, in Table 1.10 and 1.11.
Table 1.10: State-wise Procurement of Rice for Central Pool
(Kharif Marketing Season: October-September) (Lakh tonnes)
State 2008-09 2009-10 2010-11 2011-12 2012-13
Andhra Pradesh 90.58 75.55 96.09 75.40 0.40
Chhattisgarh 28.48 33.57 37.46 41.15 0.49
Haryana 14.25 18.19 16.87 20.07 24.99
Odisha 28.01 24.96 24.65 28.64 0.00
Punjab 85.54 92.75 86.34 77.31 80.54
Tamil Nadu 12.01 12.41 15.43 15.96 0.01
Uttar Pradesh 40.07 29.01 25.54 33.55 0.21
West Bengal 17.44 12.40 13.10 20.36 0.00
Others 24.66 21.50 26.50 37.87 0.20
All India Total 341.04 320.34 341.98 350.31* 106.84*
* Procurement figure as on 14.11.2012
Source: Department of Food & Public Distribution
10 MID-YEAR ECONOMIC ANALYSIS
Table 1.11: State-wise Procurement of wheat for Central Pool
(lakh tonnes)
State 2008-09 2009-10 2010-11 2011-12 2012-13
Haryana 52.37 69.24 63.47 69.28 86.65
MP 24.10 19.68 35.39 49.65 84.93
Punjab 99.40 107.25 102.09 109.58 128.34
Rajasthan 9.35 11.52 4.76 13.03 19.64
U.P. 31.37 38.82 16.45 34.61 50.63
Others 10.30 7.31 2.98 7.20 11.29
All India 226.89 253.82 225.14 283.35 381.48
Source: Department of Food and Public Distribution
1.19 Wheat and rice are issued from the welfare schemes, the Central Pool of food
central pool to state governments/UTs at stocks is required to have sufficient quantities
Central Issue Prices(CIPs) for distribution of rice and wheat in order to meet
under the TPDS. The CIPs of foodgrains emergencies like drought/failure of crop and
issued under the TPDS are fixed much below to enable open market intervention in case of
their economic cost. The Central
sharp price increases. The minimum buffer
government bears subsidy burden on this
norms for the Central Pool have been fixed
account, especially for making available
foodgrains at highly subsidized rates for by taking into consideration the seasonality
households in the Below Poverty line (BPL) in the arrival of the grains and distribution
and Antodaya Anna Yojana (AAY) category requirements. Food stocks have remained
(Table 1.12). The CIPs have not been revised significantly higher than the buffer norms
since the year 2002, even though there have (Table 1.13). Keeping in view the comfortable
been corresponding large increases in MSP stock position a liberalized approach has been
and economic cost. adopted towards allocation of additional
1.20 Besides meeting the requirements of foodgrains under different schemes and
distribution of foodgrains under TPDS and exports.
Table1.12: Economic Cost and Issue Price of Wheat and Rice
Year Rice ($) Wheat Rice Wheat
APL BPL AAY APL BPL AAY
Economic Cost 830 565 300 610 415 200
Issue Price as per cent to Economic Cost of FCI
2010-11 (Prov.) 2002.4 1526.4 41.5 28.2 15.0 40.0 27.2 13.1
2011-12 (RE) 2184.2 1651.9 38.0 25.9 13.7 36.9 25.1 12.1
2012-13 (BE) 2418.7 1822.5 34.3 23.4 12.4 33.5 22.8 11.0
($)- Weighted average of common and Grade A Rice taken together
OVERVIEW OF THE ECONOMY 11
Table 1.13: Details of Buffer norms and actual stock position
(in lakh tonnes)
Date Rice Wheat Total Actual Stock
as per cent to
Actual Buffer Actual Buffer Actual Buffer Buffer Norms
Stock norms Stock norms Stock norms
1.01.2010 243.5 138.0 230.9 112.0 474.5 250.0 189.8
1.04.2010 267.1 142.0 161.3 70.0 428.4 212.0 202.1
1.07.2010 243.0 118.0 335.8 201.0 578.5 319.0 181.3
1.10.2010 184.4 72.0 277.8 140.0 462.2 212.0 218.0
1.01.2011 255.8 138.0 215.4 112.0 471.2 250.0 188.5
1.04.2011 288.2 142.0 153.6 70.0 441.8 212.0 208.4
1.07.2011 268.6 118.0 371.5 201.0 640.1 319.0 200.6
1.10.2011 203.6 72.0 314.3 140.0 517.9 212.0 244.3
1.01.2012 297.2 138.0 256.8 112.0 553.9 250.0 221.6
1.04.2012 333.5 142.0 199.5 70.0 533.0 212.0 251.4
1.07.2012 307.1 118.0 498.1 201.0 805.2 319.0 252.4
1.10.2012 233.7 72.0 431.5 140.0 665.3 212.0 313.8
Source: Department of Food and Public Distribution
Agriculture Credit - Enabling farmers to crore (108 per cent) against the target of
deliver higher output ` 4,75,000 crore (Table 1.14).
1.21 It has been the endeavour of the 1.22 The Kisan Credit Card (KCC) Scheme
government to ensure timely and adequate introduced in August 1998 has since stabilized,
with a major share of crop loans being routed
availability of agricultural credit at affordable
through it. By the end of June 2012, the number
cost to farmers. Agriculture credit flow at the
of live KCCs issued by commercial banks,
end of July, 2012 stood at ` 1,86,243 crore cooperative banks, and regional rural banks
achieving 32 per cent of the target at reached 9.08 crore, while total loans
` 5,75,000 crore for 2012-13. The achievement outstanding amounted to ` 444,421 crore in
during the year 2011-12 amounts to ` 5,11,029 March 2012.
Table 1.14:Target and Achievement of Credit Flow to Agriculture Sector
during 2011-12 and 2012-13(up to July 2012)
(` Crore)
2011-12 2012-13
Agency Target Achievement Per cent Target Achievement per cent
(Provisional) Achieved (Provisional) Achieved
Commercial 3,55,000 3,68,616 103.84 4,20,000 1,11,543 26.56
Banks
Cooperative 69,500 87,963 126.57 84,000 52,630 62.65
Banks
Regional Rural 50,500 54,450 107.82 71,000 22,070 31.08
Banks
Total 4,75,000 5,11,029 107.59 5,75,000 1,86,243 32.39
Source: Commercial Banks' data from IBA; Cooperative & RRBs data from NABARD ROs
12 MID-YEAR ECONOMIC ANALYSIS
INDUSTRY AND INFRASTRUCTURE 1 per cent. In the first six months of the current
financial year, growth in the manufacturing
Industrial Output - Prolonged Stagnation
sector has been (-)0.4 per cent as compared
1.23 The deceleration in the industrial sector to the 5.5 per cent growth during the same
was sharper during the first half of the current period of the previous year. Mining sector
financial year in comparison to that in the same performance was dragged down by the sharp
period of the previous year. The combination reduction in natural gas output and the near
of factors that affected industrial production stagnant production of crude oil. Electricity
during 2011-12, continued to be a drag on generation growth during the current financial
industrial output even during the current year slowed down to 4.6 per cent as compared
financial year. However, a major cause of to a robust 9.4 per cent increase recorded in
manufacturing sluggishness in this financial the first half of previous year. Shortage of coal
year has been the drop in investment as led to capacity underutilization in the thermal
reflected in the slower rate of growth in based power generation during the first half.
disbursement of bank credit and lower
1.25 As per the use based classification of
investment in new projects. The cycle of
adverse business sentiment leading to lower sectoral growth, the slowdown was pervasive
investment and aggregate demand slowdown (Fig 1.5). Basic goods, intermediate goods and
has delayed the industrial recovery. Corporate consumer goods sectors had comparatively
sector capacity utilization and sales growth have lower growth during the first half of the current
also continued to be low. Further, infrastructure financial year. Higher borrowing costs and the
bottlenecks also impinged on the performance dip in investment impacted the capital goods
of the mining and electricity sectors. During sector the most.
April-September 2012-13, IIP growth was 0.1
1.26 Output of the capital goods sector had
per cent as compared to 5.1 per cent in
declined by 4 per cent in 2011-12. This trend
April-September 2011-12 (Table 1.15).
continued during 2012-13 with the output
1.24 IIP based comparative growth rates of growth of this sector further declining by 20.1
broad industrial groups are given in Table 1.15. per cent and 6.9 per cent in the first and second
IIP followed a declining trend since the third quarters respectively of the current financial
quarter of 2010-11 till the first quarter of 2012- year (FY). Overall, there was a decline of 13.7
13. A reversal in this trend is observed only in per cent in the capital goods sector during April-
the second quarter. Keeping in line with the Sept. of the current FY as compared to 4.6
overall IIP, the growth in the manufacturing per cent growth during the corresponding
sector also exhibited a similar trend. In the period of 2011-12. During the first half of the
last 15 months, growth has averaged less than current financial year, the dip in production had
Table 1.15: Growth in broad industrial groups based on IIP ( Base 2004-05 =100)
(per cent)
Mining Manufacturing Electricity General
Weight 141.57 755.27 103.16 1000
Q1 8.0 10.4 5.4 9.6
Q2 6.3 7.4 2.1 6.8
Q3 6.3 9.2 6.5 8.6
2010-11 Q4 1.1 8.9 8.1 7.9
Q1 0.7 7.7 8.3 7.0
Q2 -4.1 3.4 10.5 3.2
Q3 -4.2 1.1 9.6 1.2
2011-12 Q4 -0.4 0.3 4.5 0.6
Q1 -1.5 -0.8 6.4 -0.3
2012-13 Q2 1.8 0.2 2.8 0.5
April-September
2011-12 -1.6 5.5 9.4 5.1
2012-13 0 -0.4 4.6 0.1
Source: Central Statistics Office
OVERVIEW OF THE ECONOMY 13
Figure 1.5:Industrial growth: use based industrial classification (per cent)
been under the categories "machinery and quarters of the current financial year as imports
equipment", "electrical machinery" and contracted in line with the overall performance
"transport". The dip in the transport segment of the manufacturing and capital goods sector.
was mainly due to the decline in output of There appears to be complementarity at times
commercial vehicles and three wheelers. between the growth of production of capital
Production of major individual products falling goods and the growth of imports of these
under the capital goods sector namely goods, as can be seen from Figure 1.6 in the
computers, UPS, transformers, insulated period before Q1 2011-2012, perhaps because
cables, turbines and construction machinery investment drives them both. More recently,
declined. While imports of capital goods though, there seems to be more substitution,
increased significantly during 2010-11 and though some caution is necessary in
2011-12, the trend reversed during the first two extrapolating recent trends.
Fig 1.6: Growth of imported and domestically produced capital goods
14 MID-YEAR ECONOMIC ANALYSIS
1.27 At the 2-digit level, out of the 22 sub- in growth. Monetary tightening and higher
sectors under manufacturing activities, 12 cost of borrowing have dented overall
sub-sectors witnessed negative growth investment flow into industry and
during the second quarter of 2012-13 as infrastructure during the current financial
compared to 8 sub-sectors during the first year. Poor business sentiment, the decline
quarter of the year. On a cumulative basis, 8 in gross fixed capital formation, the dip in
sub-sectors witnessed a negative growth the launch of new projects and lower exports
during April-September, 2012-13. There had continue to put demand side constraints on
been, however, an improvement in the industrial growth. The supply side constraints
performance of some segments during Q2. mainly on account of infrastructure
The food sub-group exhibited a growth of 1.7 bottlenecks have resulted in moderation in
per cent in the second quarter vis-à-vis a the output of many sub-sectors. Mining
decline of 0.9 per cent during the first quarter sector growth has also been affected by
of 2011-12. The textile sub-group also delays in regulatory and environment
registered a turnaround. Overall, this sub- clearances.Non-food credit off-take had been
group exhibited a cumulative growth of 6.8 lower during the current financial year as
per cent during April-September, 2012-13 as compared to the corresponding period of the
compared to the contraction of 1.2 per cent last year. Year on year growth rate of gross
during the corresponding period of 2011-12. credit deployed to industry as a whole is
Wearing apparel (mainly ready-made about 10 per cent lower during the current
garments) segment has bounced back during financial year.
the Q2 as it exhibited a growth of 5.7 per
Major infrastructure sectors and universal
cent during the second quarter as compared
intermediaries
to a contraction of 6.4 per cent during the
first quarter of 2012-13. There has also been 1.29 The eight core infrastructure
recovery in case of chemicals and chemical supportive industries, with an overall weight
products segment during Q2. This sub-group of 37.9 per cent in IIP, registered a growth of
exhibited a growth of 5.8 per cent during the 3.6 per cent and 2.8 per cent in the first and
second quarter as compared to contraction second quarters of 2012-13 respectively. The
of 1.2 per cent during the first quarter of year on year growth during April-September
2012-13. Overall this sub-group exhibited a of the current financial year was 3.2 per cent
cumulative growth of 2.3 per cent during as against growth of 5 per cent during the
April-September 2012-13 as compared to 0.7 corresponding period of the previous year
per cent rise during the corresponding period (Table 1.16). Coal, refinery products and
of 2011-12. cement sectors achieved comparatively
higher growth in the current financial year.
Reasons for industrial sector slowdown
Growth rates of the steel sector and electricity
1.28 The prevailing slowdown in industrial generation were comparatively lower.
production is due to combination of domestic Production of crude oil, natural gas and
and external factors. While the global fertiliser contracted during the first half of
economic slowdown had affected the export current financial year vis-à-vis the production
dependent sectors, depressed sentiments, in the first half of 2011-12. The slowdown has
high interest rates, moderation in credit impacted revenue earning on account of
growth and a deceleration in growth of reduced cargo, freight handling by railways,
investment also contributed to the reduction civil aviation and ports sectors.
OVERVIEW OF THE ECONOMY 15
Table 1.16: Trends in Growth of Infrastructure and Universal Intermediaries (per cent)
Industry 2009-10 2010-11 2011-12 April-September
2011-12 2012-13
i Electricity 6.2 5.5 8.1 9.3 4.7
ii Coal 8.1 -0.3 1.2 -4.8 8.3
iii Steel 6.0 8.9 7.0 9.5 2.6
iv Crude oil 0.5 11.9 1.0 5.1 -0.8
v Refinery products -0.4 3.0 3.2 4.6 5.4
vi Cement 10.5 4.5 6.7 3.8 7.4
vii. Natural Gas 44.6 10.0 -8.9 -8.5 -12.5
Viii Fertilizers 12.7 0.0 0.4 0.6 -5.6
Overall Index 6.6 5.7 4.4 5.0 3.2
Source: O/O The Economic Adviser, DIPP
Corporate sector performance 2012-13. Further, due to a higher rate of
1.30 Based on the abridged results of non- growth of expenditure as compared to sales,
government non-financial listed companies, net profits declined for four consecutive
the deceleration in sales growth (Y-o-Y) quarters up to Q1 of 2012-13. However there
which started in Q4 of 2011-12 continued in has been a marked improvement in the
the first half of 2012-13 as shown in Table growth of net profits during Q2 of 2012-13
1.17. Sales growth decelerated to a due to lower growth in interest expenses and
11-quarter low of 11.6 per cent in Q2 of higher growth in 'other income'
Table 1.17: Performance of Non-Government Non-Financial Listed Companies
1
Growth Rates (in Per cent)
2011-12 2012-13
Item Q1 Q2 Q3 Q4 Q1 Q2(P)
No. of Companies 2,615 2,627 2,637 2,597 2,790 1,435
Sales 22.5 19.0 19.2 15.0 13.4 11.6
Expenditure, of which 23.0 22.4 24.7 16.1 15.8 11.9
Raw Material 27.6 23.1 25.1 16.4 13.4 11.6
Staff Cost 19.6 17.6 18.9 14.2 17.3 16.0
Operating Profits (EBITDA) 12.1 -1.0 -5.9 -1.8 -3.7 13.8
Other Income* 39.4 25.8 66.1 47.2 29.5 54.8
Depreciation 9.5 9.7 10.5 11.1 10.3 8.6
Gross Profits (EBIT) 15.7 -0.3 -2.8 2.1 -2.5 23.8
Interest 21.6 47.1 42.6 34.8 37.9 7.4
Tax Provision 21.0 3.3 -2.4 1.9 -3.6 19.8
Net Profits 5.7 -14.8 -31.3 -7.2 -10.7 31.2
Net Profits to Sales 7.4 6.1 4.8 6.8 5.9 8.4
*: Other income excludes extraordinary income/expenditure if reported explicitly
1.Growth rates are per centage changes in the level for the period under reference over the corresponding period
of the previous year for common set of companies.
Source : RBI.
16 MID-YEAR ECONOMIC ANALYSIS
Industry and infrastructure financing which was a decline from 8.01 per cent in
August 2012. It has fallen further to 7.45 per
1.31 The sectoral deployment of credit by
cent in October 2012. The recent decline in
the scheduled commercial banks indicates a
inflation was mainly because of the decline in
moderation in credit growth for the
inflation of manufactured products (non-
manufacturing and infrastructure sector metallic mineral products, leather, basic metals,
(telecommunication & other infrastructure chemical and chemical products), primary
sectors) in the current year (Table 1.18). Within articles (spices, fruits & vegetables) and fuel
the manufacturing sector, food processing and & power (bitumen, petrol and electricity).
textiles witnessed a reduction in the credit Inflation, however, increased in crude
growth. petroleum, non-food articles, cereals, protein
foods, mineral oils, edible oils, beverages,
PRICES
tobacco & tobacco products.
Inflation is moderating
1.33 Inflation as measured by the consumer
1.32 Inflation as measured by the Wholesale price indices,which averaged 10.0 per cent to
Price Index (WPI), which averaged 9.6 per cent 10.5 per cent in 2010-11, moderated to 8.2 per
in 2010-11, moderated to 8.9 per cent for cent to 8.4 per cent in 2011-2012. However, it
2011-12 and further decelerated to 7.7 per cent has again gone up and is in the range of 8.5
in 1st half (April-September) of 2012-13. WPI per cent to 10.0 per cent during 1st half of
inflation was 7.81 per cent in September 2012, 2012-2013 (Table 1.19).
Table 1.18: Growth of Credit by Scheduled Commercial Banks (per cent)
2009-10 2010-11 2011-12 2012-13
Apr-Sep Oct-Mar Apr-Sep Oct-Mar Apr-Sep Oct-Mar Apr-Sep
Industries 19.7 18.3 26.3 26.6 23.7 20.7 17.8
Manufacturing 12.3 10.0 18.2 20.5 21.4 20.8 19.2
Mining 19.6 14.8 28.7 27.2 41.9 43.0 34.7
Electricity 45.1 51.7 51.5 45.5 37.6 25.1 16.7
Construction 28.0 10.1 16.8 15.8 12.8 17.9 17.5
Other Infrastructure 39.0 38.3 44.4 38.4 19.6 14.4 11.8
Manufacturing sub sectors
Food Processing 6.1 11.5 26.3 32.4 26.3 20.8 18.2
Textiles 7.9 10.8 16.9 19.5 19.3 13.1 8.0
Petroleum & Nuclear Fuels 11.0 -11.3 3.9 -11.5 -1.6 3.7 7.9
Chemicals & Chemical Products 6.5 5.0 15.1 16.8 11.7 12.4 19.9
Cement & Cement Products 43.8 20.1 29.0 33.8 14.9 18.5 20.0
Basic Metal & Metal Product 23.1 20.7 24.6 27.4 29.9 25.0 19.6
All Engineering 15.1 6.3 20.0 29.8 25.8 20.9 25.2
Transport Equipment 7.1 3.9 11.4 14.2 23.3 21.3 22.5
Other Industries 9.8 14.1 17.3 20.9 23.7 29.2 24.7
Source : RBI
Table 1.19: Food and non-food inflation for WPI and CPI (IW, AL, RL and New Series)
2010-11 2011-12 2012-13 (Apr-Sep)
General Food Non- General Food Non- General Food Non-
Food Food Food
WPI 9.6 11.1 9.0 8.9 7.2 9.6 7.7 9.0 7.1
CPI-IW 10.5 9.9 11.3 8.4 6.3 11.6 10.0 11.0 8.9
CPI-AL 10.0 9.4 11.4 8.2 5.2 15.1 8.5 7.0 11.8
CPI-RL 10.0 9.6 11.0 8.4 5.3 14.9 8.8 7.2 12.0
CPI-NS - - - - - - 10.0 11.1 9.0
OVERVIEW OF THE ECONOMY 17
Food and Non-food inflation higher from previous level of 8 months. It
declined somewhat in September and in
1.34 Non-food inflation in terms of consumer
October 2012. During the current financial year,
price indices which averaged 11.0 per cent to
weighted contribution of primary articles and
11.4 per cent in 2010-11 accelerated in the
fuel to headline inflation was relatively higher
range of 11.6 per cent to 15.1 per cent in 2011-
than their respective weights, while the
2012 and, it has decelerated in the range of
weighted contribution of manufactured
8.9 per cent to 12.0 per cent during 1st half of
products has been relatively lower than its
2012-2013.
weight. The movement of point contribution to
1.35 Inflation in food items has been a major headline inflation of major groups for last three
source of high headline CPI inflation. Food years is presented in Fig 1.7.
inflation based on CPIs (weight 46.20 per cent
1.38 The reasons behind persistent inflation
to 69.15 per cent), which averaged 15.2-15.7 are (a) higher international prices of crude,
per cent in 2009-10 due to supply precious metals, edible oil etc. (b) change in
shocks,moderated to 9.4 - 9.9 per cent in dietary pattern leading to structural demand
2010-11 and further to 5.2-6.3 per cent in supply mismatch for protein rich items (c)
2011-12. CPI food inflation during April- revision in MSP prices for some of the essential
September of the current year varied from 7.0 commodities (d) revision in petroleum prices in
per cent to 11.1 per cent (Table 1.19). September 2012 among others. Inflation has
1.36 In case of WPI and CPI-IW and CPI new been a major cause of concern for both the
series, the primary sources of inflation have Government and Reserve Bank of India who
switched to food from April 2012. Persistent are taking a number of measures to contain it
supply constraints in many protein food products as indicated in Box 1.1. Ultimately, though, short
have generated price pressures in these term measures will only have short term effects,
commodities. However, in case of CPI-AL and and not always in the desired direction. Periodic
CPI-RL, the sources of inflation have continued bans of exports, institution and removal of tariffs,
to be non-food commodities from August 2010. and repeated closure of futures markets tend
to make it hard for producers to plan, distorts
Contribution to inflation of major groups their incentives, and inhibits the production
1.37 The year-on-year headline WPI increases that are needed to bring prices under
inflation in August 2012 was 8.0 per cent, little more sustained control.
Fig 1.7: Weighted point contribution of major group to headline WPI inflation
14.00
10.88
10.48
10.25
10.00
12.00
9.98
9.87
9.78
9.74
9.68
9.56
9.54
9.51
9.45
9.47
9.46
9.36
9.08
8.98
8.87
8.20
10.00
8.01
7.81
7.74
7.69
7.58
7.56
7.55
7.52
7.50
7.45
7.23
8.00
6.00
4.00
2.00
0.00
Apr 10
Aug10
Apr 11
Aug11
Apr 12
Aug12
Jun10
Sep10
Oct10
Nov10
Dec 10
Feb11
Jun11
Sep11
Oct11
Nov11
Dec 11
Feb12
Jun12
Sep12
Oct12
May10
Jul10
Jan11
Mar 11
May11
Jul11
Jan12
Mar 12
May12
Jul12
Primary Articles Fuel & Power Manufactured Product All Commodities
18 MID-YEAR ECONOMIC ANALYSIS
Box 1.1Measures taken and proposed by the Government to contain price rise
1. Fiscal & Administrative measures
· Reduced import duties to zero - for wheat, onion, pulses, crude palmolein and to 7.5 per
cent for refined & hydrogenated oils & vegetable oils.
· Duty-free import of white and raw sugar was extended up to 30.6.2012; however, import
duty of 10 per cent was instituted in June 2012.
· Banned export of edible oils (except coconut oil and forest based oil) and edible oils in
blended consumer packs upto 5 kg with a capacity of 20,000 tons per annum and
pulses (except Kabuli chana and organic pulses and lentils up to a maximum of 10000
tonnes per annum).
· Imposed stock limits from time to time in the case of select essential commodities such
as pulses, edible oil, and edible oilseeds and in the case of paddy and rice for specific
seven states upto 30.11.2012.
· Ban on export of onion was imposed for short period of time whenever required. Exports
of Onion were calibrated through the mechanism of Minimum Export Prices (MEP).
· Maintained the Central Issue Price (CIP) for rice (at Rs 5.65 per kg for BPL and Rs 3 per
kg for AAY) and wheat (at Rs 4.15 per kg for BPL and Rs 2 per kg for AAY) since 2002.
· Suspended Futures trading in rice, urad, tur, guar gum and guar seed.
· To ensure adequate availability of sugar for the households covered under TPDS, the
levy obligation on sugar factories was restored to 10 per cent for sugar season 2011-12.
· Government allocated rice and wheat under Open Market Sales Scheme.
· Resumed the scheme for subsidized imported pulses through PDS in a varied form
with the nomenclature " Scheme for Supply of Imported Pulses at Subsidized rates to
States/UTs for Distribution under PDS to BPL card holders" with a subsidy element of
` 20/- per kg to be paid to the designated importing agencies upto a maximum number
of BPL card holders for the residual part of the current year and extended the scheme
for subsidized imported edible oils w.e.f. 1.10.2012 to 30.9.2013 with subsidy of ` 15/-
per kg for import of upto 10 Lakh tonnes of edible oils for this period.
2. Budgetary and other measures
A number of measures were announced in Union Budget 2012-13 to augment supply and
improve storage and warehousing facilities. Government launched a National Mission for Protein
supplements in 2011-12 with allocation of Rs 300 crore. To broaden the scope of production of
fish to coastal aquaculture, apart from fresh water aquaculture, the outlay in 2012-13 was
stepped up to Rs 500 crore. Recently, Government permitted Foreign Direct Investment (FDI)
in multi-brand retail trading. This will help consumers and farmers as it will improve the selling
and purchasing facilities.
3. Monetary measures
The Reserve Bank of India (RBI) had also taken suitable steps to contain inflation with 13
consecutive increases by 375 bps in policy rates from March 2010 to October 2011.
OVERVIEW OF THE ECONOMY 19
MONEY AND BANKING domestic growth, the growth-inflation trade-off
needs a revisit. In the assessment of the
Monetary Policy stance
Reserve Bank of India, keeping in view the
1.39 Mounting inflationary pressures during inflation in the country, further reduction in
the period January 2010-October 2011 policy rates at this juncture, could accentuate
required adoption of a tight monetary policy inflationary pressures rather than supporting
by the Reserve Bank of India (RBI). An growth. Further, since the risk to inflation was
increase in policy rates by 375 basis points also emanating from the high fiscal deficit,
(repo rate was increased from 4.75 per cent to uncertainty in international prices of crude oil
8.5 per cent) during this period, helped in and structural imbalances in demand-supply
moderation of inflation from a peak of 10.9 per of food (particularly protein foods), a cautious
cent in April, 2010 to an average of 7.7 per monetary policy stand was preferable.
cent during April-September 2012. However, However, the actions taken by the Government
the economy may have slowed down more since September, particularly with regard to the
than what was anticipated earlier. Since April, increase in the administered prices of diesel,
2012, monetary policy has attempted to announcement of a fiscal road map with clear
balance the growth-inflation dynamics though medium term fiscal deficit targets and
a calibrated softening of policy rates. The repo initiatives to improve investor perception have
rate was reduced by 50 basis points to 8 per created a favourable environment and have
cent in April, 2012. There was a reduction in signalled a shift towards investment and
the Cash Reserve Ratio (CRR) from 6 per cent capacity addition. As it anticipates some of
in October 2011 to 4.25 per cent in October the inflationary pressures from excess demand
2012 and a reduction in Statutory Liquidity will be alleviated, the RBI should have room
Ratio (SLR) from 24 per cent since May 2012 for more accommodative monetary policy.
to 23 per cent in August, 2012. Movements of
1.41 The slow-down of economic activity
key policy rates have been as indicated below
was also getting reflected through a
(Table 1.20):
moderation in money supply and bank credit
1.40 Global economic and financial growth. While liquidity conditions continue to
conditions continued to deteriorate during this remain manageable, a widening of the gap
period and with a sharper moderation in between deposit and credit growth combined
Table 1.20: Revision in Policy Rates
Effective date Bank Rate Repo Reverse Repo CRR SLR
01.01.2011 6.00 6.25 5.25 6.00 24.00
25.01.2011 6.50 5.50
17.03.2011 6.75 5.75
03.05.2011 7.25 6.25
16.6.2011 7.50 6.50
26.7.2011 8.00 7.00
16.09.2011 8.25 7.25
25.10.2011 8.50 7.50
28.01.2012 5.50
13.02.2012 9.50
10.03.2012 4.75
17.4.2012 9.00 8.00 7.00
11.08.2012 23.00
22.9.2012 4.50
03.11.2012 4.25
st
* Prevailing rates as on 1 January 2011
20 MID-YEAR ECONOMIC ANALYSIS
with a seasonal pick up in credit demand are with inflation expected to average 7.5 per cent.
likely to keep up the pressure on liquidity. Consistent with macro parameters, the targets
Policy actions in terms of reduction in CRR of money supply and credit growth were also
and SLR, in the recent months have been reduced (Table 1.21).Actual M3 growth at 13.6
supportive and have tended to pre-empt a per cent in Q2 of 2012-13 appears to be
prospective tightening of liquidity conditions converging to the indicative target of 14 per
and reinforce the growth stimulus. cent set by RBI. Non-food credit growth has
Macro parameters and targeted money and also been hovering around 16 to 17 per cent
credit growth in the last 3 quarters and is only slightly higher
1.42 The monetary policy of RBI was based than the indicative targets. The ratio of M3 to
on its indicative projection of macroeconomic GDP is currently slightly higher than its medium
parameters for 2012-13. In its policy review on term average of 3.1, largely on account of a
April, 17, 2012, RBI expected GDP growth at moderation in the growth itself (Fig 1.8).
7.3 per cent and inflation to slow to 6.5 per cent Liquidity Conditions
by March, 2013. Consistent with this growth
and inflation it had set an indicative target of 1.44 During 2011-12, liquidity conditions had
M3 growth and non-food credit growth of 15 per remained benign to mid-November, but
cent and 17 per cent respectively (Table 1.21). pressures intensified in the subsequent part
of the year, with average net borrowing under
1.43 However, based on its latest theliquidity adjustment facility (LAF) reaching
assessment of economic situation, it reduced as high as ` 1,570 billion in March 2012, with
the projection for GDP growth to 5.8 per cent an all-time high of ` 2,028 billion on March 30,
Table 1.21: Indicative Projections of Macro Parameters by RBI for 2012-13
Indicative projections for growth rates (per cent)
Annual Policy First Quarter Review Second Quarter Review
2012-13 (July 31, 2012) (Oct 30, 2012)
(April 17, 2012)
GDP growth 7.3 6.5 5.8
WPI inflation 6.5 7.0 7.5
Money supply growth (M3) 15.0 15.0 14.0
Non-food credit 17.0 17.0 16.0
Fig 1.8: Growth of Non-food credit, M3, GDP and M3/GDP
OVERVIEW OF THE ECONOMY 21
2012. Both structural and frictional factors - improved the access of banks to potential
such as foreign exchange market interventions liquidity. In September and October 2012
by the RBI, divergence between credit and liquidity conditions tightened, taking the
deposit growth, build-up of government cash average net LAF borrowing to ` 904 billion
since October 15, 2012, which was well above
balances with RBI and the increase in currency
the (+/-) one per cent of net demand and time
in circulation - contributed to the liquidity
liabilities (NDTL) comfort level for liquidity. A
pressures. Responding to the tight liquidity CRR cut by 25 basis points (from 4.5 per cent
conditions, the RBI had conducted open to 4.25 per cent) by RBI on October 30, 2012,
market operations (OMOs) aggregating ` 1.3 injected primary liquidity of ` 0.20 trillion into
trillion between November 2011 and March the banking system (Fig 1.9).
2012, besides sequentially reducing CRR,
injecting thereby primary liquidity of around Deployment of Credit
` 0.8 trillion into the banking system. 1.46 The disaggregated data on sectoral
deployment of gross bank credit available upto
1.45 Liquidity conditions eased gradually
September, 2012 indicate that except for
during the first half of 2012-13. The turnaround agriculture, there has been a reduction in the
in liquidity conditions was due to a decline in rate of growth of credit flow to other sectors.
government's cash balances, injection of The sectoral shares of the non-food credit
liquidity of about ` 860 billion by way of OMOs indicate that for the personal loans and priority
purchases of securities and increased use of sector lending, there has been a decline in the
the export credit refinance facility by banks. share in the last three years (Fig 1.10 and Table
Reduction in SLR by one percentage point also 1.22).
Fig. 1.9: Net Injection/Absorption of Liquidity
Figure 1.10: Sectoral Deployment of Non-food credit (April-September)
22 MID-YEAR ECONOMIC ANALYSIS
Table 1.22: Sectoral deployment of Bank credit (Rs. billion)
2009-10 2010-11 2011-12 2012-13
Apr-Sep Oct-Mar Apr-Sep Oct-Mar Apr-Sep Oct-Mar Apr-Sep
Non-food Credit 26,067 28,204 31,010 34,615 37,258 40,300 43,450
Agriculture 3,316 3,627 4,000 4,319 4,456 4,667 5,242
Industry) 10,774 12,092 13,610 15,311 16,831 18,479 19,831
Services 6,369 6,779 7,409 8,419 8,985 9,753 10,394
Personal Loans 5,608 5,706 5,992 6,566 6,986 7,401 7,984
Priority Sector 9,263 9,859 10,779 11,859 12,414 12,887 14,060
Sectoral Shares (per cent)
Agriculture 12.7 12.9 12.9 12.5 12.0 11.6 12.1
Industry) 41.3 42.9 43.9 44.2 45.2 45.9 45.6
Services 24.4 24.0 23.9 24.3 24.1 24.2 23.9
Personal Loans 21.5 20.2 19.3 19.0 18.7 18.4 18.4
Priority Sector 35.5 35.0 34.8 34.3 33.3 32.0 32.4
Year on year rate of growth (per cent)
Non-food Credit 15.6 13.3 19.0 22.7 20.1 16.4 16.6
Agriculture 25.1 22.0 20.6 19.1 11.4 8.1 17.6
Industry) 19.7 18.3 26.3 26.6 23.7 20.7 17.8
Services 15.7 11.5 16.3 24.2 21.3 15.8 15.7
Personal Loans 4.0 1.5 6.8 15.1 16.6 12.7 14.3
Priority Sector 18.7 16.0 16.4 20.3 15.2 8.7 13.3
1.47 Moderation in the growth in personal was kept to 3 per cent for 2012-13,
loans was sharp in first half of 2009-10 and making the effective rate of interest for
2010-11. Though credit growth significantly prompt payee farmers @ 4 per cent p.a.
recovered in first half of 2011-12 and 2012-13,
it continued to remain below the overall non-
· To strengthen NABARD's capital base
food credit growth. Within personal loans, in a phased manner, ` 2000 crore has
loans for housing were affected more severely. been proposed for release in the
Moderation in the growth of agricultural credit financial year 2012-13.
in second half of 2011-12 necessitated policy · The Government of India has allocated
initiatives in this sector. Some of important
` 5000 crore for Rural Warehousing
initiatives for improving credit to agriculture
sector were the following: during the financial year 2012-13.
Operational guidelines have been
· The credit flow target for agriculture for issued to NABARD.
the year 2012-13 was raised by to
` 575,000 crore from ` 475,000 crore 1.48 Rural Infrastructure Development Fund
in 2011-12. In the first half of the year, (RIDF) was set up by the Government in 1995-
42 per cent of the target was achieved 96 for financing on-going rural infrastructure
and the banks have been asked to step projects. The fund is maintained by NABARD.
up agriculture lending to achieve the The contributions to the RIDF are made by
target. those public and private sector banks who fail
· The interest subvention for timely to meet the target for priority sector and/or
repayment of crop loans upto Rs 3 lakh agriculture lending. This fund is utilized to lend
OVERVIEW OF THE ECONOMY 23
to State Governments to build rural of which ` 5,000 crore has been allocated
infrastructure in the areas of roads, minor exclusive for Rural Warehousing.
irrigation, soil conservation, drainage, forests,
Financial inclusion
plantation etc. The total cumulative sanctions
under RIDF (XVIII) as on 30th October, 2012 1.49 Financial inclusion remained high on
the list of priorities of the government and
stood at ` 169,757 crore, while the
several steps were initiated to meet the target
disbursement was ` 1,18,828 crore. In addition,
of extending banking outreach to all habitations
in past four years, ` 18,500 crore was having population of 1000 in North East and
sanctioned, and disbursed, to National Rural hilly states and to other habitations have
Road Development Agency (NRRDA) for rural crossed a population of more than 2000 as per
roads under Bharat Nirman. During 2012-13, Census 2011. Initiative taken for financial
` 20,000 crore has been allocated under RIDF, inclusion is given in Box 1.2.
Box: 1.2 - Financial inclusion
Opening of Bank Branches: In view of the continued need for opening of branches in rural
areas for increasing banking penetration and financial inclusion, Government issued detailed
guidelines on financial inclusion in October 2011, advising banks to open branches in all
habitations of 5,000 or more population in under-banked districts and 10,000 or more population
in other districts. As per reports received, out of 3,955 identified villages/habitation 2163 bank
branches have been opened (including 1,437 Ultra Small Branches) by end of October, 2012.
" Swabhimaan" the Financial Inclusion Campaign : The Government had launched
"Swabhimaan" - the Financial Inclusion Campaign in February 2011, under which over 74,000
habitations having a population of over 2000 have been provided with banking facilities through
branches, business correspondent agents (BCAs), mobile vans etc. and about 3.16 crore Financial
Inclusion accounts have been opened till March, 2012. Pursuant to the Finance Minister's Budget
Speech 2012-13 the "Swabhimaan" campaign has been extended to habitations with population
of more than 1000 in North Eastern and hilly States and to other habitations which have crossed
population of 2,000 as per census 2011. Accordingly about 45,000 such habitations have been
identified to be covered under the extended "Swabhimaan" campaign.
Direct Cash Transfer of Subsidies
Government has decided to introduce Direct Cash Transfers into the Bank account of the
beneficiary under various programmes. In the first instance effective January, 2013, Direct Cash
Transfer is being taken up in 51 districts in 18 States /UTs for various welfare schemes being
implemented such as MGNREGA, Scholarship/Fellowship, JananiSurakshaYojna,
IndraAwasYojana, National Rural Livelihood Mission etc. While the concerned Departments/
Agencies would provide details of the beneficiaries along with amounts to be credited, the banks
have been advised -
(i) To be ready with the opening of bank account of the beneficiaries under various schemes.
(ii) To ensure that these can capture the Aadhaar numbers, since Aadhaar numbers would
form the basis for transfer of benefits.
(iii) To provide adequate number of different access point (Branch, ATMs and others) to
enable the beneficiary to withdraw the money as per his ease and convenience.
Opening of one Bank Account per family: In order to ensure electronic transfer of cash subsidies
directly into the accounts of the beneficiaries under the various Schemes of Govt. of India and
State Governments, it is important that the beneficiaries have an account in a bank having Core
Banking Solutions (CBS). Accordingly, banks have been advised that the service area bank in
rural areas and banks assigned the responsibility in specific wards in urban area ensure that
every household has at least one bank account.
24 MID-YEAR ECONOMIC ANALYSIS
Interest Rates commercial banks (SCBs) during 2012-13 (up
to October). The modal deposit rate and base
1.50 Following the reduction in the policy
rate of SCBs witnessed moderation of seven
(repo) rate by 50 bps in April 2012 coupled with
basis points and 25 basis points, respectively,
the reduction in the CRR by 150 points during over this period (Table 1.23). With the reduction
January -September 2012 and SLR by 100 bps in CRR by 25 bps effective November 3, 2012,
in August 2012, there has been a moderation deposit and lending rates expected to
in both deposit and lending rates of scheduled moderate further.
Table 1.23: Deposit & Lending Rates of Scheduled Commercial Banks (SCBs)
(Per cent)
Items Sept-11 Dec-11 Mar-12 Jun-12 Sep-12 Oct-12 (P)
(A) Domestic Deposit Rates
(i) Public Sector Banks
Up to 1Year 1.00-9.55 1.00-9.55 1.00-9.75 4.00-9.25 4.00-9.25 4.00-9.25
1 3 Years 8.55-9.75 8.55-9.75 9.00-9.75 8.75-9.50 8.50-9.30 8.50-9.25
Above 3
8.00-9.50 8.00-9.50 8.50-9.50 8.00-9.50
Years 8.50-9.30 8.50-9.25
(ii) Private Sector Banks
Up to 1Year 3.00-9.40 3.00-9.25 3.00-9.50 3.00-9.25 3.00-9.25 3.00-9.00
1 3 Years 8.00-10.50 8.00-10.50 8.00-10.50 8.00-10.00 8.00-9.75 8.00-9.75
Above 3
8.00-10.00 8.00-10.10 8.00-10.10 8.00-10.00
Years 8.00-9.50 8.00-9.50
(iii) Foreign Banks
Up to 1Year 3.00-10.00 3.50-10.00 3.50-11.80 3.50-9.25 2.43-9.25 2.43-9.25
1 3 Years 3.50-9.75 3.50-9.75 3.50-9.75 3.50-9.75 3.50-9.75 3.50-9.75
Above 3
4.25-9.50 4.25-9.50 4.25-9.50 3.75-9.50
Years 3.75-9.50 3.75-9.50
SCBs Modal Deposit Rate
(All Tenors) 7.44 7.46 7.42 7.40 7.29 7.35
(B) Base Rate
Public Sector 10.00-10.75 10.00-10.75 10.00-10.75 10.00-10.50 9.75-10.50 9.75-10.50
Banks
Private Sector
9.70-11.00 10.00-11.25 10.00-11.25 9.75-11.25
Banks 9.75-11.25 9.75-11.25
Foreign
6.25-10.75 6.25-10.75 7.38-11.85 7.38-11.85
Banks 7.25-11.75 7.25-11.75
SCBs
Modal Base
10.75 10.75 10.75 10.50 10.50 10.50
Rate
(C) Median Lending Rate
Public Sector
Banks 10.50-15.25 10.25-15.25 10.60-15.35 10.50-15.50 10.50-15.38 -
Private Sector
Banks 9.00-15.25 10.00-15.50 10.50-15.50 10.63-15.38 10.20-15.63 -
Foreign
Banks 9.13-14.75 9.50-14.38 10.00-14.50 10.00-14.50 9.83-14.50 -
(Median range of interest rate on advances at which at least 60 per cent business has been contracted and figures
for September, 2012 are provisional)
OVERVIEW OF THE ECONOMY 25
1.51 Rate of growth of deposits, not only was enabled a downward movement in yields
sticky, it continued to remain lower than the while inflationary pressure, liquidity
growth of non-food credit for most part of conditions and supply concerns exerted an
2010-12. Persistently high inflation and upward pressure. The maturity of issuance
increased preferences for gold partly reflected during the year was elongated in view of the
relatively flat yield curve and better appetite
slower growth of deposits. The ratio of non-
for longer term debt. The weighted average
food credit to deposits, therefore, increased
maturity of securities issued during 2012-13
from around 67 per cent in June, 2009 to 73-
(up to 08 November 2012) was 13.54 years
75 per cent from February, 2012.
as compared to 12.19 years in the
Government securities market corresponding period of the previous year.
1.52 The Central Government completed The weighted average yield during the same
a large part (74.1 per cent) of the budgeted period was 8.43 per cent as compared to
gross market borrowing programme during 8.48 per cent in the corresponding period of
April-November 2012 (up to November 08) the previous year.
as compared with 73.4 per cent in the Treasury Bills
corresponding period of the previous year.
1.53 The cut off yields in case of 91-Day,
Most of the repayments during 2012-13 were
182-Day and 364-Day Treasury Bills (TBs) in
scheduled in first half of the year 2012-13 eased vis-à-vis previous year due to
necessitating the front loading of budgeted reduction in repo and reverse repo rates by
gross borrowings for the year. Interplay of 50 bps in the beginning of the year.
factors influenced the yields on government Moderation in yields was more pronounced
securities during the year whereby policy rate at the longer end resulting in an inversion of
cut by RBI in the beginning of the fiscal year, the yield curve during the year, though the
OMO purchases by RBI, slowdown in GDP degree of inversion gradually corrected during
growth rate and global economic outlook the course of the year (Table 1.24).
Fig 1.11: Non-Food credit and Deposits' growth
26 MID-YEAR ECONOMIC ANALYSIS
Table 1.24: Average Implicit Yield of Treasury Bills in the Primary Market
(per cent)
Month-end 91-Day 182-Day 364-Day
2010-11 6.14 6.47 6.66
2011-12 8.45 8.43 8.38
2012-13 8.40 8.25 8.11
Apr-12 8.55 8.48 8.25
May-12 8.41 8.42 8.30
Jun-12 8.28 8.24 8.07
Jul-12 8.20 8.19 8.02
Aug-12 8.24 8.25 8.09
Sep-12 8.13 8.14 8.07
Oct-12 8.09 8.08 7.98
Nov -12 (upto Nov 08) 8.14 8.16 8.11
CAPITAL MARKET Primary Market
1.54 The development of an efficient and 1.56 Comprehensive review of the extant
deep capital market is essential for sustained Regulatory Framework : In line with the
growth in an emerging market economy like announcement made in the Union Budget
India. The capital market fosters economic 2012-13, Securities and Exchange Board of
growth by channelling real savings to capital India (SEBI) has undertaken a comprehensive
formation, and can help raise the productivity review of the extant regulatory framework in
of investment by improving the allocation of the primary market and approved many
investable funds. It also allocates risks to those progressive measures including:
who can best bear it. However, the quality of
the market determines its effectiveness in For distributing IPOs in electronic form,
meeting these objectives. Accordingly, to nationwide broker network to be made
improve the quality of the market in terms of available at more than 1000 locations.
market efficiency, transparency, price To reduce the time from closure of issue
discovery, preventing unfair trade practices, to its listing and for enhancing the reach
etc. and bringing it at par with international
of Application Supported by Blocked
standards, a package of reforms comprising
Amount (ASBA) all ASBA banks are
measures to liberalise, regulate and develop
mandated to provide the facility in all
the Indian capital market have been
their branches in a phased manner.
implemented since the early 1990s. As a result
of these initiatives, capital markets in India have Modifying the share allotment system
emerged as an important source of funds for to ensure that every retail applicant,
Indian companies and also as an avenue for irrespective of his application size, gets
the small and retail investors to productively allotted a minimum bid lot subject to
channelising their savings. availability of shares in aggregates.
1.55 Against this background and in the Facilitating capital raising by issuers by
overall context of the evolving macro-economic reducing the requirement of average
situation, the Government in close free float market capitalisation from
collaboration with RBI and Securities and `5,000 crore to `3,000 crore for follow
Exchange Board of India (SEBI) has taken on public offerings (FPOs) and rights
several initiatives to meet the growing capital issues through fast-track route.
needs of the Indian economy. Some of the
initiatives taken are as under: Allowing professionally and technically
OVERVIEW OF THE ECONOMY 27
qualified entrepreneurs to meet up to Management Companies (AMCs) to
fifty per cent of 20 per cent promoters' pay higher upfront commissions to
contribution through SEBI registered distributors;
Alternative Investment Funds, such as
Simplifying the distributors' registration
SME Funds, Infrastructure funds, PE
process by introducing varied levels for
funds, VCFs, etc.
certification and registration for different
As required in terms of Securities types of MF products; and reducing
Contracts (Regulation) Rules, listed fees for registration / certification.
companies and PSUs can achieve the
AMCs have been permitted additional
minimum public shareholding of 25 per
TER upto 30 basis points for improving
cent and 10 per cent, respectively by
the of MF products in smaller cities
Rights and Bonus issues.
(beyond top 15 cities). Aligning the
For improving the quality of public interest of investors, distributors and
offerings and investor protection, AMCs by setting apart a portion of the
issuers with minimum average pre-tax asset management fees annually for
operating profit of `15 crore only are the investor education campaigns.
allowed to access the market through
Permitting direct investments with a
the 'profitability route'; other issuers can
lower expense ratio; ensuring single
continue to access capital markets
expense structure under a plan to
either through SME platform or
eliminate discrimination between
compulsory book building with
investors;
increased Qualified Institutional Buyers
(QIBs) participation of 75 per cent as Permitting investments in cash where
against the existing 50 per cent; PAN/ Bank accounts are not available.
Putting in a place a framework for To enable the mutual fund industry to
rejection of poor quality draft offer be in line with all other industries where
documents; disallowing any withdrawal service tax is borne by the end user, it
or reduction of the size of bids for non- is decided that the service tax payable
retail investors at any stage in the IPO on investment management fees
process; should be charged to the scheme.
Increasing transparency in capital Protecting the investor by curbing mis-
raising by limiting 'General Corporate selling and churning by creating a
Purposes' as an object of the issue to system of identification of agents and
25 per cent of the issue size; restraining labeling of products and by requiring
employee benefit schemes from exit loads to be charged to the scheme
acquiring their shares from the while compensating the AMCs by
secondary market. allowing an additional TER to the extent
of 20 basis points.
1.57 Steps to Re-energise Mutual Fund
Industry: Strengthening regulatory framework for
mutual funds by streamlining
Increasing penetration of mutual fund disclosures on portfolios, performance
products and energising distribution and expenses and initiation of the
network by permitting a broader process of setting up of a Self-
interpretation of the Total Expense Regulatory Organization (SRO) for
Ratio (TER) which would enable Asset regulation of MF distributors.
28 MID-YEAR ECONOMIC ANALYSIS
Secondary Market from the returns in the Indian markets given in
1.58 Market Developments : The Indian Table 1.25 below. Recent reform measures
stock market is one of the best performing taken by the Indian government have had a
markets in the world in 2012. Relative to its positive impact on market sentiments.
level on the last trading day in 2011, the Sensex
FII Investment
gained 3050 points or 19.7 per cent and Nifty
gained 995 points or 21.5 per cent as on 31 1.60 The total net FII flows to India in 2009
October, 2012. However, in the current financial stood at US$ 18.51 billion (Table 1.26). These
year, Sensex gained 1101 points (or 6.3 per flows grew remarkably in 2010 and India
cent) whereas, Nifty gained 324 points (or 6.1 received net FII investment worth US$ 39.47
per cent). Market capitalisation is around 0.73 billion in 2010 which has been highest over
times the GDP of 2011-12. the last decade. These flows were largely
1.59 The Indian market has been one of the equity inflows. Similarly, about three-fourth of
better performing markets recently as evident net FII inflow in 2012 is equity.
Table 1.25 : Comparative picture of Stock Exchanges Level and growth
Oct Oct
2012 2012 Oct
over over 2012
31-Oct- 30-Dec- 30-Mar- 31-Oct- March Oct over Dec
11 11 12 12 2012 2011 2011
Level Per cent change
BSE, India 17705.0 15454.9 17404.2 18505.4 6.33 4.5 19.7
NSE, India 5326.6 4624.3 5295.6 5619.7 6.12 5.5 21.5
S&P 500, US 1253.3 1257.6 1408.5 1412.2 0.26 12.7 12.3
DAX, Germany 6141.3 5898.4 6946.8 7260.6 4.52 18.2 23.1
FTSE 100, UK 5544.2 5572.3 5768.5 5782.7 0.25 4.3 3.8
NIKKEI 225, Japan 8988.4 8455.4 10083.6 8928.3 -11.46 -0.7 5.6
HANG SENG, Hong
Kong 19864.9 18434.4 20555.6 21641.8 5.28 8.9 17.4
KOSPI, Korea 1909.0 1825.7 2014.0 1912.1 -5.06 0.2 4.7
DJIA, USA 11955.0 12217.6 13212.0 13096.5 -0.87 9.5 7.2
Straits Times,
Singapore 2855.8 2646.4 3010.5 3038.4 0.93 6.4 14.8
TAIWAN TAIEX, Taiwan 7587.7 7072.1 7933.0 7166.1 -9.67 -5.6 1.3
SHANGHAI, China 2468.3 2199.4 2262.8 2068.9 -8.57 -16.2 -5.9
CAC 40, France 3242.8 3159.8 3423.8 3429.3 0.16 5.7 8.5
Source: Bloomberg
Table 1.26 : Net FII Investment in India during 2007-2012 in US $ Million)
Segments 2007 2008 2009 2010 2011 2012*
Equity 17655.8 -11974.3 17457.50 29361.83 -357.8 18034.2
Debt 2340.1 2636.4 1050.00 10112.16 8654.6 6270.5
Total 19995.9 -9337.9 18507.50 39473.99 8296.8 24304.7
*Investments up till October 31, 2012
Source : SEBI
OVERVIEW OF THE ECONOMY 29
Initiatives taken to attract foreign invest in corporate debt securities
investments and External Commercial (without any lock-in or residual maturity
Borrowings (ECB) Policy Reforms since clause) and Mutual Fund debt schemes
March 2012 upto USD 1 billion.
1.61 Initiatives to attract FII Investment : 1.63 Streamlining the QFIs Scheme
In June 2012, the FII limit for Widening the Definition of QFI: The
investment in G-Sec enhanced by US definition of QFI has been expanded
$ 5 billion raising the cap to US $ 20 to also include residents of the member
billion with the following sub-limits; countries of Gulf Co-operation Council
· USD 10 billion -Investment in G- (GCC) and European Commission as
Sec without any residual maturity GCC and EC are the members of FATF.
criterion
Allowing QFIs to open Individual bank
· USD 10 billion - Investment in G- accounts: QFIs have been allowed to
Sec subject to residual maturity of open individual non-interest bearing
at least three years. Rupee Bank Accounts with Authorized
In order to make the scheme for FII Dealers banks in India for receiving
investment in Long-term infra bonds funds and making payment for
attractive, the scheme has been transactions in securities they are
rationalized as under: eligible to invest.
· US $10 billion investment in 1.64 Liberalisation of ECB Policy During
Infrastructure Debt Funds (IDF) -(a) 2012-13
Lock-in period of 1 Year (b) Five initiatives on External Commercial
Residual maturity of at least 15 Borrowings were announced in the Budget
months. 2012-13, with the focus to augment resources
· US $ 12 Billion for FII investment for infrastructure development. These include:
in in long term infrastructure bonds (1) Enhancement in the limit for refinancing
- (a) Lock-in period of 1 Year (b) rupee loans from 25 per cent to 40 per cent
Residual maturity of at least 15 for power sector (2) Allowing ECB for capital
months. expenditure on the maintenance and
operations of toll systems for roads and
· USD 3 billion for Qualified Foreign
highways (3) Allowing ECBs for low cost/
Investors (QFIs) Investment in MF
affordable housing projects (4) Permitting ECB
debt schemes which hold at least
for working capital requirements of the airline
25 per cent of their assets (either
in debt or equity or in both) in the industry (5) Reduction in the rate of withholding
infrastructure sector. tax on interest payments on external
commercial borrowings from 20 per cent to 5
At present the total limit prescribed for FII per cent for three years (July 2012- June 2015).
investment in various debt securities stands
at US $ 65 billion. 1.65 A New Scheme under ECB
1.62 Allowing qualified foreign investors On 25th June, 2012, it was decided to add a
(QFIs ) to access Indian corporate bond new scheme for ECB. Indian companies in the
market: manufacturing and infrastructure sector can
now avail of ECBs for repayment of Rupee
Pursuant to the Budget Announcement loan(s) availed of from the domestic banking
2012-13, Qualified Foreign Investors system and/or for fresh Rupee capital
(QFIs) have been allowed to access expenditure, under the approval route upto a
Indian Corporate Bond market. QFI can ceiling of USD 10 billion. The ECBs will be
30 MID-YEAR ECONOMIC ANALYSIS
allowed to companies based on the foreign · The successful bidders in the 2G
exchange earnings and its ability to service the auction would be eligible to
ECB. refinance their Rupee loans availed
1.66 Decisions taken in the meeting of of from the domestic lenders for
High Level Committee on ECB (HLCECB) making the upfront payment with a
held on August 22, 2012 long-term ECB, under the
'automatic route' subject to certain
SIDBI has been permitted as an eligible
conditions.
borrower for accessing ECB for on-
lending to MSME sector subject to · Such bidders can also avail of short
certain conditions. term foreign currency loan in the
nature of bridge finance under the
National Housing Bank/ Housing
'automatic route' for the purpose of
finance companies have been
making upfront payment towards
permitted to avail ECBs for financing
prospective owners of low cost / 2G spectrum allocation and replace
affordable housing units. the same with a long term ECB
under the 'automatic route' subject
Pursuant to the Budget Announcement to certain terms and conditions.
2012-13, ECBs have been permitted
for low cost housing projects. · Successful bidders will also be
allowed to avail of ECB from their
Credit enhancement facility under the
ultimate parent company without
Structured Obligation Scheme has
any maximum ECB liability-equity
been extended to all companies with
ratio under the 'automatic route'
reduced minimum average maturity
subject to certain conditions.
norms from 7 years to 3 years. FIIs
have also been permitted to invest in TRADE
these bonds upto the equivalent of
1.68 India is the 19th largest merchandise
US$5 billion within the overall corporate
exporter and 12th largest importer in the world
bond limit of US$45 billion.
with shares of 1.7 per cent and 2.5 per cent
Re-financing of buyer's credit for import in world exports and imports respectively in
of capital goods in the infrastructure 2011, as per the World Trade Organization
sector has been placed under (WTO). In commercial services, India is the
automatic route subject to certain 8th largest exporter and 7th largest importer
conditions. It has also been decided to in the world with shares of 3.3 per cent and
increase the maturity of such buyer's 3.1 per cent in world exports and imports
credit to maximum five years. respectively.India's merchandise exports in
1.67 Relaxation In ECB Policy for US dollar terms increased by 21.3 per cent to
financing of 2G Spectrum Auction: reach US $ 304.6 billion while imports
increased by 32.3 per cent to US $ 489.2
On a review of the current ECB policy
and keeping in view the large outlay of billion in 2011-12.The trade deficit increased
funds required to be paid directly to the to US$ 184.6 billion which was 55.6 per cent
Government within a limited period of higher than US $ 118.6 billion in 2010-11.
time, the following relaxations are However, as a result of the global slowdown,
provided for the recently held 2G the growth rate in exports became negative
spectrum auction:- in first two quarters of 2012-13 (Fig 1.12).
OVERVIEW OF THE ECONOMY 31
Fig 1.12: Value of Exports (US $ Billion) and rate of growth (per cent)
60.0 90.0
Exports US $ Billion (RHS) 80.0
50.0
Rate of Growth (LHS) 70.0
40.0 60.0
30.0 50.0
40.0
20.0 30.0
10.0 20.0
0.0 10.0
0.0
10.0 10.0
20.0 20.0
30.0
30.0 40.0
40.0 50.0
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
2009 10 2010 11 2011 12 201213
1.69 In 2011-12, high export growth was are projected to grow at 2.2 per cent in 2012
observed in petroleum products (34.1 per cent), as compared to 5.3 per cent growth in 2011
chemicals and related products (28 per cent), for advanced economies, while the projected
agriculture and allied products (57.8 per cent), growth for emerging and developing
marine products (31.3 per cent) and leather economies is 4.0 per cent for 2012 as
and manufactures (22.7 per cent). Moderate compared to 6.5 per cent growth in 2011.
growth was registered by engineering goods
Trade Performance during 2012-13
(16.9 per cent), gems & jewellery (15.9 per
(April-October):
cent), textiles (17.1 per cent) and electronic
goods (8.8 per cent). Rising crude oil prices, 1.71 During 2012-13 (April-October),
along with increase in gold and silver prices exports at US$ 167 billion registered a negative
contributed significantly to the import bill in growth of 6.2 per cent over the corresponding
2011-12. Petroleum, Oil and Lubricants (POL) period of the previous year. Imports at US$
imports accounted for about 32 per cent of 277.1 billion also registered a negative growth
India's total imports. The value of imports of of 2.7 per cent. POL imports at US$ 95.6 billion
gold and silver increased from US$ 29.8 billion were 10 per cent higher than the corresponding
in 2009-10 to US 61.5 billion in 2011-12. The previous period. Non-POL imports at US$
share of gold and silver in total imports 181.6 billion in April-October 2012 declined by
increased from 7.6 per cent in 2005-06 to 12.6 8.2 per cent over the corresponding period of
in 2011-12. the previous year. The trade deficit during April-
Global scenario October 2012 was US $ 110 billion.
1.70 As per IMF's World Economic Outlook 1.72 In the first half of 2012-13 (April-
(WEO) update of October 2012, World Trade September), agriculture and allied exports and
Volume (goods & services) is projected to grow chemicals and related products exports
by 3.2 per cent in 2012 as compared to 12.6 registered a growth of 47.9 per cent and 5.9
per cent in 2010 and 5.8 per cent in 2011. per cent respectively. The sectors that
Imports of advanced economies are projected witnessed decline in growth in exports include,
to grow at 1.7 per cent in 2012 as compared to petroleum & oil products (-14.8 per cent),
the 4.4 per cent growth in 2011. Imports of engineering goods (-9.2 per cent), gems &
emerging & developing economies are jewellery (-9.1 per cent), textiles (-8.9 per cent),
expected to grow by 7.0 per cent in 2012 as electronic goods (-7.0 per cent) and leather and
compared to the 8.8 per cent in 2011. Exports manufactures, (-4.3 per cent). Among imports,
32 MID-YEAR ECONOMIC ANALYSIS
there was a deceleration in the growth of POL transport equipment, project goods and
imports to 6.1 per cent. A notable feature on manufacture of metals), which had registered
the import side was the declining trend in gold a growth of 30.4 per cent in 2011-12, declined
and silver imports with a negative growth of to (-) 11 per cent in Q2 of 2012-13.
32.5 per cent. Import growth of pearls, precious Composition and direction of exports
& semi-precious stones was also negative at
39.8 per cent. Some other major items which 1.75 The destination-wise exports of major
registered negative growth include machinery items of the major trading partners from 2009-
(-7.6 per cent), coal, coke and briquette (-9.7 10 to the first half of 2012-13 show significant
per cent) and electronic goods (-8.8 per cent). changes in the composition of exports to USA
and China. In the case of India's exports to
1.73 Quarter wise growth performance of USA, the share of exports of primary products
exports and imports (Table 1.27) shows that increased from 6.8 per cent in 2009-10 to 23.8
the growth of total exports, POL and non POL per cent in 2012-13 (April-September). The
exports started decelerating from Q3 of share of manufactured goods in India's exports
2011-12 and became negative in Q1 and Q2 to USA declined from 89.1 per cent to 71.4 per
of 2012-13. Growth in POL import has shown cent during the same period. This decline was
swings on both sides with deceleration from mainly due to fall in growth rate of exports of
52.5 per cent in Q1 of 2011-12 to (-) 0.1 per textiles and gems & jewellery. In the case of
cent in Q1 of 2012-13 and then growth of 12.7 India's exports to China, the share of primary
per cent in Q2 of 2012-13. Non POL import products declined from 65.7 per cent to 41.0
growth which was at 35.7 per cent in Q2 of per cent due to the fall in growth rate of ores &
2011-12, started decelerating and registered minerals. Share of manufactures in India's
growth of (-) 9.2 per cent and (-) 6.7 per cent exports to China increased from 32.2 per cent
in Q1 and Q2 of 2012-13 respectively. to 55.8 per cent during this period, mainly due
1.74 Growth of non-POL, non-gold and silver to the rise in share of engineering goods,
imports (which reflect the import of capital textiles and chemicals and related products
goods and inputs needed for exports and and rise in growth rates of textiles. In the case
industrial activity) started decelerating from Q1 of India's exports to European Union (EU),
of 2011-12, and became negative at (-) 47.3 there is a marginal rise in the share of primary
per cent in Q1 of 2012-13. Negative growth products and manufactured goods and a fall
continued in Q2 of 2012-13 at (-) 12.5 per cent. in the share of petroleum products which have
Capital goods imports (including machine tools, moved from a high growth rate to negative
machinery both electrical and non-electrical, growth rate (Table 1.28).
Table 1.27 : Year on Year growth of exports and imports
2010-11 2011-12 2012-13
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
Exports 46.1 26.2 40.6 48.1 36.4 44.7 10.8 2.7 -4.3 -11.7
POL exports 95.6 42.0 21.5 52.1 76.2 53.5 21.5 3.2 -20.4 -8.7
Non POL exports 39.6 23.4 45.1 47.3 29.1 42.9 8.8 2.5 -0.3 -12.3
Imports 44.3 31.3 17.2 24.1 36.3 40.0 29.5 24.7 -6.2 -0.9
POL imports 55.3 15.1 4.9 20.7 52.5 51.1 39.3 42.8 -0.1 12.7
Non POL imports 40.3 38.9 22.6 25.7 29.7 35.7 25.8 16.8 -9.2 -6.7
Non POL and Non-
gold and silver 36.0 77.5 49.4 23.9 123.1 34.2 26.1 19.4 -47.3 -12.5
imports
Net POL imports 40.9 33.3 18.3 26.1 16.2 35.9 25.8 16.2 1.5 -5.6
Computed from Directorate General of Commercial Intelligence &Statistics (DGCI&S) data
OVERVIEW OF THE ECONOMY 33
Table 1.28: Composition of exports by major markets
Per centage share Growth rate
2009- 2010- 2011- 2012- 2009- 2010- 2011- 2012-
10 11 12 13 10 11 12 13
(Apr- (Apr-
April-March April-March
Sept.) Sept.)
I Primary Products
World 14.9 13.2 15.2 16.4 3.8 23.9 39.8 24.4
USA 6.8 8.0 14.6 23.8 -13.5 52.8 149.4 147.1
EU 8.6 8.2 9.7 10.0 -5.7 22.2 33.8 -3.4
China 65.7 51.5 55.7 41.0 26.9 4.7 24.8 -23.6
Others 13.1 11.7 13.1 14.7 -1.7 31.7 35.7 24.2
II Manufactured goods
World 67.2 69.0 66.1 65.1 -5.9 44.2 16.1 -12.1
USA 89.1 87.4 82.3 71.4 -8.7 27.0 27.9 -1.9
EU 73.2 72.1 74.9 75.6 -15.4 25.8 18.6 -14.7
China 32.2 42.3 39.5 55.8 29.5 75.4 7.8 0.0
Others 65.1 67.8 63.3 61.8 -2.5 53.4 13.6 -14.2
III Petroleum, crude & products
World 16.1 16.8 18.7 17.8 4.6 46.8 34.9 -15.5
USA 2.3 3.7 3.6 3.8 180.3 110.9 30.1 -24.5
EU 16.9 18.8 15.0 13.9 45.4 42.7 -9.4 -7.2
China 0.8 5.3 6.3 3.0 -8.4 745.2 38.1 -80.3
Others 19.9 19.4 23.4 22.7 -3.9 43.6 47.0 -13.6
Total Exports
World 100 100 100 100 -3.5 40.5 21.3 -8.0
USA 100 100 100 100 -7.6 29.5 35.8 14.2
EU 100 100 100 100 -8.4 27.9 14.1 -12.7
China 100 100 100 100 24.2 33.6 15.3 -19.7
Others 100 100 100 100 -3.4 47.2 21.6 -9.6
Computed from Directorate General of Commercial Intelligence &Statistics (DGCI&S) data
Foreign Trade Policy (FTP) 2009-14: markets, the Government announced the
annual supplement to Foreign Trade Policy
1.76 To enhance the competitiveness of (FTP) on 05.06.2012. Special attention has also
India's exports by supporting upgradation in been given to the labour intensive sectors. Some
technologies and diversification of the export important FTP measures are given in Box 1.3.
34 MID-YEAR ECONOMIC ANALYSIS
Box 1.3 :Annual Supplement to Foreign Trade Policy (2009-14):
Some important Measures
· Two per cent Interest Subvention Scheme available to Handlooms, Handicrafts, Carpets
and SMEs extended till 31st March 2013 and also extended to labour intensive sectors,
namely, Toys, Sports Goods, Processed Agricultural Products and Ready-Made
Garments.
· Zero Duty Export Promotion Capital Goods (EPCG) Scheme extended up to 31st March
2013 and its scope has been enlarged by making it available even if the benefit of
Technology Upgradation Fund Scheme (TUFS) has been availedfor another line of
business by the same applicant.
· Introduction of a new Post-Export EPCG Scheme with reduced transaction cost coupled
with comparatively reduced export obligation.Exporters if they choose so may import
Capital Goods on payment of duty in cash and subsequently receive duty credit scrip on
completion of export obligation.
· Under the EPCG Scheme, non-applicability of the condition of maintenance of average
level of exports has been extended toCarpet, Coir and Jute.
· To promote manufacturing activity and employment in the North Eastern Region of the
country, export obligation under the EPCG Scheme has been fixed at 25 per cent of the
normal export obligation.
· Export of specified products through notified Land Customs Stations of North Eastern
Region shall be provided additional incentive to the extent of 1 per centof FOB value of
exports. This benefit shall be in addition to any other benefit that may be available under
Foreign Trade Policy in respect of these exports.
· To promote exports of 16 identified green technology products, export obligation for
manufacturing of these products, under the EPCG Scheme, reduced to 75 per cent of
the normal export obligation.
· Status holders exporting products under ITC (HS) Chapter 1 to Chapter 24 (both inclusive)
are provided Duty Credit Scrip equivalent to 10 per cent of FOB value of agricultural
products so exported. These scrips are issued for import of Capital Goods and equipment
for Cold Storage Units, Pack-houses etc. These scrips will be eligible for import of 14
specified equipment for setting up of Pack-houses.
· Status holders are issued Status Holders Incentive Scrip (SHIS) to import Capital Goods
for promoting investment in up-gradation of technology of some specified labour intensive
sectors. Up to 10 per cent of the value of these scrips will be allowed to be utilized to
import components and spares of capital goods imported earlier.
· Scrips under different schemes of Chapter 3 of Foreign Trade Policy are now allowed
for payment of Excise Duty for domestic procurement.
· Algeria, Aruba, Austria, Cambodia, Myanmar, Netherland Antilles, and Ukraine have
been added to Focus Market Scheme (FMS). The scheme now covers a total of 119
markets. Belize, Chile, El Salvador, Guatemala, Honduras, Morocco, and Uruguay were
added to Special Focus Market Scheme (Special FMS).
· 46 new items are being added to Market Linked Focus Product Scheme (MLFPS). This
would have the effect of including 12 new markets for the first time. MLFPS is being
extended till 31st March 2013 for export to USA and EU in respect of items falling in
Chapter 61 and Chapter 62 (textiles and clothing).
· 100 new items added to the Focus Product Scheme (FPS) list.
OVERVIEW OF THE ECONOMY 35
The Doha Round of Trade Negotiations in product and 50 other sector specific SEZs.
the WTO There are a total of 3622 units set up in the
1.77 The Doha Round effectively made little SEZs. Physical exports from the SEZs has
progress after 2008. At present, apart from increased from ` 315,868 crore in 2010-11 to
Trade Facilitation, negotiations in other ` 364,478 crore in 2011-12, registering a
committees are not moving at all. On Trade growth of 15.0 per cent. The total exports from
Facilitation, developed countries are pressing SEZs as on 30th September, 2012 i.e. in the
for early conclusion in time for the Ninth first two quarters of the current financial year
Ministerial Conference of the WTO scheduled 2012-13, has been to the tune of ` 2,35,629
to be held in Bali, Indonesia in December 2013. crore registering a growth of 36 per cent over
Though Trade Facilitation includes export the corresponding period of the previous year.
facilitation, which is of special interest to The total investment in SEZs till 30th
developing countries, most of the proposals September, 2012 is around ` 2,18,795 crore,
under negotiation today in the area of trade including ` 1,99,333 crore in the newly notified
facilitation are about import facilitation. Since SEZs set up after SEZ Act, 2005.
most developing countries are not in a position Current Status of India's Free Trade
to undertake major reforms (especially relating Agreements (FTAs)
to exports infrastructure) because of resource
constraints, they do not anticipate significant 1.79 So far India has concluded 10 Free
benefits.Benefits through effective additional Trade Agreements (FTAs), 5 limited scope
market access, primarily provided by the Preferential Trade Agreements (PTAs) and is
developing countries, will accrue mainly to the in the process of negotiating / expanding 17
developed countries and a few strong exporting more Agreements. India's important trade
developing countries and aggravate the already engagements in 2012 are the following:
adverse balance of trade of many developing · India - EU Broad Based Trade and
countries. Other areas being pushed by the Investment Agreement (BTIA):
developed countries are a plurilateral Negotiations launched on 28th June
agreement in Services and a second 2007 in the areas of Goods, Services,
Information Technology Agreement. They are Investment, Sanitary and Phyto-
also pushing for new "21st Century" issues to sanitary Measures (SPS), Technical
be brought onto the WTO agenda, namely, Barriers to Trade (TBT), Trade
Investment, Competition, Government Facilitation and Customs Cooperation,
Procurement, Food Security, Energy Security, Competition, Intellectual Property
Environment, etc. India is working with other Rights (IPR) & Geographical
like-minded members towards a more balanced Indications (GIs) etc. Fourteen rounds
package for the Ninth Ministerial Conference of negotiations have been held till date
of the WTO so that the development agenda of with the 14th round being held in April,
the Doha Round is not jeopardised. 2012 in New Delhi.
Special Economic Zones (SEZs) · India - ASEAN Comprehensive
1.78 In a span of about six years since SEZs Economic Cooperation Agreement
Act and Rules were notified in February, 2006, (CECA) - Services and Investment
formal approvals have been granted for setting Agreement: 14 rounds of ASEAN-India
up of 585 SEZs out of which 385 have been Trade Negotiations Committee -
notified. Out of the total employment provided Working Group on Services have been
to 9,45,990 persons in SEZs as a whole, held so far with the last meeting on
8,11,286 persons is the incremental September 19-21, 2012 in New Delhi.
employment generated after February, 2006 16 rounds of ASEAN-India Trade
when the SEZ Act came into force. This is Negotiation Committee - Working
apart from the employment generated by the Group on Investment (AITNC -WGI)
developers for infrastructure activities. A total have been held. The last meeting was
of 160 SEZs are engaged in exports activity at held in Jakarta, Indonesia during 17 -
present. Out of this 93 are IT/ITES, 17 multi- 19 October, 2012.
36 MID-YEAR ECONOMIC ANALYSIS
· India - Thailand CECA: Under the Early and the fourth round was held during
Harvest Scheme (EHS), both sides 8-9 November, 2012 in New Delhi.
finalized a list of 82 common items for Global Economy
gradual tariff elimination. Tariff was
eliminated on these items by both 1.80 The global economic climate continues
sides, simultaneously, between 1st to be fragile with the problem of fiscal cliff in
September 2004 and 31st August US and uncertainties surrounding the Euro
2006. 26th round of India-Thailand zone. The Euro zone is at particular risk due
Trade Negotiation Committee (ITTNC) to worsening Greek debt crisis, fiscal and
was held on November 26-27, 2012 in banking problems in Spain, social unrest in
New Delhi. peripheral countries, slow progress in
achieving banking union and difficulty in
· India European Free Trade Association building political consensus on major issues.
(EFTA) Broad-based Trade and
Investment Agreement (BTIA) 1.81 While the Outright Monetary
(Iceland, Norway, Liechtenstein and Transactions (OMT) announced by European
Switzerland): Negotiations cover areas Central Bank has provided a temporary
of Trade in Goods, Trade in Services, reprieve, the risk on/ risk off behavior of
Investment, SPS, TBT, Trade investors continues to roil markets, contributing
Remedies, Government Procurement, to heightened currency and stock market
Customs Cooperation and Trade volatility. At the same time, record low interest
Facilitation, Dispute Settlement, rates in advanced countries and quantitative
Competition and Intellectual Property easing has contributed to "search-for-yield"
Rights. Eleventh round of negotiations behaviour similar to what prevailed immediately
was held during 5-7 March 2012 in New prior to the 2008 crisis. The slowdown in
Delhi. Inter-sessional meetings on emerging economies like China, Brazil and
Goods, Services and IPRs issues were India that grew strongly after the 2008 crisis,
held during 27-29 August, 2012 in Delhi is adding to the global economic woes. The
uncertain global climate has affected the Indian
· India - New Zealand FTA/CECA: economy through a decline in exports, a fall in
Eighth round was held in June, 2012 in the value of rupee and a slowdown in
New Zealand. investment. It has also led to a widening of the
· India - Israel FTA: Fifth round of trade and current account deficits and an
negotiation was held during 14-16 overall deceleration in the growth rate of the
August 2012 in New Delhi. economy.
· India - Singapore CECA: Meeting on 1.82 The IMF in its latest global economic
Second Review of India-Singapore assessment (World Economic Outlook October
CECA was held on 1-2 November, 2012 2012) indicates the deterioration in the world
in New Delhi at the Chief Negotiator economic environment and signs of increasing
level. risks. Accordingly, global economy is estimated
· India - Chile PTA: The PTA was to grow 3.3 per cent in 2012 and 3.6 per cent
expanded by widening product in 2013 with advanced economies projected
coverage and deepening preferences. to grow by 1.3 per cent in 2012. Growth of
5th meetings for expansion of the emerging economies has been revised
India-Chile PTA was held during 3-4 downward further by the IMF to 5.3 per cent in
August, 2012. 2012. Leading emerging markets such as
China and India are projected to show lower
· India - Canada Comprehensive growth in 2012. India's GDP at market prices
Economic Partnership Agreement (2004-05 prices) is projected to grow to 4.9
(CEPA): Sixth round of negotiations per cent in 2012 and 6.0 per cent in 2013.
was held in November 2012. China is projected to grow at 7.8 per cent in
· India - Australia: The inaugural round 2012 and 8.2 per cent in 2013. Growth in the
of negotiations was held in July, 2011. volume of world trade is projected to slump to
Third round of negotiation was held 3.2 per cent this year from 5.8 per cent in 2011
during 24 - 25 May 2012 in Australia and 12.6 per cent in 2010 (Table 1.29).
OVERVIEW OF THE ECONOMY 37
Table 1.29: Global Economic prospects
Sl Item 2010 2011 2012 P 2013 P
1 World Output (per cent change) # 5.1 3.8 3.3 3.6
a Advanced Economies 3.0 1.6 1.3 1.5
b Emerging Market & developing Countries 7.4 6.2 5.3 5.6
China 10.4 9.2 7.8 8.2
India 10.1 6.8 4.9 6.0
Net Capital Flows to Emerging Market and
II
Developing Countries (US$ billion)
i Net Private Capital Flows (a+b+c) 604.7 503.0 268.3 399.6
a) Net Private Direct Investment 392.0 462.4 393.8 409.0
b) Net Private Portfolio Investment 240.8 129.7 133.0 150.9
c) Net Other Private Capital Flows -28.1 -89.1 -258.6 -1 60.2
ii Net Official Flows 62.8 -108.3 -51.8 -89.2
III World Trade in Goods and Services @
i Trade Volume 12.6 5.8 3.2 4.5
ii Export Volume
a) Advanced Economies 12.0 5.3 2.2 3.6
b) Emerging Market & developing Countries 13.7 6.5 4.0 5.7
IV Current Account Balance (Per cent to GDP)
i US -3.0 -3.1 -3.1 -3.1
ii China 4.0 2.8 2.3 2.5
iii India -3.2 -3.4 -3.8 -3.3
iv Middle East and North Africa 7.7 14.2 12.2 10.6
Source: World Economic Outlook, October 2012, International Monetary Fund (IMF)
Note : P Projections, # growth rates are based on exchange rates at purchasing power parities, @ Average
of annual percentage change for world exports and imports of goods and services.
BALANCE OF PAYMENTS developing countries becoming India's largest
Balance of Payments development during export market in recent years.Imports also
2011-12 recorded similar increase of 31.1 per cent to
reach US$ 499.5 billion in 2011-12 from US$
1.83 India's balance of payment was under
381.1 billion in 2010-11. Economic slowdown
stress during the fiscal 2011-12, as trade and
in advanced countries and its spill over effects
current account deficits widened. Though the
in EMEs coupled with rising crude oil and gold
capital inflows increased, they fell short of
prices were responsible for sharp increase in
financing current account deficit, resulting in
trade deficit. The trade deficit increased in
a reserve drawdown.Exports crossed the US$
absolute terms to US$ 189.8 billion (10.3 per
300 billion mark for the first time in 2011-12
cent of GDP) in 2011-12 as compared to US$
and increased by 23.7 per cent to US$ 309.8
130.6 billion (7.8 per cent of GDP) during
billion in 2011-12 from US$ 250.5 billion in
2010-11.
2010-11. The improvement has been
accompanied by structural shift in the 1.84 Net invisible balance showed significant
composition of export basket from labour improvement, registering a 31.9 per cent
intensive manufacture to higher value-added increase from US$ 84.6 billion in 2010-11 to
engineering and petroleum products as well US$ 111.6 billion during 2011-12, due to an
diversification of exports destinations with increase in invisibles receipts while invisible
38 MID-YEAR ECONOMIC ANALYSIS
payments declined. Net invisible balance as of reserves(on BoP basis) to the extent of US$
per cent of GDP improved to 6.0 per cent in 12.8 billion during 2011-12 as against an
2011-12 from 4.9 per cent in 2010-11. The accretion of US$ 13.1 billion in 2010-11.
current account deficit (CAD) widened both in
Balance of Payments development during
absolute terms as well as a proportion of GDP
first Quarter (April-June 2012) of 2012-13
in 2011-12, reflecting widening trade deficit on
account of subdued external demand, relatively 1.87 During the first quarter of the fiscal
inelastic imports of petroleum, oil and lubricant 2012-13 (Q1 April -June 2012), exports at US$
(POL) and higher imports of gold & silver. The 76.7 billion recorded a negative growth of 2.4
CAD in 2011-12 at US$ 78.2 billion was 4.2 per cent over US$ 78.6 billion during Q1 of
per cent of GDP as compared with US$ 45.9 2011-12, largely reflecting the impact of
billion, amounting to 2.7 per cent of GDP in slowdown in global economy. Imports at US$
2010-11. Net capital inflows were higher at US$ 119.2 billion registered a decline of 3.6 per
67.8 billion in 2011-12 as compared to US$ cent over US$ 123.7 billion during Q1 of
62.0 billion in 2010-11, mainly due to higher 2011-12. This was probably due to slowdown
FDI inflows and NRI deposits. in domestic economic activity and weakening
exports. There has also been a moderation
1.85 The net FDI (inward FDI minus outward
in the POL imports. Gold and silver imports
FDI) was higher at US$ 22.1 billion in 2011-12
declined sharply by 48.6 per cent as against
as compared with US$ 9.4 billion in 2010-11,
a growth of 123.1 per cent in the
due to higher inward FDI of US$ 33.0 in
corresponding quarter of last year. Similarly,
2011-12 as against US$ 25.9 billion in 2010-11.
non-oil non-gold imports declined by about 2
As against this, Outward FDI decreased to US$
per cent over the corresponding quarter of
10.9 billion in 2011-12 vis-a-vis US$ 16.5 billion
previous year. With sharper decline in imports
in 2010-11. Portfolio investment witnessed
than in exports growth, the trade deficit
marked decline in net inflow and was US$ 17.2
moderated to US$ 42.5 billion in Q1 of
billion during 2011-12 as against of US$ 30.3 2012-13 as compared with US$ 45.0 billion in
billion in 2010-11 due to decline in FII inflows to Q1 of 2011-12.
US$ 16.8 billion in 2011-12 from US$ 29.4 billion
in 2010-11. Net external commercial borrowings 1.88 Net invisible balance showed marginal
(ECBs) inflows decreased to US$ 10.3 billion in deterioration, registering a decline of 5.8 per
2011-12 as against US$ 12.5 billion in 2010-11. cent to US$ 25.9 billion during Q1 of 2012-13
Similarly, short term trade credit decreased from from US$ 27.5 billion during Q1 of 2011-12.
US$ 11.0 billion in 2010-11 to US$ 6.7 billion in The decrease was mainly due to decline in
2011-12. Further, external assistance decreased services inflows to US$ 14.2 billion in Q1 of
from US$ 4.9 billion in 2010-11 to US$ 2.3 billion 2012-13 as compared to US$ 16.4 billion in
in 2011-12. Banking capital, including NRI Q1 of 2011-12. However, net software
deposits, however, witnessed more than services at US$ 15.2 billion during Q1 of 2012-
threefold increase to US$ 16.2 billion 13 (US$ 14.6 billion in Q1 of
(inclusive of NRI deposits of US$ 11.9 billion) 2011-12) and private transfers at US$ 16.8
in 2011-12 as against US$ 5.0 billion billion in Q1 of 2012-13 (US$ 14.8 billion in
(including NRI deposits of US$ 3.2 billion) in Q1 of 2011-12) remained buoyant. The
2010-11. Current Account Deficit (CAD) at US$ 16.6
billion was marginally lower in Q1 of 2012-13
1.86 The Capital Account Balance improved
as compared to US$ 17.5 billion during the
marginally by 9.4 per cent to US$ 67.8 billion
corresponding quarter of 2011-12,
during 2011-12 from the level of US$ 62.0
billion in 2010-11. However, as a per cent of 1.89 Higher level of vulnerability in global
GDP, it remained at the same level of 3.7 per financial markets owing to the Eurozone crisis
cent in 2011-12 as it was in 2010-11.As the and subdued domestic economic activity
capital account surplus fell short of financing continued to impact capital flows to India in Q1
current account deficit, there was a drawdown of 2012-13.
OVERVIEW OF THE ECONOMY 39
1.90 Net capital flows were lower at US$ June 2012 as against US$ 3.1 billion in April-
17.0 billion in Q1 (April- June 2012) of June 2011. Similarly banking capital inflow
2012-13 as compared to US$ 23.9 billion declined from US$ 12.7 billion in Q1 of
during the corresponding period last year. The 2011-12 to US$ 9.4 billion in Q1 of 2012-13.
net FDI in Q1 (inward FDI minus outward FDI) However, short term trade credit increased
was significantly lower at US$ 4.2 billion in from US$ 3.1 billion in April-June 2011 to US$
April-June 2012 as compared with US$ 9.3 5.4 billion in April-June 2012.
billion in April-June 2011, due to lower inward 1.91 As a result, the Capital Account
FDI in 2012-13. Portfolio investment witnessed Balance has declined from US$ 23.9 billion
negative flow of US$ 1.9 billion in Q1 of during Q1 of 2011-12 to US$ 17.0 billion
2012-13 vis-a-vis inflow of US$ 2.5 billion in during 2012-13. India's Balance of Payments
Q1 of 2011-12. There was a significant developments during 2010-11 to 2012-13 (up
reduction in net external commercial to Q1 of 2012) are indicated below
borrowings (ECBs) to US$ 1.0 billion in April- (Table 1.30):
Table 1.30: Major Items of India's Balance of Payments during Q1 of 2011-12 and 2012-13
(US$ billion)
Sl Items 2010-11 2011-12 2011-12 2012-13
(PR) (P) (PR) (P)
Full Full Q1 (April- Q1 (April-
Year Year June) June)
1 Exports 250.5 309.8 78.6 76.7
2 Imports 381.1 499.5 123.7 119.2
3 Trade Balance -130.6 -189.8 -45.0 -42.5
4 Net Invisibles 84.6 111.6 27.5 25.9
5 Goods & Services Balance -81.8 -125.7 -28.6 -28.3
6 Current Account Balance -45.9 -78.2 -17.5 -16.6
7 External assistance (Net) 4.9 2.3 0.3 -0.2
8 Commercial Borrowings (Net) 12.5 10.3 3.1 1.0
9 FDI (Net) 9.4 22.1 9.3 4.2
10 Portfolio 30.3 17.2 2.5 -1.9
11 Capital Account Balance 62.2 67.8 23.9 17.0
12 Errors & Omissions -3.0 -2.4 -0.9 0.1
13 Overall Balance 13.1 -12.8 5.4 0.5
14 Change in Reserves (- indicates increase;
+ indicates decrease) (on BOP Basis) -13.1 12.8 -5.4 -0.5
Memo Items/Assumptions
1 Trade Balance/GDP (per cent) -7.8 -10.3
2 Goods & Services Balance / GDP (per cent) -4.9 -6.8
3 Invisibles / GDP (per cent) 4.9 6.0
4 Current Account Balance/GDP (per cent) -2.7 -4.2
5 Net Capital Flows / GDP (per cent) 3.7 3.7
Note: Total may not tally due to rounding off. PR: Partially Revised. P: Preliminary.
Source : RBI.
40 MID-YEAR ECONOMIC ANALYSIS
1.92 As per the latest available information Exchange Rate
on capital inflows, net FDI inflows were 1.94 The movement of exchange rate in
US$12.8 billion during April-September 2012 2011-12 indicates that the average monthly
as compared to US$ 15.4 billion in the exchange rate of rupee against the US dollar
corresponding period of 2011-12. FII inflows depreciated by 10.6 per cent from ` 44.97 per
US dollar in March 2011 to ` 50.32 per US dollar
increased to US$ 6.2 billion during
in March 2012. Similarly, on point-to-point
April-September 2012 from US$ 0.9 billion in
basis, the average exchange rate of rupee
April-September 2011. ECB approvals stood (average of buying and selling rate of FEDAI)
at US$14.3 billion during April-September 2012 depreciated by 12.7 per cent from ` 44.65 per
vis-à-vis US$ 18.2 billion a year earlier, NRI US dollar on 31 March 2011 to `51.16 per US
deposits amounted to US$ 8.9 billion during dollar on March 30, 2012.
April-September 2012 vis-à-vis US$ 3.9 billion
1.95 In order to reduce the volatility of
during the same period in 2011-12.
exchange rate value of the rupee, the RBI had
Foreign Exchange Reserves intervened in the foreign exchange market
1.93 The foreign exchange reserves stood through sale of US dollars amounting to US$
at US$ 304.8 billion at end March 2011. In 20.1 billion in 2011-12 Further, in view of the
the fiscal 2011-12, foreign exchange reserves sharp depreciation of the rupee in the later part
reached a high of US$ 322.0 billion at end of 2011, the RBI announced various policy
August 2011. However, it declined thereafter measures that were aimed at curbing
speculative behaviour of banks and corporate
and stood at US$ 294.4 billion at end March
in the foreign exchange market. A number of
2012. In the current fiscal 2012-13, the foreign
steps were also taken to facilitate capital flows
exchange reserves declined by US$ 4.7 billion
and boost exports to augment supply of foreign
to US$ 289.7 billion during the first quarter. exchange.
At the end of the second quarter (end
September 2012), it stood at US$ 294.8 1.96 During the first quarter of current fiscal
billion. At end October 2012, it stood at US$ 2012-13, monthly average exchange rate of
rupee again showed a depreciating trend. It
295.3 billion. Country-wise details of foreign
has depreciated by 2.9 per cent in April 2012,
exchange reserves reveal that India continues
4.9 per cent in May and 2.8 per cent in June
to be one of the largest holders of foreign 2012 over the previous month. In the month
exchange reserves. India is the seventh of June 2012, the rupee touched a low of
largest foreign exchange reserves holder in ` 57.22 per US dollar (RBI's reference rate)
the world, after China, Japan, Russia, on June 27, 2012 indicating 10.6 per cent
Switzerland,Brazil and China P R Hong Kong depreciation over `51.16 per US dollar on
(Table1.31) at end September 2012. March 30, 2012.
Table 1.31 : Foreign exchange reserves of some major countries
(US$ billion)
Sl Country Foreign exchange reserves at end
September, 2012
1 China 3285.0
2 Japan 1277.0
3 Russia 529.9
4 Switzerland 525.0
5 Brazil 378.7
6 China P R Hong Kong (August 2012) 298.2
7 India 294.8
8 Germany 262.9
9 France 190.3
10 Thailand 183.6
Source: IMF except for China. In additional foreign exchange reserves of Taiwan are shown at US$
391.2 billion (Q2) as per The Economist November 1st , 2012
OVERVIEW OF THE ECONOMY 41
Table 1.32: Exchange rates of Rupee per foreign currency and RBI's Sale / Purchase of US
dollar in the Foreign Exchange Market*
Month US Pound Euro Japanese RBI Net Sale (-)
Dollar Sterling Yen** / Purchase (+)
(US$ million)
2011-12 (annual average) 47.9229 76.3912 65.8939 60.7484 - 20,138
(-4.9) (-7.2) (-8.6) (-12.3)
March 2012 50.3213 79.6549 66.5307 61.0259 -
(-2.3) (-2.5) (-2.1) (2.8)
2012-13(monthly average)
April 2012 51.8029 82.9414 68.1617 63.8139 -275
(-2.9) (-4.0) (-2.4) (-4.4)
May 2012 54.4735 86.7202 69.6991 68.3286 -485
(-4.9) (-4.4) (-2.2) (-6.6)
June 2012 56.0302 87.1349 70.3087 70.6743 -50
(-2.8) (-0.5) (-0.9) (-3.3)
July 2012 55.4948 86.5173 68.2520 70.2809 -785
(1.0) (0.7) (3.0) (0.6)
August 2012 55.5598 87.2492 68.8750 70.6814 -452
(-0.1) (-0.8) (-0.9) (-0.6)
September 2012 54.6055 87.8663 70.1263 69.9084 -10
(1.7) (-0.7) (-1.8) (1.1)
**Data
Dataupto April 2012
uptoApril basedon
and based
2012 and on FEDAI
FEDAI indicative
indicative Market
Market Rates.
Rates. DataData from2012
from May May onwards
2012 onwards are
are based based
on RBI's
on RBI's reference
reference rates.
rates. **Per 100 Yen
Figures
**Per 100 parentheses indicate appreciation (+) and depreciation (-) over the previous month/year in per cent. Some
in Yen
per centage
Source : RBI, figures may not
in tally
Figures due to rounding
parentheses off. appreciation (+) and depreciation (-) over the previous
indicate
Source: RBI
month/year in per cent. Some per centage figures may not tally due to rounding off.
1.97 The decline in rupee indicated among `51.62 per US dollar on October 05, 2012. The
others, supply-demand imbalance in the rupee however, has weakened again since
domestic foreign exchange market due to
October 08, 2012 due to demand for dollars
widening trade and current account deficit and
from oil importing firms and pressure on the
slowdown in FII inflows. The depreciation
trade account.
could also be partly explained by the
strengthening of US dollar in the international 1.99 It may be noted that the depreciation
market and the decline of euro due to of the exchange rate in 2012-13 is not
unfolding euro zone crisis. Apart from the specific to India. Most of the emerging
global factors, there are several domestic market currencies have depreciated due to
factors which have added to the weakening the uncertain global economic environment.
trend of the rupee that included continued high The extent of depreciation for rupee (5.6 per
inflation. In the second quarter of 2012-13, cent) between March 2012 and October 2012
the monthly average exchange rate of rupee is lower than that of the currencies of major
has appreciated by 1.0 per cent in July 2012 EMEs like South Africa's Rand (11.1 per
and 1.7 per cent in September over the cent), Brazilian Real (9.8 per cent) and
previous month, while in the month of August Russian Rouble (6.5 per cent), reflecting the
it has marginally depreciated by 0.1 per cent favourable impact of recent policy measures
(Table 1.32). on capital inflows.The 6-currency trade-
1.98 The domestic policy measures for based REER (base: 2004-05=100) of the
attracting FDI, coupled with the announcement Rupee depreciated by 5.5 per cent from
of quantitative easing by the US Federal 115.97 to 109.59 between March 2011 and
Reserve and Bank of Japan in September 2012 March 2012. During 2012-13 so far (up to
contributed to an increase in capital inflows to September 2012), the 6 currency index of
India leading to a strengthening of the rupee. 104.24 showed depreciation of 5.6 per cent
Besides, the Reserve Bank sold nearly US$ over the March 2012 index of 109.59 largely
2.1 billion during 2012-13 (April-September reflecting depreciation of rupee in nominal
2012). As a result, the rupee recovered to terms (Table1.33).
42 MID-YEAR ECONOMIC ANALYSIS
Table 1.33: Indices of REER and NEER of Indian Rupee (6-Currency Trade Based Weights)
Base 2004-05 (April-March)=100
Monthly NEER Appreciation(+) / REER Appreciation(+)/
Depreciation(-) in NEER Depreciation(-) in NEER
over previous period / over previous period /
month (per cent) month (per cent)
March 2011 90.29 115.97
March 2012 81.60 -9.6 109.59 -5.5
2012-13
April 2012 79.24 -2.9 107.57 -1.8
May 2012 76.10 -4.0 104.12 -3.2
June 2012 74.67 -1.9 102.24 -1.8
July 2012 75.95 1.7 103.85 1.6
August 2012 75.53 -0.6 104.33 -0.5
September 2012 75.67 0.2 104.24 - 0.1
Source: Reserve Bank of India.
External Debt 1.101 India's key debt indicators compare
well with other indebted developing countries.
1.100 India's external debt continues to
According to the latest Global Development
r e m a i n w i t h i n m a n a g e a b l e l i m i ts a s
Finance, 2012 of the World Bank, which
indicated by the external debt to GDP ratio
contains external debt numbers for 2010,
of 20.0 per cent and debt service ratio of
India's position was fifth in terms of absolute
6.0 per cent during 2011-12. As per the
debt stock among top twenty developing
latest data available, India's external debt indebted countries in 2010, after China,
stood at US$ 349.5 billion at end-June 2012, Russian Federation, Brazil and Turkey, In
recording an increase of US$ 3.9 billion (1.1 terms of ratio of external debt to Gross
per cent) over an estimate of US$ 345.6 National Income, India's position was the fifth
billion at end-March 2012. The increase in lowest. The share of concessional credit in
total external debt during the quarter was India's external debt portfolio was the fourth
primarily on account of the rise in NRI highest after Pakistan, Indonesia and the
deposits and short-term trade credit. The Philippines. In terms of cover provided by
long-term debt increased by US$ 1.6 billion foreign exchange reserves to debt, India's
(0.6 per cent) to US$ 269.1 billion, while position was the fifth highest after China,
short-term debt showed an increase of US$ Thailand, Malaysia and Russian Federation
2.3 billion (2.9 per cent) to US$ 80.4 billion. among the top twenty developing debtor
The long-term debt accounted for 77.0 per countries.
cent of total external debt at end-June 2012, 1.102 The active external debt management
while the remaining was short-term debt. policy of the Government of India has helped
The share of Government (Sovereign) in containing the growth of accumulation of
external debt in total external debt was 23.0 external debt and maintaining a comfortable
per cent, while the share of non- external debt position. It continues to focus
Government debt in total external debt was on monitoring long and short-term debt,
77.0 at end-June 2012. The share of raising sovereign loans on concessional terms
concessional debt in total external debt with longer maturities, regulating external
stood at 13.5 per cent at end-June 2012 vis- commercial borrowings through end-use and
a-vis 13.8 per cent at end-March 2012. The all-in-cost restrictions, rationalizing interest
ratio of short-term debt to foreign exchange rates on Non-Resident Indian deposits. As a
reserve at 27.8 per cent at end-June 2012 consequence of this, key external debt
was higher compared to 26.6 per cent at indicators remained at comfortable levels
end-March 2012. (Table 1.34).
OVERVIEW OF THE ECONOMY 43
Table 1.34: India's Key External Debt Indicators (Per cent)
At end External External Debt Foreign Concessional Short Short
March Debt Debt to Service Exchange Debt to Total Term to Term to
(US$ GDP Ratio Reserves External Debt Foreign Total
billion) to Total Exchange External
External Reserves Debt
Debt
2005-06 139.1 16.8 10.1a 109.0 28.4 12.9 14.0
2006-07 172.4 17.5 4.7 115.6 23.0 14.1 16.3
2007-08 224.4 18.0 4.8 138.0 19.7 14.8 20.4
2008-09 224.5 20.3 4.4 112.1 18.7 17.2 19.3
2009-10 260.9 18.3 5.8 106.8 16.8 18.8 20.0
2010-11 305.9 17.8 4.3 99.6 15.5 21.3 21.2
2011-12 345.7 20.0 6.0 85.1 13.8 26.6 22.6
PR
End-June 349.5 - 5.9 82.9 13.5 27.8 23.0
2012 QE
PR: Partially Revised; QE: Quick Estimates.
a: Works out to 6.3 per cent, excluding India Millennium Deposit repayments of US$ 7.1 billion and
pre-payment of US$ 23.5 million.
SOCIAL SECTOR: DEVELOPMENTS AND Performance of Programmes
PERFORMANCE OF PROGRAMMES Developmental schemes are proceeding
Falling unemployment apace
1.104 The progress under major programmes
1.103 As stated in the Mid-Year Analysis
of the Government of India is as under:
2011-12, a comparison of the different
unemployment rates like Usual Principal Mahatma Gandhi National Rural
Status (UPS), Usual Status (US), Current Employment Guarantee Act
Weekly Status (CWS) and Current Daily (MGNREGA): This scheme has been
Status (CDS) as per the 61st round (2004- provided a sum of ` 33,000 crore in the
05) and 66th round (2009-10) of the NSSO Budget 2012-13. During 2012-13 (up
Surveys show that there is a fall in to September, 2012) the expenditure
unemployment rate in 2009-10 over 2004- incurred by the States/UTs is ` 18,148.6
2005. Total unemployment rates have fallen crore, which accounts for 55 per cent
from 3.1 per cent to 2.5 per cent (UPS), 2.3 of allocated funds and 3.55 crore
per cent to 2.0 per cent (US), 4.4 percent to households have been provided
3.6 per cent (CWS) and 8.2 percent to 6.6 employment during the period. The
percent (CDS). Quarterly quick employment share of SCs, STs and Women is 23
surveys are being conducted by the Labour percent, 15 percent and 54 per cent
Bureau since January 2009 for selected respectively. The share of women in
sectors. Comparing the results of the last four total persondays generated is well
quarterly surveys (i.e. July, 2011 to June, above the stipulation of 1/3 as per the
2012), overall employment increased by 6.94 Act.
lakh in June, 2012 over July, 2011, for the PradhanMantri Gram SadakYojana
selected sectors with the highest increase of (PMGSY): During the current financial
4.44 lakh in IT/BPO followed by 1.70 lakh in year, PMGSY has been allocated a sum
textiles, 0.45 lakh in transport, 0.26 lakh in of ` 24,000 crore for connecting 4,000
metals, 0.19 lakh in gems & jewellery and 0.11 habitations and construction of 30,000
lakh in automobiles. KM of roads. Up to September, 2012
44 MID-YEAR ECONOMIC ANALYSIS
connectivity has been provided to 3,155 crore with a step up of 13.1 per cent.
habitations; 9,256.41 KM length road During 2012-13, the activities of ASHA
has been constructed and a total of (Accredited Social Health Activist)
` 4,260 crore has been released. Since
under NRHM, is sought to be enlarged
to include prevention of Iodine
inception of PMGSY 87,567 habitations
Deficiency Disorder (IDD), ensure 100
(73 per cent of the cleared habitations)
per cent immunization and better
have been provided with all-weather spacing of children, more active role for
road connectivity (till August, 2012); ASHA as convener of the Village Health
216,635 kms of roads have been and Sanitation Committee as also to
constructed for new connectivity and support the initiative on malnutrition.
1,43,123 kms of roads have been States have also been supported under
upgraded by the States. NRHM to provide free emergency and
patient transport services through basic
Indira AwaasYojana (IAY): During the
and advanced level ambulances in
current financial year, ` 11,075 crore
every nook and corner of the country.
has been allocated for rural housing,
More than 15,000 ambulances are
out of which ` 10,513.2 crore were
integrated all over the country under the
earmarked for release to District Rural
network. An amount of ` 20,542 crore
Development Agencies under IAY for
has been earmarked for programmes/
construction of 30.10 lakh houses. Till
schemes under NRHM.
September, 2012 ` 4,930.32 crore have
been released and 7.67 lakh houses JananiShishuSurakshaKaryakaram
have been constructed which is 25.48 (JSSK): As an initiative in the direction
per cent of the target. of universal healthcare, JSSK was
introduced in 2011, which entitles all
Swarnajayanti Gram SwarozgarYojana
pregnant women deliveries in public
(SGSY)/ National Rural Livelihoods health institutions to be absolutely free,
Mission (NRLM): SGSY/NRLM is a self- even for caesarean cases. The
employment programme which aims at initiative stipulates free drugs,
linking bank credit to income diagnostics, blood and diet, besides
generation. Central allocation of SGSY/ free transport from home to institution
NRLM is ` 3,915 crore during the and between facilities in case of a
financial year 2012-13. Central subsidy referral and drop back home. An
for the States and UTs is ` 2,196.7 amount of ` 1,301.6 crore has been
crore. The central release under SGSY provided to the States in the current
& NRLM amounts to ` 384.0 crore and financial year for free drugs. Further,
` 623.6 crore respectively. Out of the States have been provided with
total number of assisted Swarozgaries financial assistance for operating
of 127 lakh, 96 lakh Swarozgaries have Mobile Medical Units (MMUs) with the
been covered under Self-Help Groups objective to take health care to door
(SHGs) and 31 lakh are individually steps of people in the underserved rural
assisted Swarozgaries. The per and tribal areas. So far 2,013 vehicles
centage coverage of SCs, STs, are operational as MMUs in 464
Minorities, Women and Physically districts across the country.
Challenged is 30.0 percent, 12.6
percent, 9.7 percent, 54.6 percent, and
Pradhan Mantri Swasthya Suraksha
Yojana (PMSSY): This is being
0.8 percent respectively.
expanded during the year to cover
National Rural Health Mission upgradation of more Government
(NRHM):During 2012-13, the budget Medical Colleges to enhance the
outlay of the Central Government for availability of affordable tertiary health
health sector has increased to ` 34,488 care services and quality medical
OVERVIEW OF THE ECONOMY 45
education. An amount of ` 1,544.2 1.105 Some important programmes in the
crore has been budgeted for PMSSY, education sector viz. the Sarva Shiksha
during 2012-13. Various initiatives have Abhiyan (SSA) supported by the Mid-Day
been taken to reform Medical Meal Scheme (MDMS), intend to ensure
Education, which inter-alia include provision of elementary education to all
relaxation of land requirement, bed children in the 6-14 age group. Under the
strength and bed-occupancy, increase MDMS, 10.64 crore children are provided hot
in maximum intake, opening of Medical cooked meal in 12.31 lakh schools in the
Colleges. The numbers of MBBS seats country. During 2011-12, 11.86 lakh schools
have increased by 36 per cent while have been provided with kitchen devices and
the number of PG seats has increased 24.70 lakh cook-cum-helper have been
by 60 per cent, in last four years. 26 appointed by the State to prepare and serve
new Medical Colleges have started in the mid-day meals to the school children. 5.72
2012-13 including 6 AIIMS like lakh kitchen-cum-stores have been
Institutions which commenced constructed to ensure safety of foodgrains
functioning in September 2012, with and provisioning of hygienic and nutritious
intake of 50 students each. In order to meals to the children. An intensive programme
strengthen the Nursing sector, 176 for providing health care to the school children
districts have already been supported
has been undertaken in collaboration with the
for establishment of Auxiliary Nurse
National Rural Health Mission (NRHM). A sum
Midwife (ANM) Schools and General
of ` 11,937 crore has been earmarked for the
Nursing & Midwifery (GNM) Schools.
programme in the current financial year. The
R a s h t r i y a S w a s t h y a B i m a Yo j a n a Government revised the MDMS in 2009-10
(RSBY): Under RSBY over 3.25 crore to incorporate upward revision of food norm
smart cards have been issued till for upper primary children, enhancement of
September, 2012. The scheme has cooking cost for supply of pulses, vegetables,
now been extended to construction oils, salt & condiments and fuel, separate
workers, street vendors, railway porters provision of honorarium of ` 1,000 per month
& vendors, MGNREGA workers who to each cook-cum-helper etc. The web
have worked for more than fifteen days enabled Management Information System
during the preceding year, domestic (MIS) for MDMS has also been launched in
workers and beedi workers. July, 2012. The MIS will integrate with
Government is contemplating to extend Intractive Voice Responsive System (IVRS) to
the benefit of the Scheme to other monitor the scheme on real time basis.
occupational groups in the unorganized 1.106 The Right of Children to Free and
sector in a phased manner. Compulsory Education (Amendment) Act, 2012
Rajiv Gandhi National Rural Drinking inter-alia provides inclusion of children with
Water Mission: National Rural Drinking disability as stipulated in the Persons with
Water Programme (NRDWP) which Disabilities (PWD)Act 2005 and the National
aims to ensure drinking water supply Trust Act under the purview of RTE Act and
for all households in rural India, has a provide them free and compulsory education.
plan outlay of ` 10,500 crore for 2012- Option of home based education has also been
13 out of which ` 4,289.83 crore has provided for the children with severe disability.
been released till September, 2012 and The rights of minorities as provided to them
27,273 partially covered and 4,036 under Article 29 and 30 of the Constitution are
quality affected habitations have been protected, educational institutions imparting
covered against the target of 75,000 religious instruction are exempted from the
for partially covered and 25,000 quality provisions of the RTE Act and School
affected habitations respectively for the Management Committees constituted under
year as a whole. the Act by aided institutions shall perform
46 MID-YEAR ECONOMIC ANALYSIS
advisory function, and shall not be required to to 30 per cent by the year 2020. Further,
prepare a School Development Plan. Government has taken several legislative
initiatives of which the most important is the
1.107 A National Vocational Education
establishment of an overarching regulatory
Qualification Framework for establishing a
body, the National Commission for Higher
system of clear education pathways from
Education and Research (NCHER) to cover
school through higher education for vocational
all areas/disciplines of learning; setting up of
education stream has been developed and will
Educational Tribunals to adjudicate on disputes
be implemented in close partnership with the
among stake-holders within institutions and
industry/ potential employer so as to enhance
between the institutions; making mandatory
the employability of the youth. The Centrally
accreditation system to ensure quality of
Sponsored Scheme of "Vocationalisation of
higher educational institutions and
Higher Secondary Education" was approved
programmes; creation of a National
by the government on 15th September, 2011.
Accreditation Regulatory Authority and
100 new schools were provided under the
creation of a national electronic database of
revised scheme for the financial year
academic awards through the Academic
2011-2012. Of these, 40 schools are being set
Depository Bill. To have an inclusive higher
up in Haryana and 60 in Assam.
education system, the Government launched
1.108 Universalization of Secondary 89 Virtual labs for quality enhancement so that
Education is the other important goal in view the learner in distance education system and
of the fact that there is an increase in the remotely located & backward areas can reap
number of students moving upward from the benefit of quality and relevant education,
elementary education to secondary level. The through ICT mode. To strengthen
goal of universal access by 2017 and universal comprehensively all issues related to teacher,
retention by 2020 is to be achieved through teaching, teacher preparation and professional
the Rashtriya Madhyamik Shiksha Abhiyan development, Government has planned to
(RMSA). RMSA has been operational from launch National Mission on Teacher and
2009-10. Since inception of the scheme, Teaching which is one of the major thrust areas
opening of 9,636 new schools, strengthening of action during the 12th Five Year Plan. The
of 34,311 existing secondary schools, 40,018 scheme of Community College has been
teachers in existing secondary schools and initiated in 200 colleges on pilot basis from
55,974 teachers for new secondary schools existing colleges / polytechnics so that they
have been sanctioned. become operational from the academic session
2013.
1.109 Saakshar Bharat (SB) is the new
variant of the programme format of National 1.111 The Unique Identification Authority of
Literacy Mission. The principal target of the India (UIDAI) is expected to bring in efficiency
Mission is to impart, by 2012, functional literacy in service delivery mechanism and reducing
to 70 million adults in the age group of 15 years corruption, leakage and wastefulness in it. A
and above. Auxiliary target of the mission is to total of 22.7 crore enrolment packets have
cover 1.5 million adults under Basic Education been uploaded into the system out of which
(Equivalency) programme and equal number 20.6 crore Aadhaar numbers have been
under Vocational Training (skill development) generated as on 30th September 2012. The
programme. The total of 372 districts in 25 innovative technology embedded in Aaadhar
States and one in U.T have been covered by Platform together with the spread of modern
the end of September, 2012. banking system will make it possible the direct
cash transfer of subsidies and in ensuring that
1.110 Higher Education plays a vital role in these reach the targeted beneficiaries.
overall economic development and to have a Ambitious timelines have been set for a phased
just and equitable society and a vibrant political use of this platform with 51 districts to be
system. Government has set a target of covered by January, 2013, 18 States by April,
increasing the Gross Enrolment Ratio (GER) 2013 and the rest of the country later in 2013.
CENTRAL GOVERNMENT FINANCES 47
CHAPTER II
CENTRAL GOVERNMENT FINANCES
REVIEW OF TRENDS IN RECEIPTS AND EXPENDITURE DURING APRIL-SEPTEMBER 2012
2.1 The Budget for 2012-13 was presented the economy in growth revival; and second, to
against the backdrop of growth slowdown and bring down the deficit from 2011-12 level so
rising prices that owed to a mix of domestic as to leave space for private sector credit as
and global factors. The Budget for 2012-13 the investment cycle picks up. Being the first
estimated fiscal deficit at ` 5,13,590 crore (5.1 year of the 12th Five Year Plan, an ambitious
per cent of estimated GDP for the year) and a plan outlay which is 22.1 per cent higher than
revenue deficit of ` 3,50,424 crore (3.4 per cent RE 2011-12 has been provided. Even with
of GDP). The total fiscal deficit upto September, higher increase in plan allocation, fiscal deficit
2012 is ` 3,36,904 crore. Revenue deficit upto is estimated to be reduced with appropriate
September, 2012 is ` 2,63,284 crore. The total policy measures. It is estimated that non-plan
non-debt receipts upto September, 2012 is expenditure could be controlled with a growth
` 3 ,57 ,11 5 c ror e w her e a s t he total of 8.7 per cent in BE 2012-13 over RE 2011-
expenditure was ` 6,94,019 crore. 12. This would result in overall expenditure
increase of 13.1 per cent in BE 2012-13 over
2.2 The reduction in fiscal deficit from a RE 2011-12. Thus the bulk of the correction in
level of 5.9 per cent of GDP in RE 2011-12 to fiscal deficit has been targeted though revenue
5.1 per cent of GDP in BE 2012-13 was augmentation.
designed with a mix of reduction in total
expenditure as percentage of GDP and 2.4 With the macroeconomic performance
improvement in gross tax revenue as continuing to be at lower levels, the fiscal
percentage of GDP. The revenue deficit outcome in the first half of the financial year
estimated for the year 2012-13 is also lower was affected. The FRBM Mid-Year benchmarks
than the revenue deficit of 4.3 per cent for the of a minimum attainment of 40 per cent of BE
financial year 2011-12. The `effective revenue in terms of non-debt receipts and maximum of
deficit', which represents imbalance in revenue 45 per cent of BE in terms of both revenue
account after netting grants used for creation and fiscal deficits could not be realised in the
of capital assets has been estimated at 1.8 per current financial year.
cent of GDP in BE 2012-13. Going forward, it
would be the endeavor of the Government to 2.5 Trends in receipts and expenditure at
eliminate this imbalance in revenue account the end of the second quarter of year 2012-13
by 2014-15 as per the Medium Term Fiscal (April-September, 2012) are summarized in
Policy Statement 2012-13. Table 2.1. The figures therein are unaudited
and may undergo revision subsequent to audit.
2.3 The fiscal policy of 2012-13 was The receipts and recoveries, wherever directly
calibrated with two fold objectives first, to aid linked to expenditure, have been netted out.
48 MID-YEAR ECONOMIC ANALYSIS
Table 2.1- Budgetary Position April-September
(` crore) (Percentage)
B.E. Actuals up to Sept. Percentage to BE 5 years
Particulars
moving
Upto average
2012-13 2012-13 2011-12 COPPY
09/2012
1 Revenue Receipts 935685 350888 305528 37.5 38.7 43.6
2 Tax Revenue (Net) 771071 293812 254731 38.1 38.3 40.2
3 Non-Tax Revenue 164614 57076 50797 34.7 40.5 56.7
4 Capital Receipts (5+6+7) 555241 343131 293565 61.8 62.7 55.6
Non Debt Capital Receipts 41650 6227 12755 15.0 23.2 52.3
5 Recovery of Loans 11650 4855 10024 41.7 66.7 74.5
6 Other Receipts 30000 1372 2731 4.6 6.8 97.0
7 Borrowings and other 513590 336904 280810 65.6 68.0 56.6
liabilities
8 Total Receipts (1+4) 1490925 694019 599093 46.5 47.6 46.7
9 Non-Plan Expenditure 969900 491279 421270 50.7 51.6 48.8
10 On Revenue Account 865596 446673 376275 51.6 51.3 50.2
of which
11 Interest payments 319759 131165 122499 41.0 45.7 43.3
12 On Capital Account 104304 44606 44995 42.8 54.5 38.2
13 Plan Expenditure 521025 202740 177823 38.9 40.3 42.3
14 On Revenue Account 420513 167499 151033 39.8 41.5 42.4
15 On Capital Account 100512 35241 26790 35.1 34.4 42.1
16 Total Expenditure (9+13) 1490925 694019 599093 46.5 47.6 46.7
17 Revenue Expenditure
(10+14) 1286109 614172 527308 47.8 48.1 47.7
18 Of which Grants for creation 164672 50656 51411 30.8 35.0 --
of Capital Assets
19 Capital Expenditure (12+15) 204816 79847 71785 39.0 44.7 39.1
20 Revenue Deficit (17-1) 350424 263284 221780 75.1 72.2 77.0
21 Effective Revenue Deficit #
(20-18) 185752 212628 170369 114.5 106.2 --
22 Fiscal Deficit {16 (1+5+6)} 513590 336904 280810 65.6 68.0 56.6
23 Primary Deficit (22 11) 193831 205739 158311 106.1 109.3 12.5
Notes: 1. The figures of Railways have been netted as in Budget Estimates.
2. COPPY Corresponding Period of Previous Year.
3. # Excluding Grants for creation of Capital Assets
RECEIPTS over provisional actuals of 2011-12. Revenue
receipts at ` 3,50,888 crore during first half of
Revenue Receipts 2012-13 are 37.5 per cent of B.E. 2012-13
2.6 Revenue receipts consist of net tax (Table 2.2 and Fig 2.1). This is lower than the
revenue and non-tax revenue. Revenue five year average of 43.6 per cent of respective
receipts were estimated at ` 9,35,685 crore in BE. The growth in total revenue receipts during
BE 2012-13 reflecting a growth of 23.7 per cent the first half of 2012-13 is 14.8 per cent over
CENTRAL GOVERNMENT FINANCES 49
Table 2.2-Revenue receipts in April-September
(` crore)
April - September
Sl.
No. REVENUE RECEIPTS 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13
1 Tax Revenue (Net) 160500 202247 185669 233415 254731 293812
2 Non-Tax Revenue 37456 42651 58802 164819 50797 57076
3 Total Revenue Receipts (TRR) 197956 244898 244471 398234 305528 350888
4 BE for the full year 486422 602935 614497 682212 789892 935685
5 Realised revenue as per cent to
BE 40.7 40.6 39.8 58.4 38.7 37.5
6 Rate of Growth of TRR (per cent) 22.6 23.7 -0.2 62.9 -23.3 14.8
the corresponding period in 2011-12. Growth gross tax revenue in April-September 2012
in gross tax revenue in BE 2012-13 was has been 15 per cent over last year's actuals
estimated at 21.0 per cent over the actual of the same period. As percentage of BE,
receipts of 2011-12 (provisional). However, the gross tax revenue till September is almost the
performance during first half is not in line with same level as last year. Trends in year on year
BE due to continued economic slowdown growth for different quarters in collection of
affecting revenues. gross taxes for 2010-11, 2011-12 and 2012-
13 is shown in Fig 2.2.
Gross Tax Revenue
Direct Taxes
2.7 During the first half of 2012-13 direct
tax refunds were `46,012 crore as against 2.8 The gross direct tax collection (net of
`62,230 crore during the corresponding period refunds) increased by 16.0 per cent amounting
of 2011-12 (Table 2.3). The overall growth in to a sum of ` 2,28,072 crore for April-
Fig 2.1: Net Tax Revenue and its rate of growth
230000 35.0
Net Tax Revenue (Rs crore) (LHS)
210000 30.0
Rate of Growth (per cent) (RHS)
190000 25.0
170000 20.0
150000 15.0
130000 10.0
110000 5.0
90000 0.0
70000 -5.0
50000 -10.0
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
2010-11 2011-12 2012-13
50 MID-YEAR ECONOMIC ANALYSIS
September, 2012 over April-September, 2011 during the same period in 2011-12. The BE
(` 1,96,623 crore). Going by the past trends, 2012-13 for this component implies year-on-
the target for the fiscal year appears achievable year growth of 15.5 per cent over the
with a pickup in the economic activity in the provisional actual receipts in 2011-12.
second half. This is based on the observed fact
that there are some seasonalities in both Income Tax other than Corporation Tax
revenue realized as well as GDP growth.
2.10 Taxes on income other than
However, some downside risks associated with
Corporation tax were estimated at ` 1,89,866
prevailing uncertainty in the global economy
crore in BE 2012-13 which is 14.9 per cent
and domestic macroeconomic outcome may
higher than provisional actual receipts during
impact eventual performance. Two major
2011-12. Revenue realized at ` 82,598 crore
components of Direct Taxes are discussed
during the first half of the year 2012-13 reflects
below. Trends in year on year growth for
a growth of 24.7 per cent over collections
different quarters in collection of corporation
during corresponding period in the previous
tax and non-corporate direct taxes for 2010-11,
financial year. In all likelihood, the receipts
2011-12 and 2012-13 are indicated in Fig 2.3.
under this component of tax may exceed BE.
Corporation Tax
Indirect Taxes
2.9 Corporation tax at ` 1,42,965 crore
continues to be the largest component of total 2.11 The gross indirect tax collections during
taxes. During the first half of 2012-13, it shows first half of 2012-13 is ` 1,96,824 crore. This
a growth of 12.2 per cent over collections reflects a growth of 13.9 per cent over the
Table 2.3 Components of Gross Tax Revenue (` crore)
Per
Actuals cent Actuals
per BE per
Sl. BE upto growth upto
Description cent 2011- cent
No. 2012-13 Sept. over Sept.
of BE 12 of BE
2012 sept. 2011
2011
1 Corporation Tax 373227 142965 38.3 12.2 359990 127375 35.4
2 Taxes on income other
than Corporation Tax 189866 82598 43.5 24.7 164526 66249 40.3
3 Other Taxes 7165 2509 35.0 -16.3 8135 2999 36.9
Total Direct Taxes 570258 228072 40.0 16.0 532651 196623 36.9
4 Customs 186694 78557 42.1 5.0 151700 74808 49.3
5 Union Excise Duties 194350 67424 34.7 13.7 164116 59315 36.1
6 Service Tax 124000 49103 39.6 32.5 82000 37049 45.2
7 Other Taxes 2310 1740 75.3 11.7 1973 1558 79.0
Total Indirect Taxes 507354 196824 38.8 13.9 399789 172730 43.2
Total Gross Tax
8 Revenue 1077612 424896 39.4 15.0 932440 369353 39.6
Total Gross Tax Revenue (with direct
Tax refunds 470908 431583
CENTRAL GOVERNMENT FINANCES 51
Fig 2.2: Quarterly Gross Tax Revenue Receipts and their growth
280000 35.0
Gross Tax Revenue (Rs crore)
260000 (LHS) 30.0
240000 Rate of Growth (per cent)
(RHS) 25.0
220000
200000 20.0
180000 15.0
160000
10.0
140000
5.0
120000
100000 0.0
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
2010-11 2011-12 2012-13
collections during April-September, 2011. this component, BE 2012-13 was estimated
However, this is much lower than the estimated at ` 1,86,694 crore reflecting a growth of 24.9
growth of 28.2 per cent in BE 2012-13 over per cent over the provisional actuals of 2011-
provisional actuals of 2011-12. Growth of 12. Receipts under this component have
indirect taxes over last 10 quarters is indicated increased by 5 per cent in the first half of 2012-
in Fig 2.4. 13 over the corresponding period in 2011-12.
Trends in year on year growth for different
Customs
quarters in collection of customs duties for
2.12 Customs duties collection during the 2010-11, 2011-12 and 2012-13 are indicated
first half of 2012-13 is on lower side. For in Fig. 2.4. The collection in the first half of
Fig 2.3: Rate of growth of Direct Taxes
60.0
50.0 Corporation Tax
40.0 Income Tax
30.0
20.0
10.0
0.0
-10.0
-20.0
-30.0
-40.0
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
2010-11 2011-12 2012-13
52 MID-YEAR ECONOMIC ANALYSIS
2012-13 is 42.1 per cent of BE 2012-13. As growth of 27.1 per cent over provisional actual
may be seen from the figure, the trends in this receipts in 2011-12. In the first half of the
year have improved in the second quarter as current fiscal, the receipts are at ` 49,103 crore
compared to the previous quarter. reflecting a growth of 32.5 per cent over the
collections made in the corresponding period
Union Excise Duties of 2011-12 ( ` 37049 crore). The amount
2.13 Revenue from Union excise duties was collected during April September, 2012
estimated at ` 1,94,350 crore in BE 2012-13 constituted 39.6 per cent of BE 2012-13. The
reflecting a growth of 33.8 per cent over the broadened base and higher rate is expected
provisional actual collection of 2011-12. This to result in collections exceeding the Budget
level of increase was estimated on the basis Estimates.
of relative better performance of manufacturing 2.15 On the tax revenue side, the trend
sector and likely demand in the economy. In growth in the mid-year is lower than estimated.
the first half of 2012-13, the receipts under
While the targets may be achieved in taxes on
Union excise duties is ` 67,424 crore reflecting
income other than Corporation tax and service
a growth of 13.7 per cent over the collections tax, achieving targets in Corporation tax on the
in the corresponding period of 2011-12
Direct tax side and Customs and Central Excise
(`59,315 crore) and is 34.7 per cent of BE
duty on the Indirect tax side is somewhat
2012-13. Lower than estimated growth is also difficult given the trend so far. The reason for
due to moderation in the growth in the
under achieving target is due to
manufacturing sector. macroeconomic environment being under
Service Tax stress. Slower pace of GDP growth has
affected the manufacturing and trade sectors
2.14 Service Tax in BE 2012-13 was thereby resulting in lower than estimated excise
estimated at ` 1,24,000 crore reflecting a duty collections. Moreover, global economic
Fig 2.4: Rate of Growth of Indirect Taxes
80.0
Customs Duty
70.0
UnionExcise Duty
60.0
Service Tax
50.0
40.0
30.0
20.0
10.0
0.0
-10.0
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
2010-11 2011-12 2012-13
CENTRAL GOVERNMENT FINANCES 53
factors and fluctuations in exchange rates have EXPENDITURE
also affected imports other than oil, thereby
Total Expenditure
affecting Customs duty collections. Higher
policy rates of the Central bank in effort to 2.18 Total expenditure for 2012-13 is
contain inflation, has led to an investment estimated at ` 14,90,925 crore in BE 2012-13
downturn and affected corporate profitability. (14.7 per cent of GDP), which reflects a
Thus, corporate tax is also lower than gr owt h o f 1 4.8 per ce nt ove r a ctu al
estimated. However, based on the proportion expenditure of ` 12,98,444 crore in 2011-12.
of revenue realized in April-September 2012 Growth in plan expenditure is estimated at 26
and observed past trends regarding the per cent over the provisional actuals of 2011-
proportion of revenue in the first half to total 12. However, non-plan expenditure is
revenue realized for the full year along with estimated to increase by 9.6 per cent over the
the efforts taken to augment revenue, the actuals of 2011-12. Total expenditure during
slippage under overall gross tax revenue may April-September 2012 is ` 6,94,019 crore as
be minimal. against a level of ` 5,99,093 crore during the
same period in the previous financial year. As
Non-Tax Revenue
a proportion of BE, total expenditure in April-
2.16 Non tax revenue receipts up to April- September 2012 is 46.5 per cent which is in
September 2012 have been placed at ` 57,076 line with the five year average of 46.7 per cent
crore amounting to 34.7 per cent of B.E. 2012- (Table 2.4).Total expenditure in the first half of
13 showing a growth of 12.4 per cent over 2012-13 reflects a growth of 15.8 per cent in
receipts during corresponding period of expenditure, which is higher by one percentage
previous financial year. The 2G telecom point over the growth envisaged by BE.
spectrum proceeds are likely to be much lower
than budgeted as the response to the auction 2.19 Revenue expenditure for 2012-13 is
held in November 2012 was lukewarm and estimated at ` 12,86,109 crore (12.7 per cent
there is likely slippage in terms of receipts on of GDP). This implies a growth of 12.7 per
this account as efforts are afoot to reduce the cent over actual expenditure of ` 11,40,915
reserve price in the process of auctioning the crore in 2011-12. During first half of 2012-13,
same afresh. this has gone up from ` 5,27,308 crore in
2011-12 to ` 6,14,172 crore implying an year-
Non-debt Capital Receipts on-year growth of 16.5 per cent. As a
proportion of BE, revenue expenditure upto
2.17 The receipts on account of recoveries
September 2012 is 47.8 per cent during
of loans in the current fiscal were ` 4,855 crore
2012-13 which is in line with the 5 year
up to September 2012 compared to ` 10,024
average of 47.7 per cent.
crore during the corresponding period of
previous financial year. This is 41.7 per cent 2.20 Capital expenditure for 2012-13 is
of B.E. 2012-13. Disinvestment receipt and estimated at ` 2,04,816 crore (2.0 per cent
Miscellaneous receipt for current year are of GDP), implying a growth of 30 per cent
` 1,372 crore against ` 2,731 crore during
over actual expenditure of ` 1,57,529 crore
the corre sponding period of previous
in 2011-12. Capital expenditure during April-
financial year. With the present trend and
September 2012 is ` 79,847 crore as against
prevailing scenario in the capital market,
` 71,785 crore during the same period in
efforts are there for expeditious divestment;
2011-12, reflecting a growth of 11.2 per cent.
nevertheless achieving the target of ` 30,000
As a proportion of BE, capital expenditure
crore during the remaining period of 2012-13
during the first half of 2012-13 is 39 per cent
would be a challenge.
54 MID-YEAR ECONOMIC ANALYSIS
Table 2.4: Trends in expenditure in April-September
April - September
Sl.
No. Expenditure 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13
1 Revenue Expenditure 259080 323211 409454 473155 527308 614172
2 Capital Expenditure 58812* 25870 39394 64822 71785 79847
3 Total Expenditure 317892 349081 448848 537977 599093 694019
4 BE for the full year 680521 750884 1020838 1108749 1257729 1490925
5 Total Expenditure as per cent
to BE 46.7 46.5 44.0 48.5 47.6 46.5
6 Rate of growth of Total
Expenditure 26.2 9.8 28.6 19.9 11.4 15.8
*This includes one-time expenditure of `35,531 crore on account of payment to RBI for acquisition of its stake in SBI
in 2012-13 and is in line with the five year performance in Plan expenditure during the first
average of 39.1 per cent. half of fiscal 2012-13 for the Ministries /
Departments are shown in Annex 8. Trends in
Plan Expenditure plan expenditure as percentage of B.E. at the
2.21 Plan expenditure during 2012-13 is end of Q2 of respective financial years are
estimated at ` 5,21,025 crore reflecting a growth shown in Table 2.5.
of 26.0 per cent over the provisional actuals of
Non-Plan Expenditure
2011-12. Plan expenditure of ` 2,02,740 crore
during the first half of 2012-13 shows a moderate 2.22 Non-plan expenditure is estimated at
growth of 14 per cent over the corresponding ` 9,69,900 crore in BE 2012-13 reflecting
period during 2011-12 (` 1,77,823 crore) and is growth of 9.6 per cent over the provisional
38.9 per cent of BE 2012-13. This shows a slower actuals of 2011-12 and accounts for 65.1 per
pace of plan expenditure when compared to five cent of the total expenditure in BE 2012-13.
year average of 42.3 per cent of respective BE. Non-plan expenditure during the first half of
Details of variations over the previous year 2012-13 is at ` 4,91,279 crore showing a
Table 2.5: Trends in plan expenditure in April-September
April - September
Sl.
No. Plan Expenditure 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13
1 Revenue 71571 93727 108163 144847 151033 167499
2 Capital 15187 14725 18615 24860 26790 35241
3 Total Plan Expenditure 86758 108452 126778 169707 177823 202740
4 BE for the full year 205100 243386 325149 373092 441547 521025
5 Plan expenditure as per cent
to BE 42.3 44.6 39.0 45.5 40.3 38.9
6 Rate of growth of Plan
Expenditure (per cent) 26.0 25.0 16.9 33.9 4.8 14.0
CENTRAL GOVERNMENT FINANCES 55
Table 2.6: Non-Plan Expenditure on key items and growth rates
Non-plan items Expenditure during the Growth during 2012-13
First half (` in crore) over 2011-12
2012-13 2011-12
Major Subsidies 141903 95190 49%
Defence 84925 75097 13%
Interest payment 131165 122499 7%
Total 357993 292787 22%
growth of 16.6 per cent over expenditure of problem of government finances which needs
` 4,21,270 crore during the same period in to be addressed through policy initiatives.
the previous financial year. As a proportion Trends in non-plan expenditure as percentage
of BE, non-plan expenditure in the first half of B.E. at the end of Q2 of respective financial
is 50.7 per cent during 2012-13 as against years are shown in Table 2.7.
five year average of 48.8 per cent. In absolute
Resources transferred to States/UTs
terms, there is increase of ` 70,009 crore in
the non-plan expenditure during the first half 2.24 Against the B.E. of ` 5,21,294 crore for
of 2012-13 when compared to the same transfers to States/UTs, the actual resources
period in 2011-12. This increase is largely on transferred to States/UTs during the first half
account of three items: namely, interest of 2012-13 is ` 2,10,318 crore. This shows a
payment (which has increased by ` 8,666 growth of 11.8 per cent over ` 1,88,198 crore
crore); major subsidies (which show increase transferred during the corresponding period in
of ` 46,713 crore); and defence (which has the previous financial year. States' share of
increased by ` 9,828 crore). Table 2.6 shows Central Taxes as proportion of gross tax
the growth in percentage terms of the above
receipts during the first half of 2012-13 is 30.5
three items.
per cent which is almost equal to 30.6 per cent
2.23 Higher growth in expenditure on the devolved during the corresponding period of
above three items explains the structural 2011-12.
Table 2.7: Trends in non-plan expenditure in April-September
Sl.
No. Non-Plan Expenditure 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13
1 Revenue Account
of which 187509 229484 301291 328308 376275 446673
Interest Payments 72820 86061 86669 102779 122499 131165
2 Capital Expenditure 43625* 11145 20779 39962 44995 44606
3 Total Expenditure 231134 240629 322070 368270 421270 491279
4 BE for the full year 475421 507498 695689 735657 816182 969900
5 Non-Plan expenditure as per
cent to BE 48.6 47.4 46.3 50.1 51.6 50.7
6 Rate of growth of Non-Plan
Expenditure (per cent) 26.3 4.1 33.8 14.3 14.4 16.6
*This includes one-time expenditure of `35,531 crore on account of payment to RBI for acquisition of its stake in SBI
56 MID-YEAR ECONOMIC ANALYSIS
DEFICIT current year, refunds in direct taxes during the
first half (` 46,012 crore) are lower than the
2.25 In the Budget for 2012-13, fiscal deficit first half of previous year (` 62,230 crore in
for the year is estimated at ` 5,13,590 crore 2011-12). This has resulted in higher
amounting to 5.1 per cent of GDP. In April- availability of net tax resources (post refunds
September 2012 fiscal deficit is ` 3,36,904 and post devolution to States) for Centre to
crore, which is 65.6 per cent of BE 2012-13. finance its deficit in the current financial year.
Higher levels of fiscal deficit as percentage of
BE during the first half of 2012-13 raises some 2.27 Trends in various deficit indicators in
concern when compared with five year average both absolute terms as well as in terms of
of 56.6 per cent. Trends in tax revenue do not percentage of B.E. up to the Q2 of respective
show any significant slippage. Expenditure financial years are shown in Table 2.8.
during the first half is in line with Budget
FINANCING OF DEFICIT
Estimates. However, uncertainty on account of
disinvestment receipts and likely higher 2.28 The deficit of ` 3,36,409 crore on
subsidy requirement does make it a Consolidated Fund of India was financed by
challenging task to adhere to the overall fiscal raising net Internal Debt of ` 3,03,185 crore,
deficit target during 2012-13. net External Assistance of (-)` 765 crore,
Ways and means advance/ cash draw down
2.26 Revenue def icit f or 2012-13 is
of ` 18,410 crore and public account (net) of
estimated in the Budget at ` 3,50,424 crore
` 1,486 crore as shown in Table 2.9.
amounting to 3.4 per cent of GDP. During the
period April-September, 2012, revenue deficit 2.29 Gross and net market borrowings
is ` 2,63,284 crore amounting to 75.1 per cent during the first half of 2012-13 amounted to
of B.E. 2012-13. Five year average of ` 3,55,000 crore and ` 2,84,384 crore
revenue deficit during the f irst half as respectively and accounted for 62.3 per cent
percentage of BE is 77.0 per cent. In the and 59.4 per cent of the estimated market
Table 2.8: Trends in Deficit in April-September
April - September
Sl.
No. Deficits 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13
Revenue Deficit (RD) ( Apr-
1 Sep) 61124 78313 164983 74921 221780 263284
2 Revenue Deficit (BE) 71478 55184 282735 276512 307270 350424
3 RD Percentage of BE 85.5 141.9 58.4 27.1 72.2 75.1
4 Fiscal Deficit ( Apr-Sep) 81200 102654 197775 133252 280810 336904
5 Fiscal Deficit (FD) (BE) 150948 133287 400996 381408 412817 513590
6 FD Percentage of BE 53.8 77.0 49.3 34.9 68.0 65.6
Primary Deficit (PD) (Apr-
7 Sep) 8380 16593 111106 30473 158311 205739
8 Primary Deficit (BE) -8047 -57520 175485 132744 144831 193831
9 PD Percentage of BE -104.1 -28.8 63.3 23.0 109.3 106.1
CENTRAL GOVERNMENT FINANCES 57
Table 2.9: Financing of Deficit
April-Sept. 2012 April-Sept. 2011
Fiscal Deficit 336904 280810
Sources of Financing
1 Internal Debt 303185 235399
a Market Loans & Short Term Borrowings 331839 277074
b Treasury Bills (14 days) -27549 -35733
c Compensation and Other Bonds -3516 -6803
d Others 2411 861
2 External Assistance including Revolving
Fund -765 2368
3 Cash Draw Down Decrease(+) Increase (-) 18410 1833
4 Borrowing (-)/Surplus(+) on Public Account* 1486 407
* Includes Suspense & Remittances.
bo rro win gs f or the ye ar. Du rin g t he ASSESSMENT VIS-À-VIS MID-YEAR FRBM
correspon ding period of the previous BENCHMARKS
financial year, gross and net borrowings
2.31 Under Rule 7 of the FRBM Rules, 2004,
accounted for 59.9 per cent and 55.6 per cent
of budget estimates, respectively. The Government is required to take appropriate
weighted average maturity of dated securities corrective measures in case the outcome of
the second quarter review shows that:
issued upto the end of first half of the fiscal
year 2012-13 (April-September) at 13.55 years I. The total amount of non-debt receipts
was higher than 12.19 years during the are less than 40 per cent of budget
corresponding period of the previous year. The estimates for that year; or
weighted average yield of dated securities
II. The fiscal deficit is higher than 45 per
issued during the same period increased to
cent of the budget estimates for that
8.46 per cent from 8.40 per cent during the
year; or
first of half of 2011-12.
III. The revenue deficit is higher than 45
CASH MANAGEMENT per cent of the budget estimates for that
2.30 The year 2012-13 commenced with year.
surplus cash position of ` 26,022 crore and The performance in the first half of the fiscal
investment surplus of ` 50,000 crore. At the year 2012-13 does not comply with any of the
end of second quarter, the Government ended targets in respect of the benchmark of non-
with a cash balance of ` 10 crore and debt receipts, fiscal deficit and revenue deficit.
investment of ` 35,412 crore. The net It could be seen from Table 2.10 that only in
collection under National Small Savings Fund 2010-11 were all the three FRBM Mid-Year
during April-September 2012 continued to be bench marks was achieved and this owed to
negative; it is (-) ` 13,593 crore as against (-) the higher than budgeted receipts from the 3G
` 6,549 crore during the first half of last year. Broadband Wireless Access spectrum auction.
58 MID-YEAR ECONOMIC ANALYSIS
2.32 The Indian economy was estimated to 2.33 Government is continuously monitoring
grow by 6.9 per cent in 2011-12 in terms of the emerging economic developments and the
gross domestic product at factor cost at fiscal position. Government appointed a
constant 2004-05 prices. However, this has committee headed by Dr. Vijay L Kelkar to
been revised to 6.5 per cent mainly on account suggest roadmap for fiscal consolidation (See
of lower performance in `manufacturing' and Chapter 3 for details). Government has broadly
`trade hotels, transport and communication' accepted its recommendation with certain
than anticipated. The slowdown in the reservations on the details of achieving the
economy, coupled with rising costs and targets and has initiated action on many of its
narrowing profit margins of corporate sector recommendations.
led to a lower than budgeted growth in
government revenues. Increasing subsidy bill Government has announced the
of three major subsidies viz. Food, Fertilizer roadmap for fiscal consolidation by
and Petroleum, on the other hand has led to containing current year's fiscal deficit
rising Non-Plan expenditure. At the time of the at 5.3 per cent of the GDP and reducing
presentation of the Budget for 2012-13, it was it to 4.8 per cent next year. The fiscal
estimated that growth would recover, deficit is targeted to be reduced by 0.6
particularly in the industrial sector. A percentage points each year thereafter
continuance of the slowdown well into the (till 2016-17), at 4.2%, 3.6% and 3.0%
second quarter of the current year has led to in the years 2014-15, 2015-16 and
the slippages in terms of the Mid-Year FRBM 2016-17 respectively.
benchmarks. The outlook for the second half
looks much brighter with a growth of 8.2 per To contain the increasing Subsidy
cent in IIP in October 2012, better corporate burden, Government has revised
profit margins, moderation in inflation and Diesel prices and capped subsidized
better business expectations for the third LPG cylinders to consumers.
quarter (outlook section of Chapter 3 provides Government has also initiated reforms
greater details). to boost investment.
Table 2.10: Outcome versus mid-year benchmarks under FRBM rules
Outcome versus mid-year benchmarks under FRBM Rules
Performance April-September
S.No. Variable benchmarks under
2012 2011 2010 2009 2008
FRBM Rules
1 Total Non-Debt Receipts Not Less than 40 percent 36.5 37.7 55.6 40.5 39.9
Not more than 45
2 Fiscal Deficit
percent 65.6 68.0 34.9 49.3 77.0
Not more than 45
3 Revenue Deficit
percent 75.1 72.2 27.1 58.4 141.9
CENTRAL GOVERNMENT FINANCES 59
Government is taking various steps to in fiscal transfers to States, Public
boost revenues and limit any slippage Sector Undertakings, Autonomous
therefrom. As indicated earlier the Bodies, etc.
reserve price of 2G telecom Spectrum
The measures on the expenditure side
auction has been revised and a fresh
would partially offset the higher than
auction would be held soon and efforts
budgeted outgo on subsidies and the
are there to expedite the plan for
slippage in non-debt receipts.
divestment.
2.34 While the fiscal outcome in the first six
Government has imposed economy
months of the current financial year raises
measures like rationalization of concerns on the likely fiscal marksmanship this
expenditure and optimization of year, it would be instructive to note that in 2005-
available resources with a view to 06 a similar situation obtained; but the actual
improve the macro-economic fiscal outcome was broadly in line with the
environment. This include 10 % budget estimates for non-debt receipts and
mandatory cut on Non-Plan performance in terms of deficit indicators was
expenditure in the current financial much better than budgeted. With the likely
year, ban on creation of Plan and Non- revival in the economy and the measures
Plan posts, restrictions on foreign already taken and those on the anvil, it is likely
travel, restrictions on re-appropriation that the fiscal deficit for the year would be 5.3
of funds, strict observance of discipline per cent of GDP.
ANALYSIS AND OUTLOOK 61
CHAPTER III
ANALYSIS AND OUTLOOK
GROWTH AND INVESTMENT has adversely affected export dependent
The Indian economy recovered quickly sectors, depressed business sentiment,
after the global crisis of 2008-09, which coupled with high interest rates and moderation
reduced the growth rate of real GDP at factor in credit growth have led to a deceleration in
cost to 3.5 per cent in Q4 of 2008-09. Growth investment growth, as well as some
improved to 11.2 per cent by Q4 of 2009-10. moderation in consumption demand, resulting
However, following the crisis in Eurozone and in slower overall growth. The Reserve Bank of
the slow recovery in several other countries, India's quarterly Business Expectation Index
in combination with certain domestic factors, (BEI)1, after recovering from a low of 96.4 in
economic growth began to decelerate Q1 of 2008-09 to 126.5 in Q3 of 2010-11, has
thereafter and has averaged 5.8 per cent in declined steadily thereafter. The index,
last five quarters. A decline in the contribution however, still remains in the growth terrain (i.e.,
of the industrial sector to overall GDP growth, above 100, which is the threshold that
from 36.9 per cent in Q4 of 2009-10 to 9.8 per separates contraction from expansion). Nearly
cent in Q4 of 2011-12, has been the key factor half of the companies reported production
in this moderation. Besides the slowdown in constraints preventing them from attaining their
growth, the economy has been under pressure normal production levels during the quarter
on account of elevated levels of inflation, a high July-September 2012. They cited lack of
fiscal deficit and a widening current account domestic demand, uncertainty of the economic
deficit. environment, shortage of power, lack of export
Moderation in manufacturing growth- demand and shortage of working capital
expectations and interest costs finance. Deseasonalized IIP growth has
3.2 While the global economic slowdown generally mirrored the BEI (Fig 3.1).
Fig 3.1: Business Expectation Index and IIP growth (Deseasonalized annualized
quarter over quarter)
1
The Business Expectation Index gives a single snapshot of the industrial outlook in each quarter. This
index is computed as a weighted average of net responses from all the industries on nine select performance
parameters where the weights are the industry's share in Gross Value Added (GVA). The selected parameters
are `overall business situation', `production', `order books', `inventory of raw materials', `inventory of finished
goods', `profit margin', `employment', `exports' and `capacity utilization'.
62 MID-YEAR ECONOMIC ANALYSIS
3.3 While high interest rates may have in granting such clearances, for delays not only
been necessary to combat inflation, they have slow growth but also render projects unviable,
also raised the interest cost for manufacturing turning them into NPAs for the banking system.
industries. Interest as a percentage of
3.4 The decline in investment affected the
operating profits of these companies (non-
production of capital goods. Higher growth of
government non-financial) increased from 15.2
imports of capital goods in 2011-12 (para 1.27
per cent in Q4 of 2009-10 to 30.3 per cent in
of Chapter 1) also contributed to deceleration
Q1 of 2012-13. Investment as measured by
in growth of domestic production. Based on
new projects in the CMIE Capex declined from
an analysis of relationship between production
28.5 per cent of GDP to 9.7 per cent of GDP
and imports of manufactured goods industries,
over the same period (Fig 3.2). Of course, a
RBI has also observed a negative association
substantial portion of the decline in new projects
between production and imports in case of
occurred before interest expenses grew
electrical machinery (which had a negative
substantially, suggesting that other factors such
growth in last 5 quarters) resulting in
as the difficulty in acquiring various project
substitution of domestic output by imports.
clearances or land may also have played a part.
The proposal for setting up a National 3.5 Some sectors have been affected by
Investment Board (NIB) headed by the Prime high interest rates to a greater extent than
Minister for fast tracking projects over `1000 others. In interest-sensitive sectors like capital
crore is intended to reduce unnecessary delays goods and consumer durables (Fig 3.3), there
Fig 3.2: Interest cost of Companies and Investment in industrial projects
Fig 3.3: Growth of Capital goods and Consumer Durables and Repo rates
ANALYSIS AND OUTLOOK 63
seems to be a strong negative correlation in Chapter 1, growth of aggregate deposits
between the growth in production and rising moderated considerably, from an average of
repo rates. Here again, though, high interest 17.8 per cent during Apr-Sep, 2011 to 14.2 per
rates should be seen as only one of the factors cent during Apr-Sep, 2012. Corporate
affecting growth. profitability as reflected in corporate internal
accruals (profit after tax and depreciation) also
Cycle of moderation in expectation may
declined sharply from 14.3 per cent of sales in
have reached its trough
Q1 of 2009-10 to 8.2 per cent in Q3 of
3.6 There are, however, signs that the cycle 2011-12. There has also been a slowdown in
of moderation of expectation has reached its national savings, particularly financial savings
trough. The confidence building measures since 2007-08 (from 26.0 per cent of GDP in
announced by Government in September and 2007-08 to 19.6 per cent of GDP in 2010-11)
October, 2012 including liberalization of FDI due to public dis-savings, fall in corporate
policy in sectors like multi-brand retail, aviation, savings and shift in household savings towards
power and broadcasting sectors to attract real assets away from financial assets (even if
foreign investment, announcing a road map to we do not include gold purchases). The
achieve fiscal consolidation, rationalization of components of household savings clearly
subsidy on diesel, etc. are gradually improving indicate that there has been a steady decline
business expectations, though progress on in the share of pension and provident funds as
implementing some of the suggested real interest rates have declined and a decline
measures, such as the proposed National in investment in shares and debentures, as real
Investment Board, is needed to consolidate the estate and gold have become perceived as
shift. RBI's business expectation index, after more attractive alternatives. In addition to
having declined for seven consecutive increasing customs duty on gold to reduce its
quarters, moved up in the Oct-Dec, 2012 demand - and there is a limit to how much this
quarter. HSBC's purchasing managers index can be done without encouraging smuggling -
(PMI), picked up in November, indicating the - measures to offer gold-linked savings as well
fastest rate of expansion in November in the as bonds linked to real returns are being
last five months. Companies reported an considered (see later). Finally, corporate
increase in order book volumes and together profitability also appears to be reversing its
with depletion of inventories, this could set the declining trend (Fig 3.4) which suggest that
stage for higher output growth. availability of domestic funds for investment
Some early signs of improved availability may see an increase in subsequent quarters.
of investable funds 3.8 Because of the slowdown and high
3.7 The slowdown in investment was also levels of leverage, some industry and
partly due to financing constraints. As indicated infrastructure sectors are experiencing an
Fig 3.4: Corporate Profitability and Gross Fixed Capital Formation
34 15
33 14
13
32
12
31
11
30
10
GFCF a s per cent to GDP
29
9
Interna l Acc rua l s a s p er cent to
28 s a l es (RHS) 8
27 7
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 (P)
2 009 10 2010 11 2011 12 2012 13
64 MID-YEAR ECONOMIC ANALYSIS
increase in non- performing assets (NPAs). equity, and requiring greater risk capital up front
Overall NPAs of the banking sector increased in future financing, including greater promoter
from 2.36 per cent of total credit advanced in equity to buffer bank claims.
March, 2011 to 3.57 per cent of total credit
advanced in September, 2012 (Fig 3.5). While INFLATION
there has been across the board increase in 3.9 Headline inflation measured in terms
NPAs, the increase is particularly sharp for of the Wholesale Price Index (WPI) is still
industry and infrastructure sectors, with NPAs uncomfortably high, albeit at a lower level than
as per cent to credit advanced increasing from what was observed in 2010-12. The frequency
1.91 per cent in March, 2011 to 3.44 per cent
distribution of commodities included in the WPI
in September, 2012. Sectors, particularly under
indicates that there has been a sharp reduction
stress include textiles, chemicals, iron & steel,
in the number of commodities experiencing
food processing, construction and
telecommunications. The rapid rise in non- double digit inflation in the first half of 2012-13
performing bank loans suggests once again (Table 3.1) along with a corresponding increase
the need for a single-minded focus by all in the number and weights of commodities with
stakeholders on reducing unnecessary delays inflation in the single digits. This distributional
to project completion. Moreover, failing projects shift has not only resulted in the moderation of
need to be restructured rapidly and equitably, inflation but suggests more room for adopting
drawing in new promoters if the old ones commodity focused strategies for containing
cannot bring in better capabilities and new inflation.
Fig 3.5: Non-Performing Assets of the Banking Sector
Table 3.1: Frequency distribution of WPI- commodities in terms of inflation range
2009-10 2010-11 2011-12 2012-13
Apr-Sep Oct-Mar Apr-Sep Oct-Mar Apr-Sep Oct-Mar Apr-Sep
Headline inflation 0.64 7.01 9.90 9.24 9.66 8.24 7.66
Frequency Distribution of commodities by inflation range (Number of Commodities)
up to 5 492 459 389 394 340 397 449
6-10 81 88 112 113 149 124 137
Above 10 103 129 175 169 187 155 95
W eights of the Commodities (per cent)
up to 5 75.25 63.66 40.50 47.17 39.37 47.86 49.21
6-10 8.69 12.82 22.81 17.79 30.81 20.94 31.21
Above 10 16.06 23.52 36.69 35.04 29.82 31.20 19.58
ANALYSIS AND OUTLOOK 65
Inflation momentum 3.11 Within core inflation, while the inflation
3.10 Policy decisions to contain inflation are for capital goods has continued to remain
expected to be ahead of the curve. This muted, inflation for consumer durables has
requires understanding the momentum of been showing signs of easing recently (Fig
inflation along with its current level. Besides 3.7). Inflation for consumer durables generally
headline WPI and CPI inflation, RBI has been remained above core inflation and its
monitoring non-food manufacturing (NFM) moderation reflects the impact of monetary
inflation as the key measure of core inflation policy.
that will influence its policy stance. The reason
3.12 WPI food inflation has shown a sharper
for this emphasis is partly because demand
moderation during the period April 2010 to
conditions, which can be affected by RBI
October 2012, because of its initial high levels.
interest rate policy, are better measured by
Food inflation however is more structural and
NFM inflation, and NFM inflation is also
its response to monetary policy changes is
relatively sticky. The seasonally adjusted
relatively weak. However, the momentum of
annualized rate of inflation (SAAR) indicates
the momentum of NFM inflation is currently on food inflation is also pointing towards
a decline. moderation (Fig 3.8).
Fig 3.6: Momentum of WPI Core Inflation
Fig 3.7: Inflation of Consumer Durables and Capital Goods
66 MID-YEAR ECONOMIC ANALYSIS
Fig 3.8: Momentum of food inflation
Fig 3.9: Momentum of CPI-IW inflation
3.13 Some economists prefer the central months between these two measures.
bank to target consumer price inflation rather Momentum of CPI-IW as measured by its
than the NFM inflation, because the former is deseasonalized series, however indicates
what the person on the street experiences. moderation in inflation in recent months,
Moreover, generalized and persistent CPI consistent with WPI-core and WPI-food (Fig
inflation could entrench high inflationary 3.9).
expectations amongst the public. Though there
have been 3 consumer price indices, before Why has inflation persisted?
the Central Statistical Office launched the new 3.14 Inflation in protein foods particularly
series of CPI in January, 2010, all of these meat, fish and eggs; milk and milk products;
indices have been for a specific class of and vegetables and fruits has continued to
consumers. CPI for industrial workers, which persist because of changes in dietary habits
is primarily used for wage indexation, however, and supply constraints. Data from National
has been the CPI index preferred by many Accounts Statistics indicate that while the share
economists. Inflation during August 2010 to of food in total private final consumption
March 2012 appears to follow more or less a expenditure continued to show a decline,
similar trend irrespective of whether it is expenditure on protein foods increased from
measured in terms of WPI or CPI-IW. A nearly 18.6 per cent of total food expenditure in
2-percentage point gap has emerged in recent 1980-81 to 29.6 per cent in 2010-11. An
ANALYSIS AND OUTLOOK 67
increase in income made this desirable shift in farmers, raised the floor prices and also
consumption feasible. At the national level, per contributed to rise in input prices.
capita income, adjusted for inflation continued Commodities under price pressure and
to rise. There was also a significant increase policy initiatives
in rural wages. Rural wages in nominal terms 3.15 As indicated earlier, a few commodities
went up by an average of over 18 per cent have contributed disproportionately to inflation.
since 2008-09. Inflation-adjusted rural wages In Q2 of 2012-13, 19 commodities (commodity
also went up by 7.5 per cent during this period. groups) with a weight of 28.5 per cent in WPI
(Fig 3.10) The input costs for producers in both contributed 67.8 per cent to total inflation (Table
food and non-food segment, as reflected in the 3.2). Contribution of each of these commodities
prices of feed, fodder and other inputs also to inflation in Q2 of 2012-13 exceeded 1.5
increased. An increase in MSP, while times of their weight (with the exception of
necessary to ensure remunerative returns to milk).
Fig 3.10: Index of per capita income, rural wages and CPI-IW
255
235
215
CPI IW
195
Per Ca pi ta income
175 W a ges Rural
155
135
115
95
200405
200506
200607
200708
200809
200910
201011
201112
Table 3.2: Contribution to inflation (in per cent): items to be watched
Weight 2010-11 2011-12 2012-13
Q1 Q2 Q3 Q4 Q1 Q2
Rice 1.79 1.33 0.66 0.84 0.68 0.68 1.61 2.79
Wheat 1.12 0.44 -0.01 -0.14 -0.52 -0.47 1.06 1.97
Gram 0.33 -0.06 0.25 0.82 1.77 1.89 2.44 3.01
Arhar 0.14 -0.11 -0.36 -0.29 -0.06 -0.23 -0.12 0.35
Tomatoes 0.27 0.79 0 -0.68 0.85 -0.54 0 0.75
Potatoes 0.20 -1.2 0 0.25 -0.38 -0.08 1.5 1.66
Milk 3.24 7.63 2.84 4.21 4.88 6.78 5.96 3.63
Fish (inland+ marine) 1.30 5.47 2.29 2.96 4.12 6.79 5.64 4.67
Black Pepper 0.03 0.14 0.33 0.31 0.41 0.41 0.36 0.37
Oil seeds+ edible oil+
5.32 2.47 6.27 6.89 5.64 6.26 8.84 11.97
oilcake
Sugar 1.74 -0.25 1.14 1.2 1.35 0.84 1.32 3.67
Minerals 1.52 6.14 7.07 6.7 7.21 11.72 4.72 5.04
Coal 2.09 1.49 3.38 3.29 3.48 7.12 4.68 4.46
Non-Administered Mineral 13.7
3.04 6.63 10.92 10.2 13.18 9.01 7.82
Oil 3
Electricity 3.45 1.59 0.08 -0.09 0.8 1.4 2.89 5.37
Non-Urea Fertilizer 1.08 0.83 1.01 1.39 2.9 3.41 3.33 4.03
Cement & Lime 1.39 0.2 0.32 0.08 1.12 1.27 1.37 2.12
Gold & gold ornaments 0.36 1.75 2.75 3.15 3.66 4.06 3.6 2.78
Guar Seed 0.05 0.04 0.25 0.5 0.68 2.4 3.99 1.3
68 MID-YEAR ECONOMIC ANALYSIS
3.16 Two factors contributed to an increase integrated value chains, the government has
in inflation in cereals. Besides an increase in also been emphasizing the need for exempting
the minimum support prices (MSP) for wheat vegetables from the levy of market fees. The
and rice, there has been a mismatch between States of Madhya Pradesh and West Bengal
open market availability and demand, have recently waived the market fee on fruits
particularly for wheat. Food Corporation of and vegetables. Such waivers are expected to
India has already announced a programme of promote investment in development of
open market sales of 65 lakh tonnes of wheat backend infrastructure by private sector. The
in next three months which is expected to cool Ministry of Agriculture in collaboration with
the market and dampen expectation of a price Forward Markets Commission is facilitating
rise. The upsurge in the prices of pulses has display of spot and futures prices on Price
largely been due to a persistent mismatch in Ticker Boards in around 1700 mandis in
demand and domestic availability. In the long different states. Recently, the government has
run, containment of inflation in pulses would permitted Foreign Direct Investment (FDI) in
require an increase in the supply of pulses multi-brand retail trading. This will help
through improved productivity. consumers and farmers by improving the
3.17 Prices of vegetables have remained logistical facilities connecting the two.
volatile in recent past. Apart from a demand 3.19 The persistence of high inflation in milk
and supply mismatch, inefficient intermediation and animal products has partly been due to
and loss in the value of vegetables at different the regional concentration of production
stages of their transactions have contributed centres, rising input costs which raised the floor
to both an increase in prices and its volatility. price and lower productivity. While in some
Both the locational differences in prices and cases, there has been an increase in
the volatility of prices over time could be availability, typically it has been at a higher cost.
considerably reduced with improvement in the Further, due to limited organized marketing
supply chain mechanism. The existence of a (even in case of milk it is around 15 per cent of
large number of intermediaries between the
total milk produced) back end infrastructure
farmer and the consumers and time delays due
such as a seamless cold chain has not been
to activities such as packing, sorting,
established, reducing quality and increasing
transporting and delivery adds to
wastage. A number of measures have been
intermediation costs and value losses.
announced in Union Budget 2012-13 to
Organised marketing and greater private
augment supply and improve storage and
sector participation is critical for improving this
warehousing facilities. Government had
state of affairs but it requires reforming the
launched a National Mission for Protein
APMC legislation. The Inter Ministerial Group
supplements in 2011-12 with allocation of `300
on Inflation (IMGI) had suggested exempting
crore. To broaden the scope of production of
perishables from the purview of APMC, provide
fish to coastal aquaculture, apart from fresh
freedom to farmers to make direct sales to
water aquaculture, the outlay for the mission
aggregators and processors, introduce
in 2012-13 is being stepped up to ` 500 crore.
electronic auction platform for all mandis and
replacing licenses of APMC market with an 3.20 Issues related to sugar industry have
open registration backed by bank guarantees been analyzed by the Rangarajan Committee.
to ensure wider choices to growers and to The Committee has recommended
prevent cartelization by traders. Electronic deregulation of sugar industry and dismantling
display of prices for short duration vegetable of regulated release mechanism together with
crops could reduce the asymmetry in the levy obligations. These recommendations
information flow and provide appropriate are under consideration by the Department of
marketing signals to producers. Food and Public Distribution.
3.18 There have been some developments 3.21 The NFM products except for fertilizers
along these recommended lines. To develop (urea), non-administered petroleum products
ANALYSIS AND OUTLOOK 69
and edible oils are fully tradeable and none of prices (which is what it does by focusing on
these products are under administered price NFM inflation, which puts lower emphasis on
regime. Domestic prices for these products are food prices), while trying to ensure that food
governed both by global commodity prices and inflation does not feed into wages and
the domestic availability of these products. A generalized inflation. Unfortunately, food is a
stable rupee and moderate global prices, both big part of a worker's consumption basket, and
relatively exogenous factors, may be important higher food prices do feed into higher wage
in keeping the prices of these products stable. demands. What can be done? Government
efforts to create the conditions for greater
3.22 To summarize, inflation in India stems
protein supply (some of which are described
from a traditional mismatch between demand
earlier) are important. Tempering wage inflation
and supply. The relative magnitude of the
that is not directly linked to productivity
imbalance has varied across sectors. For
increases may also be worth exploring.
example, demand for consumer durables has
remained high till recently, even while the CURRENT ACCOUNT DEFICIT (CAD)
demand for capital goods has remained more
3.24 India's current account deficit (CAD)
muted because of the slowdown in investment.
has remained within manageable limits in
3.23 The inflation picture is further recent years and has been financed largely by
complicated in India because of shifting capital flows. During 2011-12 however, the
consumption basket and the supply of proteins CAD widened to 4.2 per cent of GDP because
and micro-nutrients like fruits and vegetables of the widening trade deficit. This has increased
has not responded quickly. Interest rates are Balance of Payment vulnerability to 'sudden
probably an inappropriate tool to shift people's stop' and reversal of capital, especially when
preferences. This is why it may be reasonable sizeable flows comprise of debt, and volatile
for the RBI to look through the rise in food portfolio investment.
Forecasting inflation in India
Augmented Phillips curve framework lends support that both demand and supply factors are
drivers of inflation. Global commodity prices have a strong and quick pass-through and an
increase of 10 per cent in global non-fuel commodity prices increases headline WPI inflation
by 70-90 basis points in the same quarter, with the long-run impact being double (140-180
basis points). The exchange rate pass-through is 0.06 in the short-run and 0.12 in the long-
run, i.e., 10 per cent appreciation (depreciation) of rupee vis-à-vis the US dollar reduces
(increases) inflation by 60 basis points in the same quarter, while the long-run pass-through
is 120 basis points. A deficiency of 10 per cent in the rainfall in July increases headline
inflation by 60 basis points with a lag of three quarters and the long-run impact turns out to
be 120 basis points. Minimum support prices have a substantial impact: 10 per cent increase
in minimum support prices increase headline WPI inflation by 100 basis points with lag of a
quarter, and the long-run impact is 200 basis points. At the same time, minimum support
prices are also found to respond to headline WPI inflation with a lag. The finding of demand
conditions having a relatively stronger impact on NFMP inflation vis-a-vis headline inflation
supports the RBI's policy focus on NFMP as an indicator of demand pressures in the economy.
Second, NFMP inflation is more persistent compared to headline inflation. The relatively
sticker nature of NFMP also extends support to NFMP being used as a core measure of
inflation or an indicator of underlying inflation pressures.
Muneesh Kapur- Inflation Forecasting: Issues and Challenges in India- Reserve Bank
of India, Working Paper series (DEPR):01/2012.
70 MID-YEAR ECONOMIC ANALYSIS
3.25 The priority has therefore been to reducing the fiscal deficit (Box 3.2).
reduce CAD through improving trade balances.
3.26 Emphasis has continued on further
Efforts have been made to promote exports
facilitating remittances and encouraging
by diversifying the export commodity basket
software exports that have been responsible
and export destinations. One way to limit
for the surplus on the invisible account. In
imports is to bring prices up to international
recent years, this surplus has lowered the
levels so that users see the full cost. A recent
study commissioned by the Ministry of Finance impact of widening trade deficit on CAD
on "Diesel Price and Under Recoveries: Macro- significantly. The two components together
Economic Impacts" by Integrated Research account for nearly two-third of the trade deficit
and Action for Development of the Department that was more than 10 per cent of GDP in
of Economic Affairs, Ministry of Finance, 2011-12. Remittances particularly are known
suggests that diesel price revision will have a to exhibit resilience when the country is hit by
positive impact on curbing inflation over the an external shock, as was evident during the
medium term, enhancing GDP growth and global crisis of 2008.
Box 3.2 Diesel Price and Under Recoveries: Macro-Economic Impacts
A study on the "Diesel Price and Under Recoveries: Macro-Economic Impacts" by
Integrated Research and Action for Development commissioned by the Ministry of
Finance, suggests that diesel price revision will have a positive impact on curbing
inflation, enhancing GDP growth and reducing the fiscal deficit
Impact on inflation
Any increase in price of diesel will lead to higher prices immediately but lower price
rise in longer run as the fiscal deficit is reduced. With no change in policy, average
inflation 2011-15 will be 7.13 per cent, while with a one shot 30 per cent increase in
diesel price, average inflation rate may come down to 5.68 per cent. Even with a 10
per cent increase in diesel prices, the inflation rate expects to come down to an
average of 6.66 per cent during 2011-15.
Impact on GDP:
GDP is affected by diesel price policy also. Under the various scenarios studied, GDP
is impacted negatively in the immediate quarters following a price rise of diesel.
However as the impact of price rise dissipates and inflation falls (compared to the "no
change" scenario), GDP increases faster. GDP growth is projected to average 8.23
per cent, 8.92 per cent and 8.46 per cent during 2011-15 with a business as usual, a
one shot 30 per cent increase in diesel prices and a partial 10 per cent increase in
prices, respectively.
Demand of Petroleum products
Analysis indicates diesel consumption will reach 2681 crore litres, 2445 crore litres
and 2549 crore litres with a business as usual, one shot 30 per cent increase in diesel
prices and a partial 10 per cent increase in prices, respectively.
ANALYSIS AND OUTLOOK 71
Fig 3.11: Quarterly movement of BOP parameters
3.27 Gold imports have been one of the domestic market. Of course, gold-linked
major factors in deterioration of CAD. instruments will have to be hedged through
Concerned over the sharp rise in the growth of direct purchases of gold, or in the derivatives
gold loan companies, RBI has been tightening markets. Any rollout of gold-linked instruments
norms for NBFC's lending against gold and will have to be monitored carefully to see
removed in February, 2011 the priority sector whether the overall demand for gold actually
tag to such loans that banks used to give to falls. More generally, however, the demand
NBFCs for on-lending, thus pushing up the cost from the public for financial investments in
of money for such companies. In March, 2012, assets that retain their real value needs to be
RBI capped the amount NBFCs can lend addressed. Of course, the ideal solution to this
against gold at 60 per cent. This was followed problem would be to bring down inflation so
by putting banks' exposure to single gold loan that household see good returns from
NBFCs from 10 per cent to 7.5 per cent of their traditional financial instruments.
capital base. Commercial banks were also
3.29 Capital flows are driven by both pull
asked to set an internal ceiling for overall
(economic fundamentals of recipients) and
exposure to gold loan NBFCs. In October RBI
push (policy stance of source countries) factors
barred banks from financing the purchase of
and have implications for exchange rate
gold in any form other than working capital
management, overall macroeconomic and
finance.
financial stability including liquidity conditions.
3.28 New gold-backed financial instruments Capital account management needs to
in the form of modified gold deposits and gold emphasize promoting foreign direct investment
accumulation plans, besides gold-linked and reducing dependence on volatile portfolio
accounts and pension products linked with the flows. This would ensure that to the extent
precious metal, are some of the measures current account deficit is bridged through
being considered to reduce the attraction of a capital surplus, it would be through stable and
direct investment in bullion and jewellery in the growth enhancing investment flows. In the
domestic market and check a substantial rise prevailing international financial architecture,
in imports. Gold-backed products will allow reserves are the first line of defense against
investors to gain the benefits of investments in the volatile capital flows. In this context, the
the high-yielding commodity without actually decline in reserves as a fraction of GDP, while
investing in the physical commodity. They will not an immediate source of concern, needs to
thus provide more choices to investors in the be watched closely.
72 MID-YEAR ECONOMIC ANALYSIS
FISCAL CONCERNS headed by Dr. Vijay L. Kelkar to suggest an
3.30 As has been pointed out earlier, the appropriate medium term roadmap for fiscal
growth slowdown in the current fiscal and in consolidation. The Committee suggested
the previous year owes partly to domestic immediate steps to minimize the resources'
factors. In an environment where the supply shortfall and to keep expenditures under
side is constrained, a high fiscal deficit control. These include: a comprehensive
contributes to excess demand. Higher strategy on tax policy and administration; new
government borrowing can also crowd out instruments to overcome concerns on the
private borrowing, and if sustained, lead to disinvestment front; progressive alignment of
concerns about debt sustainability. The fiscal prices of diesel to the international market,
deficit needs therefore to be addressed to eliminating half the diesel subsidy in the current
ensure that growth is stable and sustainable. fiscal, and a medium term policy for all fuel
3.31 The fiscal situation started worsening subsidies including movement towards direct
beginning 2008-09, but following the global cash transfer in lieu of LPG subsidy as well as
economic meltdown, it was understandable regular increases in urea prices. The
that fiscal space would be used for stimulating Committee also suggested improved
the economy. The Economic Survey 2011-12 monitoring of plan expenditure focusing on
pointed out the reasons for the lower-than- outcomes.
budgeted fiscal outcome in 2011-12 due to the 3.33 Immediately prior to the submission of
sharp slowdown in industry, rising costs and the report of the Kelkar Committee, the
thinning profits, a less-than-conducive financial government had to take measures to restrain
market inhibiting divestment plans, and the mounting under-recoveries of the oil
continued high subsidy outgo on account of marketing companies (OMCs) on account of
firm global crude petroleum and fertilizer prices. non-revision of prices of subsidized fuel. Diesel
This process has continued through the first prices were increased on September 13, 2012
half of the current fiscal. Given that these by ` 5 per litre and the supply of subsidized
factors are unlikely to reverse substantially over LPG cylinders to each consumer was capped
the foreseeable future, it is imperative that the
at 6 per annum which were expected to lower
government tackle the fiscal deficit more
the under-recovery on these products by
forcefully, and has indicated its determination
`20,300 crore for the remaining part of the
to do so.
fiscal. The Kelkar Committee recommended
3.32 Recognizing the concerns with public the following roadmap for the Central
finances, the Government set up a committee Government (Table 3.3).
Fig 3.12: Gross Tax Receipts, Fiscal Deficit and Expenditure on Interest & Subsidies
as per cent to GDP
14.0
Gross Tax Receipts
12.0 Fiscal Deficit
10.0 Subsidies+Interest
8.0
6.0
4.0
2.0
0.0
2000 01
2001 02
2002 03
2003 04
2004 05
2005 06
2006 07
2007 08
2008 09
2009 10
2010 11
2011 12
2012 13
ANALYSIS AND OUTLOOK 73
Table 3.3 Fiscal Roadmap (per cent to GDP)
2012-13 2013-14 2014-15
Budget No Reform Reform Projections
Gross Tax Revenue 10.6 10.1 10.3 10.6 11.1
Net-Centre's Tax Revenue 7.6 7.2 7.4 7.6 7.9
Non-Tax Revenue 1.6 1.6 1.6 1.4 1.3
Total-Revenue Receipts 9.2 8.9 9.0 9.0 9.2
Non-debt Capital Receipts 0.4 0.2 0.4 0.3 0.3
TOTAL- RECEIPTS 9.6 9.1 9.4 9.3 9.5
Non-Plan Expenditure 9.5 10.2 9.8 9.1 8.5
On Revenue Account 8.5 9.3 8.9 8.2 7.6
of which Subsidies 1.9 2.6 2.2 1.7 1.5
On Capital Account 1.0 0.9 0.9 0.9 0.9
Plan Expenditure 5.1 5.0 4.8 4.9 4.9
On Revenue Account 4.1 4.0 3.8 3.6 3.6
On Capital Account 1.0 1.0 1.0 1.3 1.3
TOTAL EXPENDITURE 14.7 15.2 14.6 13.9 13.4
On Revenue Account 12.7 13.3 12.7 11.7 11.2
Grants in aid for CapEx 1.6 1.6 1.6 1.9 2.0
On Capital Account 2.0 1.9 1.9 2.2 2.2
Deficits
Revenue Deficit 3.4 4.4 3.7 2.8 2.0
Effective Revenue Deficit 1.8 2.8 2.1 0.9 0.0
Fiscal Deficit 5.1 6.1 5.2 4.6 3.9
Primary Deficit 1.9 2.9 2.0 1.4 0.9
Debt 45.5 46.7 46.1 44.9 42.9
Table 3.4 Fiscal roadmap for the Twelfth Plan
Year Fiscal deficit to GDP (per cent)
2012-13 5.3
2013-14 4.8
2014-15 4.2
2015-16 3.6
2016-17 3.0
3.34 After examining the report of the Kelkar new models of disinvestment were meritorious
Committee, the Union Finance Minister and have been accepted by the Government.
announced in his press statement on October The statement also announced the intent to
29, 2012 that the Kelkar Committee had rightly realize required revenues and contain
cautioned against a business-as-usual expenditure, both on the plan and non-plan
scenario for the current year, which would entail side. The statement also indicated the roadmap
grave consequences for the economy. Further, of fiscal consolidation for the Twelfth Plan
the recommendations on tax policy, tax based on the steps taken, being taken and
administration, expenditure management and those on the anvil (Table 3.4).
74 MID-YEAR ECONOMIC ANALYSIS
3.35 The Finance Minister in his Statement takes place and investors' confidence
on October 29, 2012 has indicated that with increases, the economy is expected to return
sound policies and determination the goals can to the path of high investment, higher growth,
be achieved and that as fiscal consolidation lower inflation and long term sustainability.
Box 3.2: Report of the Committee on roadmap for fiscal consolidation.
The Union Finance Minister Shri P. Chidambaram in his Press Statement on August 6, 2012
indicated the proposed steps for economic recovery and announced the intent to unveil a
path for fiscal consolidation. To this effect a Committee headed by Dr. Vijay L. Kelkar was set
up with Dr. Indira Rajaraman and Dr. Sanjiv Mishra as Members. The Committee was charged
with the task of introducing Mid-term corrections in the current fiscal and to chart a medium
term framework in this regard.
In its report, the Committee cautioned that fiscal consolidation was imperative and serious
adverse macro-economic consequences would result if corrective action was not taken. The
Committee made an assessment of the trends in the Union public finances for the current
fiscal and observed that in a business-as-usual scenario fiscal deficit could reach 6.1 per
cent of GDP. With certain policy interventions, the Committee observed that this could be
brought down to 5.2 per cent of GDP in 2011-12 and in the medium term to 3.9 per cent of
GDP (2014-15).
The following summarises the recommendations of the Committee.
The Direct Taxes Code Bill 2010 should be comprehensively reviewed before it is enacted
into law for implementation giving due consideration to the fact that in the current conjecture
when tax-GDP ratio was low, there is not much fiscal space to accommodate any loss of
revenue.
Tax departments need to harness the large volume of information collected by them. They
have to develop data mining skills, ensuring improved compliance through proper risk
management system, on line verification of Permanent Account Number for all high value
transactions and 360 degree profiling of all tax payers.
The standard rate of 12 per cent in Union excise duties and service tax is to be progressively
reduced to align with the goods and services tax (GST) rate of 8 per cent proposed for the
Central GST.
The lower rate of 6 per cent in respect of Union excise duties will be limited only to merit
goods and further pruning negative list of services under service tax.
The exemption granted to railways for transportation of goods and passengers (of higher
class) should not be extended beyond 30.09.2012.
A comprehensive model for cross-verification of claims for input tax credit should be put in
place by the Central Board of Excise and Customs.
The Government should consider the new mechanism of `offer for sale' created by SEBI for
facilitation divestment of stake in public sector undertakings by using the secondary market
mechanism of stock exchanges either through `call option' model or the model of `Exchange
Traded Fund'.
The use of technology in managing expenditure needs to be carried forward through the
setting up of Expenditure Information Network. The committee suggested the use of direct
cash transfers increasingly in lieu of certain subsidies.
Administered prices on a number of products need to be raised progressively to rein in
subsidies to obviate the key fiscal risk.
ANALYSIS AND OUTLOOK 75
OUTLOOK FOR ECONOMY fiscal deficit would be contained to 5.3 per cent
3.36 A slowdown in economic growth in the of GDP, compared to a level of 5.1 per cent as
recent times, with the growth moderating to 5.4 indicated at the Budget stage. A fiscal
per cent in the first half of 2012-13 indicate consolidation road map announced by the
that the growth for the year as a whole will fall Government on October 29, 2012, has
short of 7.6 per cent as was envisaged in the considerably improved business expectations
Economic Survey in March 2012. There are, and perception of the domestic and global
however, reasons to believe that the slowdown investors. A further moderation in inflation,
has bottomed out and the economy is headed likely to commence from the fourth quarter of
towards higher growth in the second half of the current year, together with benign global
2012-13. A positive upturn in the Business commodity prices, will also facilitate softening
Expectation Index in Oct-Dec quarter, higher of the monetary policy stance of RBI. Inflation
PMI in November, visible buoyancy in capital as at the end of March 2013 is expected to
markets, improved internal accruals of the moderate to 6.8-7.0 per cent level. Trade deficit
corporate sector in July-Sept. quarter and in the first seven month of the year 2012-13
resurgence of the growth in the manufacturing has been somewhat higher than what it was in
sector suggest that the economy is poised for
the corresponding period of previous year.
a moderate acceleration in growth in the
However, given the present indications, it is
second half of 2012-13. Eight core sectors of
expected that the trade deficit in the current
industry with a weight of 38 per cent in IIP
recorded a growth of 6.5 per cent in October, year would not be significantly higher than what
2012, compared to an average growth of 3.2 it was last year. Consequently, it is reasonable
per cent in the first half of 2012-13. to expect that the current account deficit as a
Manufacturing sector has also reported a ratio of GDP would be lower than what it was
growth of 9.6 per cent in October 2012, in 2011-12.
compared to a contraction of 0.3 per cent in 3.39 Given such an emerging scenario, it
first half of 2012-13.
should be possible for the economy to improve
3.37 Agriculture is also expected to improve the overall growth rate of GDP to around 5.7
because of better prospects with rabi crops to 5.9 percent for the year 2012-13. This would
benefiting from greater moisture content in the imply that the growth rate for the second half
soil and dominance of irrigated wheat and rice of the year 2012-13, would be close to around
crops. Most services, particularly the trade, 6 per cent. To achieve this, both fiscal and
transport, communication, financial services, monetary policies, however, would need to be
etc., being largely driven by the performance
supportive to sustain investor confidence. The
of real sectors will also have a better growth.
government will also have to address the
3.38 The assessment about the Union concerns relating to structural supply side
finances as made in Chapter 2 indicates that bottlenecks.
MID-YEAR ECONOMIC ANALYSIS 77
Annex I
Status of Implementation of Major Budget Announcements
Sl. Para Summary of Status of
No. No. Budget Announcement Implementation
1. 20 Streamlining and reducing the number Streamlining and reducing the number of Centrally
of Centrally Sponsored Schemes while Sponsored Schemes (CSS) is a policy issue and
implementing the 12th Five Year Plan would be kept in view during the appraisal of new
and expanding the Central Plan Scheme schemes proposed during the course of
Monitoring System to facilitate better implementation of the XII Plan. So far as the
tracking and utilisation of funds released ongoing schemes are concerned, the report of the
by the Central Government. B.K. Chaturvedi (BKC) Committee on
"Restructuring of Centrally Sponsored Schemes"
has been deliberated upon in the Planning
Commission. Based on the deliberations, the
Planning Commission has come up with its
recommendations on rationalization of the
Centrally Sponsored Schemes for 12th Plan. These
recommendations, which draw upon the
suggestions/ recommendations of BKC
Committee report, will be placed before the Cabinet
for approval. A proposal to expand the Central
Plan Scheme Monitoring System has been
prepared by the Planning Commission, which will
be taken up for consideration by the Expenditure
Finance Committee shortly.
2. 22 To restrict the expenditure on Central The committee constituted under the chair of
subsidies to under 2 per cent of GDP Sh. Vijay Kelkar to formulate the f iscal
in 2012-13, and further bringing it down consolidation roadmap has submitted its report
to 1.75 per cent of GDP over the next and further appropriate action shall be taken
three years through better targeting based on the recommendations to keep the
and leakage proof delivery to improve overall subsidy outgo of Government of India to
the quality of public spending. the minimum possible level.
3. 23 Rolling out a mobile- based Fertiliser The Department of Fertilizers (DOF), with the
Management System (mFMS) designed technical support of National Informatics Centre
to provide end-to-end information on the (NIC) has developed a mobile and web
movement of fertilisers and subsidies, application named mobile Fertilizers Monitoring
from the manufacturer to the retail level System (m-FMS) which provides information
during 2012, and implementing a direct about stock position, sale and receipt of
transfer of subsidy to the retailer, and fertilizers till the last retail point. Fertilizers
eventually to the farmer in subsequent companies, retailers and wholesalers can
phases. update the data on mFMS portal (http://
mfms.nic.in) through web or mobile application.
With the help of the system, it would be possible
to track fertilizers movement from plant/port up
to retailer level. Hitherto tracking of fertilizer
movement was monitored up to wholesaler level
only. This Phase I of the Direct transfer of
subsidy to farmers has come into effect from 1st
78 MID-YEAR ECONOMIC ANALYSIS
Annex continued
Sl. Para Summary of Status of
No. No. Budget Announcement Implementation
November, 2012. Further, DOF would be doing
pilots in 10 districts spread over nine States to
track the movement of fertilizers from retailer to
farmer under Phase-III (A). This pilot will start
from January 2013. In these pilot districts, part
of the subsidy to manufacturers will be linked to
sales of fertilizers to farmers by retailers, thereby
accounting for the subsidized fertilizers from
plant/port to consumers in the supply chain
management of fertilizers. After successful
implementation of Phase-III (A) in these 10 pilot
districts, next phase, i.e., Phase III (B) in which
cash subsidy will be transferred to farmers would
commence from 1st April, 2013. Simultaneously,
Phase-III (A) would be rolled out in the whole
country.
4. 24 Implementing a pilot project in Alwar The pilot project has been undertaken in the
district of Rajasthan on direct transfer Kotkasim tehsil of the Alwar district. As on 30th
of subsidy for kerosene into the bank September, 2012, a total of 15,020 bank
accounts of beneficiaries on the lines accounts have been opened as against 25,843
of a pilot project in Mysore for selling card holders. Till that date an amount of `52.06
LPG at market price and reimbursing lakh has been deposited in those accounts as
the subsidy directly into the subsidies. Against the cumulative quota of 792
beneficiary's bank account KL for 10 months (average 80 KL/month) in
Kotkasim, only 96 KL (average 10.67 KL/Month)
has been lifted by the cardholders. This is 12%
of the quota fixed for Kotkasim. The project has
been extended till 31.12.12 to enable the State
to put in the last mile mechanism in PDS shops.
5. 25 To scale up and roll out Aadhaar enabled 51 districts have been identified and the social
payments for various government sector schemes in most of these identified
schemes in at least 50 selected districts districts have also been selected f or
within the next six months. implementation of the pilot projects. As a first
step, efforts have been directed toward
completing Aadhaar enrolments in these
identified districts and substantial enrolment
penetration has been achieved. As on
30.09.2012, Aadhaar enrolments have covered
75% or more of the resident population in 22
out of the 51 districts, while in 13 other districts
the enrolments have covered a population in
excess of 50%. The technology framework and
infrastructure for rolling out Aadhaar Enabled
Payment System (AEPS) at UIDAI's Technology
Centre has been put in place. The social sector
schemes in most of these 51 identified districts
have also been selected for integration with
MID-YEAR ECONOMIC ANALYSIS 79
Annex continued
Sl. Para Summary of Status of
No. No. Budget Announcement Implementation
Aadhaar. Aadhaar seeding in the beneficiary
databases in these districts is underway and up
to the end of September 2012, about 31% of
the beneficiary population of the various
Government schemes in these districts has been
seeded with Aadhaar. The linkage of bank
accounts of the beneficiaries with Aadhaar is
also in progress.
6. 26 Enacting the Direct Taxes Code (DTC) The Direct Tax Code (DTC) Bill, 2010 shall be
Bill at the earliest. introduced in the Lok Sabha for consideration
after examination of the recommendations of the
Standing Committee.
7. 27 Finalizing the Constitution Amendment The Constitution Amendment Bill is under
Bill, as a preparatory step in examination by the Standing Committee.
implementation of the Goods and
Services Tax (GST) after examining the A discussion paper on key concepts underlying
recommendations of the Parliamentary GST is being finalized. The drafting of Model
Standing Committee, and drafting of GST legislation for the Centre and the State will
model legislation for Centre and State be taken up after the discussion paper is
GST in concert with States. finalized.
8. 28 To set up and operationalise the Goods The proposal relating to the incorporation of the
and Service Tax Network (GSTN) as a company has been approved by the Empowered
National Information Utility by August Committee of State Finance Ministers on
2012. 13.07.2012 with suggestions. These
suggestions are under examination in the
Department of Revenue.
9. 30 Raising `30,000 crore during 2012-13 Disinvestment proceeds from the Initial Public
through disinvestment, while retaining Offer (IPO) of National Building Construction
at least 51 per cent ownership and Corporation Limited (NBCC) amounting to
management control of CPSEs with the `124.97 crore and `24.51 lakh as interest have
Government. been credited to Government account as on
30.09.2012.
10. 32 Achieving a broad consensus in respect Announcement implemented
of allowing FDI in multi-brand retail trade Press Note 5 of 2012 has been issued by
up to 51 per cent in consultation with the Department of Industrial Policy and Promotion
State Governments. on 20.9.2012.
11. 33 Advancing implementing the Advance Announcement implemented
Pricing Agreement (APA) by Advance Pricing Agreement (APA) Rules have
introducing it in the Finance Bill, 2012 been notified vide Notification No. 36/2012, S.O.
to significantly bring down tax litigation 2005(E) dated 30th August, 2012. The Rules
and provide tax certainty to foreign have become effective from the same date.
investors.
80 MID-YEAR ECONOMIC ANALYSIS
Annex continued
Sl. Para Summary of Status of
No. No. Budget Announcement Implementation
12. 35 To introduce a new scheme called Rajiv The broad provisions of the scheme and the
Gandhi Equity Savings Scheme to income tax benefits under it have been
allow for income tax deduction of 50 incorporated as Section 80CCG of the Income
per cent to new retail investors, who Tax Act, 1961, as amended by the Finance Act,
invest up to `50,000 directly in equities 2012. The Scheme has been finalised and sent
and whose annual income is below `10 to DoR for notification and SEBI f or
lakh. operationalisation.
13. 37 Deepening the reforms in Capital market Announcement implemented
by:- RBI and SEBI have issued circulars dated 16th
· Allowing Qualified Foreign Investors July 2012 and 18th July 2012 respectively. A
(QFIs) to access Indian Corporate separate sub-limit of USD 1 billion has been
Bond market; created for QFIs investment in corporate bonds
and mutual fund debt schemes.
· Simplifying the process of issuing Announcement implemented
Initial Public Offers (IPOs), lowering SEBI has issued the required Circular on 4th
their costs and helping companies October 2012.
reach more retail investors in small
towns; inter alia, by making it
mandatory for companies to issue
IPOs of `10 crore and above in
electronic form through nationwide
broker network of stock exchanges;
· Providing opportunities for wider Announcement implemented
shareholder participation in important On 13 th July 2012 SEBI has come out with
decisions of the companies through necessary amendments to be made to equity
electronic voting facilities, besides listing agreement by stock exchanges. The main
existing process for shareholder features of the scheme are as under;-
voting, which would be made a. Electronic voting is made mandatory for top
mandatory initially for top listed 500 listed companies at Bombay Stock
companies; and exchange (NSE), chosen based on market
capitalization in respect of those businesses
to be transacted through postal ballot.
b. Listed companies may chose any one of
the two agencies (Central Depository
Services (India) Ltd. (CDSL) and National
securities Depositories Ltd.(NSDL) which
are currently providing the e-voting platform.
These platforms permit any shareholder
holding shares in physical or demat form,
to cast their votes electronically
irrespective of which depository he holds
his shares with.
c. This shall be applicable for the shareholders'
meetings, for which noticed are issued on
or after October 01,2012. However, the listed
companies are at liberty to provide e-voting
MID-YEAR ECONOMIC ANALYSIS 81
Annex continued
Sl. Para Summary of Status of
No. No. Budget Announcement Implementation
facility to their shareholders in the meeting
for which notices have been sent prior to
October 01,2012.
· Permitting two-way fungibility in Announcement implemented
Indian Depository Receipts subject RBI and SEBI have already issued final Circulars
to a ceiling with the objective of on implementation of two-way fungibility of
encouraging greater f oreign Indian Depository Receipts (IDRs) on 28th
participation in Indian capital August 2012.
market. Ministry of Corporate Affairs has issued
notification on Companies (Issue of Indian
Depository Receipts) Amendment Rules, 2012
on 01 October 2012.
14. 38 To move official amendments to the The official amendments in "The Banking Laws
"The Pension Fund Regulatory and (Amendment) Bill, 2011" will be moved in the
Development Authority Bill, 2011", "The Winter session of the Parliament. Amendments
Banking Laws (Amendment) Bill, 2011" to the remaining two Bills have been approved
and "The Insurance Laws (Amendment) by the Cabinet on 4.10.2012.
Bill, 2008" in the Budget Session in
pursuance to the recommendations of
the Standing Committee.
15. 39 To move the following Bills in the
Budget Session of the Parliament:
· The Micro Finance Institutions Announcement implemented
(Development and Regulation) Bill, 2012; Bill introduced in Parliament on 22.05.2012.
· The National Housing Bank Announcement implemented
(Amendment) Bill, 2012; Bill introduced in Lok Sabha on 30.04.2012.
· The Small Industries Development Announcement implemented
Bank of India (Amendment) Bill, Bill introduced in Lok Sabha on 22.05.2012.
2012;
· National Bank for Agriculture and Legal vetting of the draft Bill is in progress.
Rural Development (Amendment)
Bill, 2012;
· Regional Rural Banks (Amendment) Legal vetting of the draft Bill is in progress.
Bill, 2012;
· Indian Stamp (Amendment) Bill, The draft Bill was sent to the Legislative
2012; and Department for vetting. As advised by them,
further opinion of Department of Legal Affairs is
being sought on certain issues.
· Public Debt Management Agency of Note for consideration of the Cabinet is under
India Bill, 2012. preparation.
82 MID-YEAR ECONOMIC ANALYSIS
Annex continued
Sl. Para Summary of Status of
No. No. Budget Announcement Implementation
16. 41 To provide ` 15,888 crore f or Capitalization of RRBs
capitalisation of Public Sector Banks, Announcement implemented.
Regional Rural Banks and other Cabinet has approved the proposal f or
financial institutions including NABARD capitalization of RRBs. An amount of `200 crore
to protect the financial health of Public has been released to 11 RRBs on 08.07.2012.
Sector Banks and financial institutions, Further release will be made after finalization of
and also to create a financial holding revised estimate and subject to release of
company which will raise resources to proportionate share by concerned State
meet the capital requirements of Public Governments and Sponsor Banks.
Sector Banks. Capitalization of NABARD
Announcement implemented. An amount of
`108.20 crore has been released on 08.07.2012.
Capitalization of Public Sector banks:
A cabinet note is under preparation.
Creating a Financial Holding Company to
meet capital requirements of PSBs,
A cabinet note is under preparation.
17. 42 Implementing a comprehensive action Bringing banking payment structure at par
plan during 2012-13 to bring banking with global standards
payment structure at par with global The Key Advisory Group constituted on this
standards, and also to develop a central issue has submitted their recommendations. A
Know Your Customer (KYC) depository Committee constituted, vide order dated
in 2012-13 to avoid multiplicity of 17.07.2012, under the chairmanship of
registration and data upkeep. Secretary (FS) is now seized with
implementation of the recommendations on
Payment Structure.
Know your customer (KYC) depository
The report of the Committee on developing KYC
depository is under preparation.
18. 43 Issuance of revised guidelines on Announcement implemented
priority sector lending after stakeholder Revised guidelines on priority sector lending
consultation, based on the have been released by RBI on 20.07.2012.
recommendations of a Committee set
up by the RBI.
19. 44 To cover the all identified habitations As against the 74398 habitations with population
under the "Swabhimaan" campaign by over 2000 identified for coverage under
March 31, 2012, and also to set up ultra Swabhiman, banking facilities to 74194
small branches at these habitations as habitations have been provided till 31st March,
a next step, where the Business 2012 through Branches, Business Correspondent
Correspondents would deal with cash Agents (BCAs), Mobile branches etc, More than
transactions. 62,000 BCAs have been appointed and about
3.16 crore Financial Inclusion Accounts opened.
MID-YEAR ECONOMIC ANALYSIS 83
Annex continued
Sl. Para Summary of Status of
No. No. Budget Announcement Implementation
20. 45 To extend the "Swabhimaan" campaign Announcement implemented
in 2012-13 to habitations with Since the village level Census data for 2011 is
population of more than 1000 in North not available, it has been decided to cover villages
Eastern and hilly States and to other with population 1600-2000 (as per 2001 Census)
habitations which have crossed as it is expected that these villages would have
population of 2,000 as per Census crossed the population of 2000 in 2011 Census.
2011. Necessary instruction for identification, allocation
and coverage of these villages, as well as villages
with population between 1000 and 2000 in the
Hilly and North Eastern region states have been
issued in May, 2012.
21. 47 To extend the scheme of capitalisation Announcement implemented
of weak RRBs by another 2 years to Extension of the scheme on capitalization of
enable all the States to contribute their weak RRBs has been approved by the Cabinet.
share.
22. 49 This year it has been decided to make The following sub-sectors have been notified as
irrigation (including dams, channels eligible for Viability Gap Funding under the
and embankments), terminal markets, Scheme for Support to PPP in Infrastructure on
common infrastructure in agriculture 24.03.2012:
markets, soil testing laboratories and a. Oil/Gas/Liquefied Natural Gas (LNG)
capital investment in fertiliser sector storage f acility (includes city gas
eligible for Viability Gap Funding (VGF) distribution network)
under this scheme. Oil and Gas/LNG b. Oil and Gas pipelines (includes city gas
storage facilities and oil and gas distribution network)
pipelines, f ixed network f or c. Irrigation (dams, channels, embankments
telecommunication and etc.)
telecommunication towers will also be d. Telecommunication (Fixed Network)
made eligible sectors for VGF. (includes optic fibre/wire/cable networks
which provide broadband/internet)
e. Telecommunication towers,
f. Terminal Markets
g. Common infrastructure in agriculture
markets; and
h. Soil testing laboratories.
In respect of the Fertilizer sector, the Department
of Fertilizer has been advised to make a
comprehensive presentation bef ore the
Empowered Committee on the requirements of
the Fertilizer sector, and the regime that is
proposed to be followed to incentivize production
of fertilizers in the country to ensure food
security.
23. 52 To raise `60,000 crore through tax-free An aggregate amount of `53,500 crores have
bonds for financing infrastructure been approved for tax-free bonds issues in
projects in 2012-13, including `10,000 Financial Year 2012-13 as against `60,000 crores
crore for NHAI, `10,000 crore for IRFC, proposed in the Budget. These bonds are now
84 MID-YEAR ECONOMIC ANALYSIS
Annex continued
Sl. Para Summary of Status of
No. No. Budget Announcement Implementation
`10,000 crore for IIFCL, `5,000 crore ready to hit the market following issue of
for HUDCO, `5,000 crore for National notification by the Central Board of Direct Taxes
Housing Bank, `5,000 crore for SIDBI, on 06.11.2012.
`5,000 crore for ports and `10,000
crore for power sector.
24. 53 To notify a harmonised master list of Announcement implemented
infrastructure sector to remove The notification for a harmonized master list of
ambiguity in the policy and regulatory infrastructure sectors has since been issued on
domain and encourage investment in 28.3.2012. An institutional mechanism for the
the infrastructure sector. updation of the harmonized master list has also
been set up.
25. 57 Signing of fuel supply agreements by As on 30.09.2012, Fuel Supply Agreements
Coal India Limited (CIL) with power (FSAs) with 30 Power Plants out of 118 Power
plants that have entered into long-term Plants commissioned after 31.07.2012, have
Power Purchase Agreements with been concluded. Remaining FSAs is under
DISCOMs and constitution of an inter- consideration by Coal India Limited (CIL) in
ministerial group to undertake periodic consultation with Ministry.
review of the allocated coal mines and An Inter-Ministerial Group (IMG) to review
make recommendations on de- allocation of Coal Mines was constituted on
allocations, if so required. 21.6.2012, which has taken up for review of 58
cases where show cause notices were issued
earlier, and 18 other cases where it was decided
to deduct Bank Guarantee based on earlier
reviews. The IMG has recommended de-
allocation of 13 coal blocks allocated to 29
companies, deduction of Bank Guarantee in the
cases of 14 blocks allocated to 19 companies
and imposition of Bank Guarantee in case of 1
coal block. No action has been recommended
in cases of 3 coal blocks allocated to 2
companies.
The recommendations of the IMG have been
accepted by the competent authority and action
is initiated accordingly.
26. 58 To permit External Commercial Announcement implemented
Borrowings (ECB) to part finance P r es s R el e a s e w a s i s s u ed b y t h e
Rupee debt of existing power projects. Government on 18 th April, 2012, and the
Reserve Bank of India (RBI) issued circular
on 20 th April, 2012.
27. 59 To award projects covering a length of A total of 81 projects were identified for award
8,800 kms under NHDP during 2012-13. up to September 2012. Out of this, 6 projects
with a total road length of 561.31 Kilometer
and total project cost of ` 5259.56 crore have
been awarded as on 30.09.2012.
MID-YEAR ECONOMIC ANALYSIS 85
Annex continued
Sl. Para Summary of Status of
No. No. Budget Announcement Implementation
28. 60 Allowing ECB for capital expenditure on Announcement implemented
the maintenance and operations of toll Press Release issued by the Government on
systems for roads and highways to 18th April, 2012, and the Reserve Bank of India
encourage public private partnerships in (RBI) issued circular on 20th April, 2012.
road construction projects,.
29. 62 Permitting ECB for working capital Announcement implemented
requirements of the airline industry for Press Release issued by the Government on
a period of one year, subject to a total 18th April, 2012, and the Reserve Bank of India
ceiling of US Dollar 1 billion to address (RBI) issued circular on 20th April, 2012.
the immediate financing concerns of
the Civil Aviation sector
30. 63 Allowing foreign airlines to participate up Announcement implemented
to 49 per cent in the equity of an air Press Note No.6 (2012 series) was issued by
transport undertaking engaged in the Department of Industrial Policy and
operation of scheduled and non- Promotion (DIPP) on 20.9.2012.
scheduled air transport services.
31. 64 The Delhi Mumbai Industrial Corridor Announcement implemented
(DMIC) is being developed on either The Deed of Public Trust of the DMIC Project
side along the alignment of the Western Implementation Trust Fund has been executed
Dedicated Rail Freight Corridor. The on 27.9.2012 and the first meeting of the Trust
project has made significant progress. was also held on the same day.
In September 2011, Central assistance An amount of `411.4 crore has been allocated
of `18,500 crore spread over a period under BE 2012-13 for the project. Department of
of 5 years has been approved. The Industrial Policy and Promotion (DIPP) as settler
Japanese Prime Minister has of the DMIC Project Implementation Trust Fund
announced US$ 4.5 billion as Japanese has contributed `312.4 crore as initial contribution
participation in DMIC project. to the main corpus of the Trust and another `99
crore as additional corpus to the Trust.
32. 65 In view of the shortage of housing for Work is in progress. The framework, draft
low income groups in major cities and guidelines and monitoring mechanism are being
towns, it was proposed to:- decided.
· Allow ECB for low cost affordable
housing projects;
· Set up Credit Guarantee Trust Fund Announcement implemented
to ensure better flow of institutional Ministry of Housing and Urban Poverty Alleviation
credit for housing loans; has set up the Credit Guarantee Trust Fund.
· Enhance provisions under Rural Announcement implemented
Housing Fund from `3000 crore to The Fund amount has been increased and
`4000 crore; allocation of banks has been made on the basis
of the shortfall of Priority Sector Lending targets
as on last reporting Friday of March 2012 by
RBI.
· Extend the scheme of interest Announcement implemented
subvention of 1 per cent on housing Release order was issued by Department of
Financial Services on 24.09.2012.
86 MID-YEAR ECONOMIC ANALYSIS
Annex continued
Sl. Para Summary of Status of
No. No. Budget Announcement Implementation
loan up to `15 lakh where the cost
of the house does not exceed `25
lakh for another year; and
· Enhance the limit of indirect finance Announcement implemented
under priority sector from `5 lakh to Notification on Priority Sector Lending was
`10 lakh. issued by the RBI on 20.7.2012 and clarifications
on targets and classifications issued on
17.10.2012.
33. 66 To reduce India's import dependence To enhance indigenous production of urea and
in urea, and to encourage use of single to reduce import of urea in the country, the inter
super phosphate (SSP), which is Ministerial consultations have been completed
produced domestically to reduce on a revised draft CCEA Note on New
dependence on potassic-phosphatic Investment Policy 2012. In order to encourage
(P&K) fertiliser. usage of single super phosphate (SSP),
following steps have been taken:
(i) SSP has been included under Nutrient
Based Subsidy (NBS) policy wherein subsidy
on SSP has been given based on its nutrient
content and MRP has been left open.
(ii) Apart from indigenous source of Rock
Phosphate, a number of grades of rock
phosphate and their blending
combinations have been notified to be
used by SSP units for production of SSP.
(iii) Low Grade Rock Phosphate has also
been allowed for Beneficiated Rock
Phosphate in order to produce SSP as
per FCO standard.
(iv) New SSP plants have been inducted
under NBS policy in order to increase the
production of SSP.
As on date, 85 SSP units are registered
under NBS Policy. Four new SSP units
are under process for induction under
NBS Policy. It has been observed that the
production of SSP has increased as
compared to production of SSP in pre
NBS regime.
34. 67 Implementation of the financial package This is a centrally sponsored plan scheme of
of `3,884 crore for waiver of loans of which Government of India share is `3137 crore
handloom weavers and their cooperative and that of State Governments is `747 crore.
societies. National Implementation, Monitoring & Review
Committee (NIMRC) has been meeting from
time to time. As on 30.9.2012, 27 States have
given letters of commitment to sign MOU and
to provide for State share, and 20 States have
signed the MoU.
MID-YEAR ECONOMIC ANALYSIS 87
Annex continued
Sl. Para Summary of Status of
No. No. Budget Announcement Implementation
35. 68 To set up two more mega handloom Advertisement for inviting Expression of Interest
clusters, one to cover Prakasam and (EOI) was published on 6 th June, 2012 for
Guntur districts in Andhra Pradesh and appointment of Cluster Management and
the other for Godda and neighbouring Technical Agency (CMTA) for Prakasam &
districts in Jharkhand, and to provide Guntur Districts in Andhra Pradesh and Godda
assistance in setting up of dormitories & neighboring Districts in Jharkhand. The
for women workers in the 5 mega technical bids were opened on 13.7.2012, and
clusters relating to handloom, power Stage II of technical evaluation is currently
loom and leather sectors. underway.
So far as setting up of dormitories for women
workers in 5 mega clusters relating to handloom,
power-loom and leather sector is concerned,
Ministry of Textile (MOT) has requested for
flexibility to set up the dormitories in projects
under the Scheme for Integrated Textile Park
(SITP). This is under examination. As regards
the dormitory in leather sector, Department of
Industrial Policy and Promotion (DIPP) has
informed that this would require modifications
in the existing `Mega Leather Cluster' scheme
and therefore appraisal of EFC and approval of
CCEA again.
36. 69 To set up three Weavers' Service Centres, State Governments of Mizoram, Nagaland and
one each in Mizoram, Nagaland and Jharkhand have been requested to provide land
Jharkhand, and also to launch a pilot for setting up of new Weavers' Service Centres
scheme in the Twelfth Plan f or (WSCs) in their States. Simultaneously, SFC/
promotion and application of Geo- EFC proposals for the setting up of WSCs and
textiles in the North East Region. Geo textile schemes have been prepared.
As regards the pilot scheme for promotion and
application of Geo-textiles in the North East
Region, a budget line has been created for this
scheme. A draft EFC note has also been
circulated to the Planning Commission. Several
rounds of consultations have been held with
stakeholders in the North East Region.
37. 70 To set up a powerloom mega cluster in Expression of Interest (EOI) was published on
Ichalkaranji in Maharashtra with a 23.8.2012 for appointment of Cluster
Budget allocation of `70 crore to Management and Technical Agency (CMTA) for
address the need of the local artisans setting up a Powerloom Mega Cluster in
and weavers. Ichalkaranji in Maharashtra. Last date for
submission of the EOI was 24.9.2012, and
Stage I of technical evaluation is currently
underway.
38. 71 To set up a ` 5,000 crore India Announcement implemented
Opportunities Venture Fund with SIDBI. India Opportunities Venture Fund has been set
up in August 2012.
88 MID-YEAR ECONOMIC ANALYSIS
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Sl. Para Summary of Status of
No. No. Budget Announcement Implementation
39. 76 To allocate `300 crore to Vidarbha Operational guidelines for the scheme have
Intensified Irrigation Development been approved and sent to the State
Programme under RKVY, which seeks Government of Maharashtra. State Level
to bring in more farming areas under Sanctioning Committee (SLSC) of Maharashtra
protective irrigation. has approved Action Plans for `300 crore under
the scheme and `150 crore have already been
released as first installment.
40. 77 To merge the remaining activities into
a set of missions to address the needs
of agricultural development in the
Twelfth Five Year Plan.
These Missions are: In-principle approval for all the five Missions has
(i) National Food Security Mission been obtained from Planning Commission, and
which aims to bridge the yield gap the memoranda for obtaining the approval of
in respect of paddy, wheat, pulses, EFC are under preparation.
millet and fodder. The ongoing
Integrated Development of Pulses
Villages, Promotion of Nutri-cereals
and Accelerated Fodder
Development Programme would
now become a part of this Mission;
(ii) National Mission on Sustainable
Agriculture including Micro Irrigation
is being taken up as a part of the
National Action Plan on Climate
Change. The Rainf ed Area
Development Programme will be
merged with this;
(iii) National Mission on Oilseeds and
Oil Palm aims to increase
production and productivity of oil
seeds and oil palm;
(iv) National Mission on Agricultural
Extension and Technology focuses
on adoption of appropriate
technologies by farmers for
improving productivity and efficiency
in farm operations; and
(v) National Horticulture Mission aims
at horticulture diversification. This
will also include the initiative on
saffron.
41. 79 To raise the target for agricultural credit in Announcement implemented
2012-13 to `5,75,000 crore. The enhanced target of `575,000 crore for
agricultural credit has been communicated to
Banks/NABARD.
MID-YEAR ECONOMIC ANALYSIS 89
Annex continued
Sl. Para Summary of Status of
No. No. Budget Announcement Implementation
42. 80 To provide an additional subvention of 3 Announcement implemented.
per cent to the prompt paying farmers Approval of the Cabinet has been obtained and
under the interest subvention scheme for instruction has been communicated to the Banks
providing short term crop loans to farmers on 18.09.2012.
at 7 per cent interest per annum, which
is to be continued during 2012-13.
43. 81 To allocate `10,000 crore to NABARD Announcement implemented.
for refinancing the RRBs through RRB Necessary allocation has been made to the
Credit Refinance Fund to disburse NABARD. RBI has allocated f unds on
short term crop loans to the small and 24.07.2012.
marginal farmers.
44. 82 To modify the Kisan Credit Card (KCC) Announcement implemented.
scheme to make KCC a smart card Revised Kisan Credit Card (KCC) guidelines
which could be used at ATMs. have been issued by the RBI on 11.05.2012.
45. 83 To set aside a sum of `200 crore for Seven high priority research projects have been
incentivising research with rewards, identified for incentivizing research:·
both for institutions and the research · Efficient photosynthesis and yield
team responsible for scientif ic improvement in rice·
breakthroughs such as developing · Development of C4rice
plant and seed varieties that yield more · Biological Nitrogen Fixation in cereals.
and can resist climate change . · Molecular breeding platform for multiple
stress resistance in rice, wheat, mustard
and chickpea.·
· Breeding and culture of hilsa
· Semen sexing in cattle and buffalo.·
· Camel immunology.
The concept note along with procedure for
implementation is under preparation.
46. 84 Revising the Accelerated Irrigation The Cabinet Note to restructure the Accelerated
Benefit Programme (AIBP) to maximise Irrigation Benefit Programme (AIBP) including
the flow of benefits from investments Command Area Development and Waste
in irrigation projects. Management (CADWM) programme during 12th
Plan is under finalization. However, during 2012-
13, total grant amounting to `850.45 crore has
been released to the states for completion of
major and minor irrigation projects under AIBP
up to September, 2012. A component micro
irrigation to cover at least 10% cultivable
command area of each CADW M project is
proposed to be implemented during the 12th Plan.
47. 85 To operationalise a Government owned Announcement implemented.
Irrigation and Water Resource Finance Irrigation and Water Resource Finance
Company in 2012-13 to mobilise large Corporation Limited has been operationalised.
resources to fund irrigation projects. It has sanctioned one project of `28 crore and
disbursed an amount of `8 crore.
90 MID-YEAR ECONOMIC ANALYSIS
Annex continued
Sl. Para Summary of Status of
No. No. Budget Announcement Implementation
48. 86 To fund a flood management project After appraisal by Ganga Flood Control
for Kandi sub-division of Murshidabad Commission (GFCC), the techno-economic
District by the Ganga Flood Control viability of the scheme namely, "Improvement
Commission under the Flood of embankments and ancillary woks in Kandi and
Management Programme. other adjoining areas in district, Murshidabad,
West Bengal" with estimated cost of `438.94
crore, was accepted by the Advisory Committee
of the Ministry of Water Resources for Irrigation
Flood Control and Multi-purpose Projects in
March, 2012. The Planning Commission
accorded investment approval to the scheme in
June, 2012. The formal request from the State
Government for funding of the above project
under Flood Management Programme is
awaited.
Action is also at hand to obtain requisite
approvals for the State Sector Scheme "Flood
Management Programme" during XII Plan. On
approval of Flood Management Programme
during XII Plan and on receipt of request along
with mandatory documents from the State
Government, the above project will be placed
before competent authority for consideration of
its inclusion f or funding under "Flood
Management Programme" during XII Plan.
49. 87 National Mission on Food Processing Announcement implemented
To start a new centrally sponsored The Cabinet Committee on Economic Affairs
scheme titled "National Mission on (CCEA) in its meeting held on 23.08.2012 has
Food Processing", in cooperation with approved the launching of a new Centrally
the State Governments in 2012-13 Sponsored Scheme- National Mission on Food
Processing (NMFP) to be implemented by states
/ UTs. In pursuance of approval of CCEA,
Ministry of Food Processing Industries had also
issued guidelines for implementation of NMFP
during the 12th Five Year Plan vide letter dated
28.8.2012. `179.39 crores had been released
to States/UTs for taking up preparatory activities
and implementation of NMFP scheme.
50. 88 Creation of 2 million tonnes of storage Under the Private Entrepreneurs Guarantee
capacity in the form of modern silos has (PEG) Scheme, a capacity of about 181.08 lakh
already been approved. Nearly 15 tonnes is to be created in 19 states through
million tonnes capacity is being created private entrepreneurs and Central and State
under the Private Entrepreneur's Warehousing Corporations. Approvals have
Guarantee Scheme, of which 3 million already been given for creation of storage
tonnes of storage capacity will be capacity of 128 lakh tonnes. A total of 31 lakh
added by the end of 2011-12 and 5 tonnes has been completed under PEG out of
million would be added next year. which 20.55 lakh tonnes has been taken over
MID-YEAR ECONOMIC ANALYSIS 91
Annex continued
Sl. Para Summary of Status of
No. No. Budget Announcement Implementation
as on 30.9.2012 and the balance is expected
to be taken over shortly. It is expected that by
March, 2013 a cumulative capacity of 73 lakh
tonnes will be completed and taken over under
the scheme.
The EGOM in its meeting held on 7.2.2012 had
approved the proposal to construct 2 million
tonnes of storage capacity in the form of silos
through the PPP mode, within the overall storage
requirements of FCI. The capacities to be
created in the different States have been
finalized, and the locations have been decided
in consultation with the State Governments. An
Inter Ministerial Group (IMG) has also been
constituted to give its recommendations on all
aspects of the project. The Planning
Commission is drafting the Model Concession
Agreements (MCA) through Viability Gap
Funding (VGF) route. FCI has also invited bids
for appointment of Transaction Advisor.
51. 91 To create a National Information Utility Necessary steps for setting up of National
for the computerisation of PDS and to Information Utility i.e. PDS Network (PDSN) for
operationalize it by December 2012. computerisation of PDS will be taken by the
Department of Food and Public Distribution in
due course.
52. 92 To roll out a multi-sectoral programme The framework for the multi-sectoral programme
to address maternal and child to address maternal and child malnutrition in 200
malnutrition in selected 200 high high burden districts has been under
burden districts during 2012-13. consideration of a Committee, as suggested by
the Planning Commission. The EFC memo is
also under preparation in Ministry of Women and
Child Development.
53. 93 To strengthen and re-structure the Announcement implemented.
Integrated Child Development Services The proposal f or Strengthening and
(ICDS) scheme. Restructuring of Integrated Child Development
Services (ICDS) Scheme has been approved
by the Cabinet Committee on Economic Affairs
in its meeting held on 24.9.2012. Administrative
approval for the scheme has been issued on
22.10.2012.
54. 98 To strengthen Panchayats across the Draft Guidelines of the proposed new scheme,
country through the Rajiv Gandhi Rajiv Gandhi Panchayat Sashaktikaran Abhiyan
Panchayat Sashaktikaran Abhiyan (RGPSA) have been prepared and shared with
(RGPSA) by expanding on the existing the States/ UTs. Based on the inputs received
schemes for Panchayat capacity building. from the States/ UTs and also the consultation
92 MID-YEAR ECONOMIC ANALYSIS
Annex continued
Sl. Para Summary of Status of
No. No. Budget Announcement Implementation
held with Planning Commission, the guidelines
are being finalized. Besides, a draft EFC memo
on this newly proposed scheme has also been
circulated for the comments of concerned
Ministries since the new scheme will require
approval of the Cabinet.
55. 99 To carry the Backward Regions Grant It is proposed to restructure the BRGF in the
Fund (BRGF) scheme into the Twelfth Twelfth Five Year Plan. Until the completion of
Plan with an enhanced allocation of this exercise, it is proposed to implement BRGF
`12,040 crore in 2012-13, including the in 2012-13 in its present form. The District
State component of projects in Component of BRGF as well as the Special Plan
backward areas in Bihar, West Bengal for West Bengal and the Integrated Action Plan
and the Kalahandi-Bolangir-Koraput (IAP) are already approved for implementation
region of Odisha, development projects in 2012-13. The CCEA Note containing the
for drought mitigation in the proposal to continue the Special Plan for Bihar,
Bundelkhand region and projects under Special Plan for the Kalahandi-Bolangir-Koraput
the Integrated Action Plan to accelerate (KBK) districts of Odisha and the Bundelkhand
the pace of development in selected Package in 2012-13 has been submitted for
tribal and backward districts. consideration by the CCEA.
`300 crore has been approved as the additional
allocation to cover 22 additional districts included
in BRGF district component.
56. 100 To enhance the allocation under Rural Announcement implemented.
Infrastructure Development Fund RBI has allocated the necessary funds on
(RIDF) to `20,000 crore, with `5,000 24.07.2012. Necessary earmarking has also
crore exclusively earmarked f or been made towards warehousing facilities.
creating warehousing facilities under
RIDF.
57. 104 To set up a Credit Guarantee Fund to A draft Cabinet note for this purpose is at the
ensure better flow of credit to deserving stage of inter-ministerial consultations.
students.
58. 105 To modernize existing vaccine Modernization of existing units
manufacturing and research facilities (i) The upgradation of DPT group of vaccine
and setting up a new integrated vaccine manufacturing facility at Central Research
unit near Chennai. Institute (CRI) Kasauli has been completed and
the upgraded facility has been taken over by the
CRI, Kasauli in August 2012 on provisional basis.
(ii) The recommendations of the Expenditure
Finance Committee (EFC) for upgradation of the
DPT manufacturing facility at PII, Coonoor have
been approved and the Hill Area Conservation
Authority Committee (HACA), Chennai has also
cleared the construction of the new structure on
hill area conservation aspect. The proposal has
now been referred for relaxation of building
MID-YEAR ECONOMIC ANALYSIS 93
Annex continued
Sl. Para Summary of Status of
No. No. Budget Announcement Implementation
height to 12 meters which is above the
permissible height of 7.00 metres as per Tamil
Nadu District Municipalities (Hill Station) Building
Rules, 1993.
(iii) So far as the BCG Vaccine Laboratory, Guindy
is concerned, civil works have started after obtaining
all the required approvals from the Chennai
Metropolitan Development Authority (CMDA).
Setting up of a new Vaccine Unit
The Cabinet Committee on Economic Affairs
(CCEA) has approved establishment of
Integrated Vaccine Complex (IVC) at
Chengalpattu, Tamil Nadu in public sector by
M/s. HLL Life Care Ltd. The financial bids of
the civil tender have been finalized and work
order shall be placed shortly.
59. 106 To enlarge the scope of ASHA's Announcement implemented
activities by including prevention of Accredited Social Health Activist `ASHA' is a
Iodine Deficiency Disorders, better community health volunteer who acts as a link
immunisation and better spacing of between community and health facilities. It has
children, and envisaging a more active been decided to expand the scope of ASHA's
role for ASHA at community level as activities by giving following additional incentives:
convener of the Village Health and Immunisation·
Sanitation Committee. · `100/- for each ASHA per child completing
all vaccination upto 1 year under full
immunization coverage.·
· An additional `50/- to ASHA on ensuring
complete immunization beyond 1st and upto
2nd year of age of the child
National Iodine Deficiency Disorder (IDD)
control Programme
`25/- per month to each ASHA on testing of at
least 50 salt samples per month in 303 endemic
districts where the prevalence of total IDD is more
than 10% in the country.
Family Planning
Financial incentive to each ASHA of:·
· `500/- for ensuring spacing of 2 years after
marriage.·
· `500/- for ensuring spacing of 3 years after
the birth of 1st child.
Conducting meeting of Village Health
Sanitation & Nutrition Committee (VHSNC)
`150/- as incentive to ASHA for facilitating the
VHSNC meeting followed by meetings of women
and adolescent girls every month.
Orders have been issued to the States for the
implementation of the above decisions.
94 MID-YEAR ECONOMIC ANALYSIS
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No. No. Budget Announcement Implementation
60. 107 To launch National Urban Health National Urban Health Mission(NUHM)
Mission and to expand the Pradhan Expenditure Finance Committee (EFC) has
Mantri Swasthya Suraksha Yojana considered the proposal on 09.10.2012. Action
(PMSSY) to cover upgradation of 7 is at hand to obtain the approval of the
more Government medical colleges to Cabinet.
enhance the availability of affordable
tertiary health care. Upgradation of 7 existing Government Medical
Colleges
The Central team has visited Government
Medical College, Kozhikode, Jhansi Medical
College and Gorakhpur Medical College to
conduct gap analysis for taking up their
upgradation. Detailed Project Reports based
on the recommendations of Central team are
yet to be submitted by the concerned State
Go ver nme nts . T he rem ain ing f o ur
Government Medical Colleges identified for
upgradation are: Government Medical
College, Rewa, Government Medical College,
Dharbhanga, Government Medical College,
Muzzafarpur, and Vijaya Institute of Medical
Services, Bellary, Karnataka. Site visits to
conduct gap analysis are yet to be made for
these Medical Colleges.
61. 110 To enlarge the corpus of `Women's Release of additional ` 200 crore towards
SHG's Development Fund' housed in `Women's SHG's Development Fund' will be
NABARD to ` 300 crore from `200 processed after Utilization Certificate for the
crore, and to provide additional interest `100 crore released last year is received from
subvention at 7 percent per annum to NABARD.
women SHGs availing loans up to ` 3 In order to operationalise the interest subvention
lakh and an additional subvention of 3 to Women SHGs to avail loan up to `3 lakh at 7
percent per annum to Women SHGs percent per annum and additional 3 percent
repaying loan in time. This is to be subvention for prompt repayment of loan in
implemented in select 600 blocks of select 600 blocks of 150 districts, including the
150 districts in the first phase. Left Wing Extremism affected districts, an EFC
note is under finalization.
62. 111 To establish a Bharat Livelihoods The note for consideration of the Expenditure
Foundation of India through Aajeevika Finance Committee (EFC) is at the stage of inter-
to support and scale up civil society Ministerial consultations.
initiatives and interventions particularly
in the tribal regions covering around
170 districts.
63. 114 To allocate `1000 crore to National Skill Action complete
Development Fund (NSDF). In view of the present fund position of the NSDF,
it has been decided not to allocate any additional
fund to NSDF in the current fiscal.
MID-YEAR ECONOMIC ANALYSIS 95
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No. No. Budget Announcement Implementation
64. 115 To set up separate Credit Guarantee A draft Cabinet note for this purpose is at the
Fund in order to improve the flow of stage of inter-ministerial consultations.
institutional credit for skill development.
65. 117 To increase the monthly pension Announcement implemented
amount per person from `200 to `300 Cabinet has approved the proposal on
under the ongoing Indira Gandhi 18.10.2012, and necessary guidelines have
National Widow Pension Scheme and been issued to States/UTs on 08.11.2012.
Indira Gandhi National Disability
Pension Scheme for BPL beneficiaries,
66. 118 To double the lumpsum grant of Announcement implemented
`10,000 presently provided on the Cabinet has approved the proposal on
death of the primary breadwinner of a 18.10.2012, and necessary guidelines have
BPL family, in the age group 18 to 64 been issued to States/UTs on 08.11.2012.
years under the National Family Benefit
scheme, to `20,000.
67. 120 Institutions that are being given grants Action is at hand to obtain the approval of
The driving force of a modern nation is Standing Finance Committee (SFC) to sanction
research and the creation of new `25 crore to Institute of Rural Management,
knowledge. With this in mind I propose to Anand. New budget heads are being created to
provide: accommodate the release.
· `25 crore to the Institute of Rural
Management, Anand;
· `50 crore to establish a world-class Detailed project report is under preparation to
centre for water quality with focus seek appraisal and subsequently approval of the
on arsenic contamination in Kolkata; competent authority. Additional fund is being
arranged through Supplementary Grants for
2012-13.
· `100 crore to Kerala Agricultural The proposal for consideration of the EFC has
University; been prepared and will be circulated for inter-
ministerial consultations shortly.
· ` 50 crore for University of The proposal for consideration of the EFC has
Agricultural Sciences Dharwad, been prepared and will be circulated for inter-
Karnataka; ministerial consultations shortly.
· `50 crore to Chaudhary Charan The proposal for consideration of the EFC has
Singh Haryana Agricultural been prepared and will be circulated for inter-
University, Hissar; ministerial consultations shortly.
· ` 50 crore to Orissa University of The proposal for consideration of the EFC has
Agriculture and Technology; been prepared and will be circulated for inter-
ministerial consultations shortly.
· `100 crore to Acharya N. G. Ranga The proposal for consideration of the EFC has
Agricultural University in Hyderabad; been prepared and will be circulated for inter-
ministerial consultations shortly.
96 MID-YEAR ECONOMIC ANALYSIS
Annex continued
Sl. Para Summary of Status of
No. No. Budget Announcement Implementation
· `15 crore to National Council for Administrative approvals have been obtained.
Applied Economic Research; Grant will be released after additional funds are
arranged through supplementary demand.
· `10 crore to Rajiv Gandhi University, Administrative approvals have been obtained.
Department of Economics, Itanagar; Grant will be released after additional funds are
and arranged through supplementary demand.
· `10 crore to Siddharth Vihar Trust Rashtriya Sanskrit Sansthan (RSkS), which has
Gulbarga, to establish a Pali been entrusted with the work of promotion of
Language Research Centre Pali language, had deputed a team to Gulbarga
to work out the modalities of establishing a Pali
Language Research Centre in consultation with
Siddharth Vihar Trust, Gulbarga. RSkS are in
process of f inalizing the modalities in
consultation with the Trust.
Simultaneously, Ministry of HRD has taken up
the proposal to grant `10.00 crores to RSkS
through Supplementary/RE under the
appropriate head.
68. 122 To construct nearly 4,000 residential The target for residential quarters and barracks
quarters for Central Armed Police have been revised based on information
Forces in 2012-13 and to construct received from Central Armed Police Forces
office buildings including land (CAPFs) and fixed at 6665 houses and 149
acquisition and barracks to barracks for accommodating approximately
accommodate 27,000 personnel. 20,259 personnel. The physical achievement
up to September, 2012 for Residential Building
is 1871 and for Barracks is 71.
69. 123 To complete the National Population National Population Registrar (NPR)
Registrar (NPR) within two years and The demographic data for NPR (in paper format)
to issue Resident Identity Cards has been collected for the entire country (approx.
bearing the Aadhaar numbers to all 1.2 billion population).The filled-in NPR
residents who are of age 18 years and Schedules (approx. 27 crore) have been
above to help in the e-governance scanned. The Data Entry (in English and the
initiatives. Regional language) from the scanned images
has been completed for more than 92.17 crore
records. The NPR biometric enrolment is in
progress by organising camps in the local areas
and biometrics have been captured for more
than 7.18 crore persons.
Resident Identity Cards (RICs)
The proposal for issuance of RICs to all the usual
residents of 18 years and above, under the
scheme of NPR in the country, has been
appraised by the Expenditure Finance Committee
(EFC). The EFC has recommended the scheme
at an estimated cost of `552.5 crore. Action is at
hand to obtain the approval of the Cabinet.
MID-YEAR ECONOMIC ANALYSIS 97
Annex continued
Sl. Para Summary of Status of
No. No. Budget Announcement Implementation
70. 126 To lay a white paper on Black Money Announcement implemented
on the table of the House during the The `White Paper on Black Money' has been
Budget session of Parliament. laid before the Parliament on 21st May, 2012.
71. 127 To introduce a Bill on Public Procurement Announcement implemented
legislation in the Budget session of the Public Procurement Bill, 2012 was introduced
Parliament to enhance confidence in public in Lok Sabha on 14.5.2012.
procurement and to ensure transparency
and efficiency in the process.
72. 142 To reduce the rate of withholding tax Announcement implemented
on interest payments on external The provisions have come in to effect with the
commercial borrowings from 20 per passage of the Finance Bill, 2012.
cent to 5 per cent for three years in
the following sectors:power; airlines;
roads and bridges; ports and
shipyards; aff ordable housing;
fertilizer; and dams
73. 152 To reduce Securities Transaction Tax Announcement implemented
(STT) by 20 per cent (from 0.125 per The provision relating to reduction in STT has
cent to 0.1 per cent) on cash delivery come into effect from the 1st July, 2012.
transactions in order to reduce
transaction costs in the capital markets.
74. 154 To introduce a General Anti Avoidance General Anti Avoidance Rules have been
Rule (GAAR) in order to counter incorporated in the Income-tax Act, through
aggressive tax avoidance schemes, Finance Act, 2012. These provisions were
while ensuring that it is used only in deferred by one year through Government
appropriate cases, by enabling a review Amendment and now will be applicable only in
by a GAAR panel. respect of income accruing or arising on or after
1.4.2013. Recommendations of the GAAR
panel on the implementation of GAAR are under
active discussion with stakeholders before
finalization.
75. 155 · Introduction of compulsory reporting Announcement implemented
requirement in case of assets held These series of measures have been introduced
abroad. in the Finance Bill, 2012 and are finally part of
· Allowing for reopening of assessment the Finance Act, 2012 except the provisions of
upto 16 years in relation to assets the tax deduction at source on immovable
held abroad. property which has been dropped from the
· Tax collection at source on purchase Finance Bill during the official amendments while
in cash of bullion or jewellery in passing the Bill as Finance Act, 2012.
excess of ` 2 lakh.
· Tax deduction at source on transfer
of immovable property (other than
agricultural land) above a specified
threshold.
98 MID-YEAR ECONOMIC ANALYSIS
Annex continued
Sl. Para Summary of Status of
No. No. Budget Announcement Implementation
· Tax collection at source on trading
in coal, lignite and iron ore.
· Increasing the onus of proof on
closely held companies for funds
received from shareholders as well
as taxing share premium in excess
of fair market value.
· Taxation of unexplained money,
credits, investments, expenditures
etc., at the highest rate of 30 per
cent irrespective of the slab of
income.
76. 168 To introduce a common simplified A common registration form and a common
registration form and a common return return for Central Excise & Service Tax have
for Central Excise and Service Tax, to been placed in the public domain. The
be named EST-1 as a measure of responses from public and departmental officers
har monisa tion b etwee n Cent ral have been invited. The Central Board of Excise
Ex cis e a nd Serv ice Ta x. Th is & Customs has appointed a committee headed
common return will comprise only one by DG, Service Tax to go into all aspects of this
page, which will be a significant issue. Further action would be taken on receipt
reduction from the 15 pages of the of the report of the Committee.
two returns at present.
77. 169 Introducing Revision Application Announcement implemented
Authority and Settlement Commission These are Budget changes. Statutory provision
in Service Tax to help resolve disputes relating to Revision Application Authority is
with far greater ease. effective since 28th May, 2012, the date of
enactment of the Finance Act, 2012. For
Settlement Commission, notification no. 16/
2012-ST dated 29.05.2012 prescribing rules has
been issued.
78. 171 Notifying the Place of Supply Rules, Announcement implemented
that will determine the location where Notification 28/2012-ST dated 20/06/2012
a service shall be deemed to be issued. Place of Provision of Services Rules
provided. These rules will also provide have come into effect from 1st July, 2012.
a possible backdrop to initiate an
informed debate to assess all the
issues that may arise in the taxation of
inter-state services for the eventual
launch of GST.
79. 172 To set up a Study Team to examine the Announcement implemented
possibility of a common tax code for A Study team to examine the possibility of a
service tax and central excise. common tax code for service tax and central
excise has been constituted.
MID-YEAR ECONOMIC ANALYSIS 99
Annex continued
Sl. Para Summary of Status of
No. No. Budget Announcement Implementation
80. 173 To implement a new scheme that will Announcement implemented
simplify tax refunds to exporters of The scheme was made operational through
goods without resorting to voluminous notification no. 27/2012-CE(NT) dated 18.06.2012
documentation or verification. Such prescribing the safeguards, conditions,
refunds will also be admissible for taxes limitations and the procedure for the refund
on taxable services that have been claims.
exempted.
81. 174 Rationalising rules pertaining to the Announcement implemented
Point of Taxation, providing greater Notifications 04/2012-ST dated 17/03/2012 and
clarity and removing the irritants, and 37/2012-ST dated 20/06/2012 issued in respect
restoration of Cenvat credits in a of Point of Taxation Rules. Notifications 18/2012-
number of areas. CE(NT) dated 17/03/2012 and 28/2012-CE(NT)
dated 20/06/2012 have been issued in respect of
Cenvat Credit Rules. Notification 26/2012-ST
dated 20/06/2012 has been issued in respect of
abatements in the case of certain taxable services.
Annex II
1. KEY INDICATORS
Items 2010-11 2011-12 per cent per cent 2011-12 2012-13 Period per cent per cent
change change change change
Annex continued
2010-11 2011-12 2011-12 2012-13
(1) (2) (3) (4) (5) (6) (7) (8) (9) (10)
1a GDP at factor cost at current prices-
` '000 crore 7157Q 8233R 17.5 15.0 3842 4363 Apr-Sep 17.0 13.5
1b Implicit Price Deflator 146.5 158.2 8.4 8.0 155.7 167.8 Apr-Sep 9.0 7.8
1c GDP at factor cost at 2004-05 prices-
` '000 crore 4886Q 5203R 8.4 6.5 2468 2600 Apr-Sep 7.3 5.4
2 Agriculture and allied sectors at
2004-05 prices - ` '000 crore 709Q 729R 7.0 2.8 304 311 Apr-Sep 3.4 2.1
3 Index of Industrial Production (IIP) 165.5 170.3 8.2 2.9 166.1 166.3 Apr-Sept HI 5.1 0.1
4 Electricity generated (in billion kwh) 811.1 876.9 5.7 8.1 435.1 455.5 Apr-Sept HI 9.5 4.7
5 Wholesale price index(point-to-point)
2004-05=100 143.3 156.1 9.6 8.9 153.8 165.6 Apr-SepP 9.7 7.7
6 Consumer price index(for industrial
workers) 2001=100 179.8 194.8 10.4 8.4 191.0 210.0 Apr-Sep 9.0 9.9
7 Money Supply (M3) (` '000 crore) 1,2 6,504 7,359 16.1 13.1 7,034 7,965 Mid-Nov. 15.5 13.2
8 Imports at current price 3 (in ` Crore) 16,83,467 23,44,772 23.4 39.3 11,01,683 12,82,774 Apr-SepP 35.7 16.4
(in US$ million) 3,69,769 4,89,181 28.2 32.3 2,43,517 2,34,706 Apr-SepP 38.1 -3.6
9 Exports at current prices 3 (in ` Crore) 11,42,922 14,59,281 35.2 27.7 6,97,873 7,76,480 Apr-SepP 38.0 11.3
(in US$ million) 2,51,136 3,04,624 40.5 21.3 1,54,185 1,42,066 Apr-SepP 40.4 -7.9
10 Foreign currency assets (in ` Crore) 1225999 1333954 6.5 8.8 1350855 1374066 Apr-Sep 13.3 1.7
(in US$ million) 274580 260742 7.7 -5.0 276079 260748 Apr-Sep 4.0 -5.6
11 Exchange rate (`/US$) 4&5 45.56 47.92 4.1 -4.9 45.23 54.66 Apr-Sep 1.8 -17.3
MID-YEAR ECONOMIC ANALYSIS
Q: Quick estimate; R : Revised estimate; P : Provisional Data 1: Units only for columns 2,3,6 and 7; 2: Figures in column 2 and 3 are for end March of the respective
financial year; 3: As per DGCI&S; 4 (+) indicates appreciation and (-) indicates depreciation of the Rupee vis-à-vis the US Dollar. 5. Yearly /Half yearly average exchange
rate {average of buying & selling by Foreign Exchange Dealers Association of India (FEDAI)}. Exchange Rate from May 2012 onwards are RBI's reference rates.
101
102 MID-YEAR ECONOMIC ANALYSIS
Annex continued
2. MAJOR ITEMS OF INDIA'S BALANCE OF PAYMENTS DURING Q1 OF 2011-12 AND 2012-13
(in US$ billion)
Items 2010-11 2011-12 2011-12 2012-13
(PR) (P) (PR) (P)
Full Year Full Year Q1 Q1
(April-June) (April-June)
1 Exports 250.5 309.8 78.6 76.7
2 Imports 381.1 499.5 123.7 119.2
3 Trade Balance -130.6 -189.8 -45.0 -42.5
4 Net Invisibles 84.6 111.6 27.5 25.9
5 Goods & Services Balance -81.8 -125.7 -28.6 -28.3
6 Current Account Balance -45.9 -78.2 -17.5 -16.6
7 External assistance (Net) 4.9 2.3 0.3 -0.2
8 Commercial Borrowings (Net) 12.5 10.3 3.1 1.0
9 FDI (Net) 9.4 22.1 9.3 4.2
10 Portfolio 30.3 17.2 2.5 -1.9
11 Capital Account Balance 62.0 67.8 23.9 17.0
12 Errors & Omissions -3.0 -2.4 -0.9 0.1
13 Overall Balance 13.1 -12.8 5.4 0.5
14 Change in Reserves (- indicates increase;
+ indicates decrease) (on BoP Basis) -13.1 12.8 -5.4 -0.5
Memo Items/Assumptions
1 Trade Balance/GDP (%) -7.8 -10.3
2 Goods & Services Balance / GDP (%) -4.9 -6.8
3 Invisibles/GDP (%) 4.9 6.0
4 Current Account Balance/GDP (%) -2.7 -4.2
5 Net Capital Flows / GDP (%) 3.7 3.7
P: Preliminary, PR: Partially Revised
Source: Reserve Bank of India
3. MONETARY SURVEY
Outstanding Balances Per cent variation
Items 2010-11 2011-12 Nov 18, Nov 16, Full year Full year year-on-year
2011 2012 2010-11 2011-12 Nov 18, Nov 16,
(` crore) (` crore) (` crore) (` crore) 2011 2012
Annex continued
I Broad Money 65,04,116 73,59,200 70,34,363 79,65,064 16.1 13.1 15.5 13.2
Components of Money Stock
1) Currency with the Public 9,11,836 10,26,500 9,77,878 11,08,116 18.8 12.6 12.2 13.3
2) Aggregate deposits with Banks 55,88,627 63,29,878 60,55,326 68,55,566 15.7 13.3 16.1 13.2
3) Other deposits with RBI 3,653 2,822 1,159 1,382 -4.0 -22.7 -67.2 19.2
Sources of M3
I. Net Bank Credit to Government (1+2) 19,83,896 23,69,547 22,23,555 26,52,974 18.9 19.4 22.1 19.3
1) Net RBI Credit to Govt. 3,96,555 5,35,738 4,16,903 5,77,798 - - - -
2) Other Banks Investment in Govt. Securities 15,87,341 18,33,809 18,06,652 20,75,176 8.9 15.5 15.7 14.9
II. Bank Credit to Commercial Sector (1 + 2) 42,36,676 49,59,426 45,14,980 52,58,116 21.3 17.1 17.6 16.5
1) RBI credit to Commercial sector 2,164 3,960 1,908 4,178 - - - -
2) Other Bank credit to Commercial sector 42,34,512 49,55,467 45,13,072 52,53,939 21.3 17.0 17.6 16.4
III. Net Foreign Exchange Assets of the
banking sector 13,93,343 15,43,780 15,89,439 16,30,376 8.7 10.8 15.2 2.6
IV. Govt's Net Currency Liability to the public 12,724 14,273 13,716 15,046 12.9 12.2 11.9 9.7
V. Other items (net) 11,22,523 15,27,826 13,07,326 15,91,449 32.0 36.1 36.2 21.7
Memorandum items
1) NDA 51,10,773 58,15,420 54,44,924 63,34,688 18.3 13.8 15.6 16.3
2) Reserve Money(M0) 13,76,821 14,27,172 14,01,667 14,78,997 19.1 3.7 13.8 5.5
MID-YEAR ECONOMIC ANALYSIS
Please note item V on the sources side is net non-monetary liabilities of the banking sector. On the sources side, M3 is derived by summing items I, II, III and IV and
deducting item V.
103
104 MID-YEAR ECONOMIC ANALYSIS
Annex continued
Table 4: Trends in Growth Rates of Infrastructure Sectors and Universal Intermediaries
(Per cent)
April-September
Industry Weight 2009-10 2010-11 2011-12 2011-2012 2012-13
I. Core infrastructure industries
i Electricity generation 10.3 6.2 5.5 8.1 9.3 4.7
ii Coal 4.4 8.1 -0.3 1.2 -4.8 8.3
iii Steel 6.7 6.0 8.9 7.0 9.5 2.6
iv Crude oil 5.2 0.5 11.9 1.0 5.1 -0.8
v Refinery products 5.9 -0.4 3.0 3.2 4.6 5.4
vi Cement 2.4 10.5 4.5 6.7 3.8 7.4
vii Natural Gas 1.7 44.6 10.0 -8.9 -8.5 -12.5
viii Fertilizers 1.3 12.7 0.0 0.4 0.6 -5.6
overall index 37.9 6.6 5.7 4.4 5.0 3.2
II. Transport and Communications
1. Cargo handled at major ports 5.8 1.6 -1.7 3.1 -3.3
2. Railway revenue earning freight traffic 6.6 3.8 5.2 4.8 4.8
3. Civil Aviation
a. Export cargo handled 11.4 13.4 -2.2 -0.7 -1.6
b. Import cargo handled 8.1 20.6 -1.6 4.1 -9.2
c. Passenger handled at
International Terminals 5.7 11.5 7.6 7.8 2.6
d. Passengers handled at
Domestic Terminals 14.5 16.1 15.0 18.8 -3.1
4. Telecommunications
a. Cellular Mobile Phones 47.4 18.0 -52.7 -40.0 0.0
Source: (i). O/o the Economic Adviser, DIPP, Ministry of Commerce & Industry
(ii). Ministry of Statistics & Programme Implementation.
MID-YEAR ECONOMIC ANALYSIS 105
Annex continued
5. TAX REVENUE
(` in crore)
2012-2013 2011-2012
DESCRIPTION BE ACTUALS % BE ACTUALS %
upto 09/2012 upto 09/2011
1 Corporation Tax 373227.00 142965.05 38% 359990.00 127374.70 35%
2 Taxes on Income 195786.00 84611.46 43% 172026.00 68861.95 40%
(a) Taxes on Income other than
Corporation Tax 189866.00 82597.68 44% 164526.00 66249.04 40%
(b) Fringe Benefit Tax 0.00 -62.05 ... 0.00 109.04 ...
(c) Securities Transaction Tax 5920.00 2075.83 35% 7500.00 2503.81 33%
(d) Banking Cash Transaction Tax 0.00 0.00 ... 0.00 0.06 ...
3 Wealth Tax 1244.00 483.84 39% 635.00 379.52 60%
4 Customs 186694.00 78556.73 42% 151700.00 74808.21 49%
5 Union Excise Duties 194350.34 67423.60 35% 164115.66 59314.62 36%
6 Service Tax 124000.00 49102.88 40% 82000.00 37049.46 45%
7 Other taxes 2310.45 1752.44 76% 1973.22 1564.18 79%
(a) Direct Taxes ... 11.90 ... ... 6.23 ...
(b) Indirect Taxes ... 1740.54 ... ... 1557.95 ...
GROSS TAX REVENUE 1077611.79 424896.00 39% 932439.88 369352.64 40%
Of which netted against
expenditure (Surcharge for
financing National Calamity
Contigency Fund) 4620.00 1689.53 37% 4525.00 1447.89 32%
Balance Gross Tax Revenue 1072991.79 423206.47 39% 927914.88 367904.75 40%
Less Assignment to States 301920.76 129394.64 43% 263457.74 113174.03 43%
NET TAX REVENUE 771071.03 293811.83 38% 664457.14 254730.72 38%
106 MID-YEAR ECONOMIC ANALYSIS
Annex continued
6. NON-TAX REVENUE
(` in crore)
2012-2013 2011-2012
DESCRIPTION BE ACTUALS % BE ACTUALS %
upto 09/2012 upto 09/2011
A. Interest receipts 25230.68 16972.87 67% 29821.89 19374.86 65%
Less - i) Receipts incidential to
Market Borrowing taken in
reduction of cost of
borrowing 5010.00 9698.27 194% 4344.11 5537.70 127%
ii) Waiver of Interest 990.00 0.00 ... 5900.00 5900.00 100%
Net Interest Receipts 19230.68 7274.60 38% 19577.78 7937.16 41%
B. Dividends and Profits 50152.55 27525.75 55% 42623.68 22867.27 54%
C. Non-Tax Revenue of U.T.s 1135.78 515.02 45% 1169.35 410.85 35%
D. Other Non-Tax Revenue
Fiscal Services 119.32 18.09 15% 127.82 41.44 32%
Other General Services 22988.94 8656.80 38% 22001.31 7928.29 36%
Less: Other Receipts utilised to
write-off loans etc. 1106.60 5.18 0% 1506.95 6.95 0%
Net - Other General Services 21882.34 8651.62 40% 20494.36 7921.34 39%
Social Services 1371.55 756.11 55% 2353.90 529.28 22%
Economic Services 91147.49 18356.78 20% 57606.69 17229.72 30%
Less - (I) Other Receipts utilised
to write-off loans 3.00 0.00 ... 0.00 0.00 ...
Net Economic Services 91144.49 18356.78 20% 57606.69 17229.72 30%
Grants-in-Aid and Contributions 2887.20 254.31 9% 2172.96 451.77 21%
Total Other Non-Tax Revenue 117404.90 28036.91 24% 82755.73 26173.55 32%
Less : Commercial Departments 23310.30 6276.25 27% 20691.42 6592.00 32%
Net Other Non-Tax Revenue 94094.60 21760.66 23% 62064.31 19581.55 32%
Net Non-Tax Revenue (A+B+C+D) 164613.61 57076.03 35% 125435.12 50796.83 40%
MID-YEAR ECONOMIC ANALYSIS 107
Annex continued
7. CAPITAL RECEIPTS
(` in crore)
2012-2013 2011-2012
DESCRIPTION BE ACTUALS % BE ACTUALS %
upto 09/2012 upto 09/2011
1 (a) Market Loans including
Short term borrowings 488000.00 331839.22 68% 358000.00 277074.39 77%
(b) Receipt under MSS (Net) 20000.00 0.00 0% 20000.00 0.00 0%
(c) Treasury Bills(14 days) 0.00 -27549.47 0.00 -35732.91
2 Securities against Small Savings 1197.52 -545.04 -46% 24182.46 -621.61 -3%
3 (i) External Loans
Gross Borrowings 26047.94 7369.09 28% 26820.13 8749.25 33%
Less Repayments 15899.74 8126.10 51% 12320.13 6368.19 52%
Net Borrowings 10148.20 -757.01 -7% 14500.00 2381.06 16%
(ii) Revolving Fund -8.45 -12.87
Non-Debt Capital Receipts (4&5)
4 Recoveries of Loans and
Advances
Gross Recoveries 23095.20 5053.93 22% 26510.00 10245.59 39%
Less Recoveries of Ways &
Means Advances and Loans
to Govt. Servants 11445.00 198.75 2% 11490.00 221.26 2%
Net Recoveries of Loans &
Advances 11650.20 4855.18 42% 15020.00 10024.33 67%
5 Miscellaneous Capital Receipts 30000.00 1371.82 5% 40000.00 1144.55 3%
(i) Disinvestment of Govt.'s
Equity Holdings 30000.00 1371.82 5% 40000.00 1144.55 3%
(ii) Issue of Bonus Shares 0.00 0.00 0.00 1585.74
(iii) Other Misc. Receipts 0.00 0.00 0.00 0.00
6 National Small Savings Fund 5005.48 13593.00 272% 94.21 8598.10
(a) Small Savings, Public
Provident Funds 0.00 -1267.23 65000.00 -6548.24 -10%
(b) Investment in Securities 12122.24 11669.84 96% -58350.00 2304.77 -4%
(c) Income & Expenditure of
NSSF -7116.76 3190.39 -45% -6555.79 12841.57 -196%
7 State Provident Funds 12000.00 746.41 6% 10000.00 2161.73 22%
8 Public Accounts
(other than SPF& NSSF) 313.57 -12853.00 -4099% -9783.58 -10353.06 106%
9 Other Internal Debt Receipts -3074.32 -559.94 18% -4176.52 -5321.01 127%
10 Ways & Means Advances 0.00 24387.00
11 Investment (-)/disinvestment (+)
of Surplus Cash 14588.00 16416.00
12 Decrease in Cash Balance 18410.14 20000.00 1833.46
(Including difference between
RBI & A/C)
13 Cash held under MSS -20000.00 0.00 0% -20000.00 0.00 0%
TOTAL 555240.65 343130.86 62% 467836.57 291979.16 62%
108 MID-YEAR ECONOMIC ANALYSIS
Annex continued
8. PLAN EXPENDITURE
(` in crore)
GRANT MINISTRY/ 2012-2013 2011-2012
NO. DEPARTMENT BE ACTUALS % BE ACTUALS %
upto upto
09/2012 09/2011
(1) (2) (3) (4) (5) (6) (7) (8)
MINISTRY OF AGRICULTURE 25338.00 12471.38 49% 21522.87 10508.53 49%
1 Department of Agriculture and
Cooperation 20208.00 9891.59 49% 17122.87 8602.77 50%
2 Department of Agricultural
Research and Education
Gross: 3220.00 1584.24 49% 2808.54 1302.54 46%
Less : Recoveries: 0.00 0.00 8.54 48.50 568%
Net 3220.00 1584.24 49% 2800.00 1254.04 45%
3 Department of Animal Husbandry ,
Dairying and Fisheries 1910.00 995.55 52% 1600.00 651.72 41%
DEPARTMENT OF ATOMIC
ENERGY 5600.00 872.64 16% 5600.00 1391.58 25%
4 Atomic Energy 4601.73 867.19 19% 3991.00 988.07 25%
5 Nuclear Power Schemes 998.27 5.45 1% 1609.00 403.51 25%
MINISTRY OF CHEMICALS AND
FERTILISERS 2201.00 1595.97 73% 1200.00 821.23 68%
6 Department of Chemicals and
Petro-Chemicals 1757.00 1577.39 90% 800.00 713.62 89%
7 Department of Fertilisers 256.00 0.83 0% 225.00 98.91 44%
8 Department of Pharmaceuticals 188.00 17.75 9% 175.00 8.70 5%
MINISTRY OF CIVIL AVIATION 4500.00 3718.58 83% 1700.00 1255.97 74%
9 Ministry of Civil Aviation 4500.00 3718.58 83% 1700.00 1255.97 74%
MINISTRY OF COAL 450.00 135.93 30% 420.00 131.16 31%
10 Ministry of Coal 450.00 135.93 30% 420.00 131.16 31%
MINISTRY OF COMMERCE AND
INDUSTRY 3465.00 1758.15 51% 3300.00 1634.95 50%
11 Department of Commerce 2100.00 1002.13 48% 2000.00 1064.50 53%
12 Department of Industrial Policy &
Promotion 1365.00 756.02 55% 1300.00 570.45 44%
MINISTRY OF COMMUNICATIONS AND
INFORMATION TECHNOLOGY 8600.00 3131.42 36% 7218.00 2296.41 32%
13 Department of Posts 800.00 49.61 6% 800.00 50.32 6%
14 Department of Telecommunications
Gross 7800.00 2371.73 30% 5518.00 2829.61 51%
Less : Recoveries 3000.00 106.07 4% 2100.00 1322.72 63%
Net 4800.00 2265.66 47% 3418.00 1506.89 44%
15 Department of Information Technology 3000.00 816.15 27% 3000.00 739.20 25%
MINISTRY OF CONSUMER AFFAIRS,
FOOD AND PUBLIC DISTRIBUTION 367.00 16.31 4% 345.00 75.88 22%
16 Department of Consumer Affairs 241.00 13.66 6% 225.00 38.63 17%
17 Department of Food and Public
Distribution 126.00 2.65 2% 120.00 37.25 31%
MINISTRY OF CORPORATE AFFAIRS 32.00 2.00 6% 28.00 13.03 47%
18 Ministry of Corporate Affairs 32.00 2.00 6% 28.00 13.03 47%
MID-YEAR ECONOMIC ANALYSIS 109
Annex continued
(1) (2) (3) (4) (5) (6) (7) (8)
MINISTRY OF CULTURE 864.00 441.55 51% 785.00 386.21 49%
19 Ministry of Culture 864.00 441.55 51% 785.00 386.21 49%
MINISTRY OF DEVELOPMENT OF
NORTH EASTERN REGION 1905.00 805.95 42% 1741.00 865.02 50%
28 Ministry of Development of North
Eastern Region
Gross 2075.00 844.46 41% 1911.00 865.02 45%
Less : Recoveries 170.00 38.51 23% 170.00 0.00 0%
Net 1905.00 805.95 42% 1741.00 865.02 50%
MINISTRY OF EARTH SCIENCES 1281.00 451.36 35% 1220.00 364.94 30%
29 Ministry of Earth Sciences 1281.00 451.36 35% 1220.00 364.94 30%
MINISTRY OF ENVIRONMENT AND
FORESTS 2430.00 760.00 31% 2300.00 526.87 23%
30 Ministry of Environment and Forests
Gross 2630.00 760.29 29% 2300.00 526.87 23%
Less : Recoveries 200.00 0.29 0% 0.00 0.00
Net 2430.00 760.00 31% 2300.00 526.87 23%
MINISTRY OF EXTERNAL AFFAIRS 1500.00 1052.24 70% 800.00 421.71 53%
31 Ministry of External Affairs 1500.00 1052.24 70% 800.00 421.71 53%
MINISTRY OF FINANCE 119675.00 32069.90 27% 90636.61 29654.46 33%
32 Department of Economic Affairs
Gross 5142.45 1195.18 23% 3080.63 1114.46 36%
Less : Recoveries 1102.45 551.22 50% 1040.63 520.30 50%
Net 4040.00 643.96 16% 2040.00 594.16 29%
33 Department of Financial Services 16088.00 1300.00 8% 7850.00 74.42 1%
35 Transfers to State and UT
Governments
Gross 106908.00 30129.01 28% 88473.61 28984.65 33%
Less : Recoveries 7365.00 4.07 0% 7732.00 0.00 0%
Net 99543.00 30124.94 30% 80741.61 28984.65 36%
38 Department of Expenditure 4.00 1.00 25% 5.00 1.23 25%
MINISTRY OF FOOD PROCESSING
INDUSTRIES 660.00 424.90 64% 600.00 108.89 18%
45 Ministry of Food Processing
Industries 660.00 424.90 64% 600.00 108.89 18%
MINISTRY OF HEALTH AND FAMILY
WELFARE 30477.00 14042.29 46% 26760.00 10044.12 38%
46 Department of Health and
Family Welfare 27127.00 12643.95 47% 23560.00 8789.06 37%
47 Department of Ayurveda, Yoga &
Naturopathy, Unani, Siddha and
Homoeopathy (AYUSH) 990.00 294.58 30% 900.00 142.62 16%
48 Department of Health Research 660.00 291.23 44% 600.00 265.11 44%
49 Department of Aids Control 1700.00 812.53 48% 1700.00 847.33 50%
MINISTRY OF HEAVY INDUSTRIES
AND PUBLIC ENTERPRISES 566.00 345.85 61% 410.00 362.52 88%
50 Department of Heavy Industry 553.00 342.65 62% 399.00 356.10 89%
51 Department of Public Enterprises 13.00 3.20 25% 11.00 6.42 58%
MINISTRY OF HOME AFFAIRS 12140.89 3507.35 29% 11562.29 2047.13 18%
52 Ministry of Home Affairs 2139.01 671.11 31% 3237.00 165.18 5%
54 Police 8045.99 2064.43 26% 6435.00 1586.68 25%
55 Other Expenditure of the
Ministry of Home Affairs 315.00 95.73 30% 328.00 21.29 6%
56 Transfers to UT Govts. 1640.89 676.08 41% 1562.29 273.98 18%
110 MID-YEAR ECONOMIC ANALYSIS
Annex continued
(1) (2) (3) (4) (5) (6) (7) (8)
MINISTRY OF HOUSING AND URBAN
POVERTY ALLEVIATION 1155.00 389.50 34% 1100.00 291.76 27%
57 Ministry of Housing and Urban
Poverty Alleviation 1155.00 389.50 34% 1100.00 291.76 27%
MINISTRY OF HUMAN RESOURCE
DEVELOPMENT 61407.00 33007.67 54% 52057.00 29153.38 56%
58 Department of School Education
and Literacy
Gross 64584.08 26545.49 41% 57483.33 23342.66 41%
Less : Rec. (prarambik shiksha
kosh/National Inv. Fund 18615.08 0.00 0% 18526.33 0.00 0%
Net 45969.00 26545.49 58% 38957.00 23342.66 60%
59 Department of Higher Education 15438.00 6462.18 42% 13100.00 5810.72 44%
MINISTRY OF INFORMATION AND
BROADCASTING 905.00 313.59 35% 861.00 336.93 39%
60 Ministry of Information and
Broadcasting 905.00 313.59 35% 861.00 336.93 39%
MINISTRY OF LABOUR AND
EMPLOYMENT 2403.88 904.33 38% 1248.25 645.44 52%
61 Ministry of Labour and Employment
Gross 2522.44 904.33 36% 1988.25 645.44 32%
Less : Recoveries 118.56 0.00 0% 740.00 0.00 0%
Net 2403.88 904.33 38% 1248.25 645.44 52%
MINISTRY OF LAW AND JUSTICE 1050.00 500.51 48% 1000.00 203.00 20%
63 Law and Justice 1050.00 500.51 48% 1000.00 203.00 20%
MINISTRY OF MICRO, SMALL AND
MEDIUM ENTERPRISE 2835.00 960.91 34% 2700.00 1053.50 39%
65 Ministry of Micro, Small and Medium
Enterprises 2835.00 960.91 34% 2700.00 1053.50 39%
MINISTRY OF MINES 232.00 121.57 52% 214.00 177.65 83%
66 Ministry of Mines 232.00 121.57 52% 214.00 177.65 83%
MINISTRY OF MINORITY AFFAIRS 3135.00 539.92 17% 2850.00 760.56 27%
67 Ministry of Minority Affairs 3135.00 539.92 17% 2850.00 760.56 27%
MINISTRY OF NEW AND RENEWABLE
ENERGY 1383.00 650.26 47% 1198.00 674.56 56%
68 Ministry of New and Renewable
Energy
Gross 1423.43 654.68 46% 1198.00 674.56 56%
Less : Recoveries 40.43 4.42 11%
Net 1383.00 650.26 47% 1198.00 674.56 56%
MINISTRY OF PANCHAYATI RAJ 5350.00 1173.10 22% 5250.00 1183.63 23%
70 Ministry of Panchayati Raj 5350.00 1173.10 22% 5250.00 1183.63 23%
MINISTRY OF PERSONNEL, PUBLIC
GRIEVANCES & PENSIONS 279.00 69.48 25% 260.00 41.83 16%
72 Ministry of Personnel, Public
Grievances and Pensions 279.00 69.48 25% 260.00 41.83 16%
MINISTRY OF PETROLEUM AND
NATURAL GAS 43.00 0.00 0% 40.00 0.00 0%
73 Ministry of Petroleum and
Natural Gas 43.00 0.00 0% 40.00 0.00 0%
MID-YEAR ECONOMIC ANALYSIS 111
Annex continued
(1) (2) (3) (4) (5) (6) (7) (8)
MINISTRY OF PLANNING 2100.00 588.71 28% 1600.00 193.84 12%
74 Ministry of Planning 2100.00 588.71 28% 1600.00 193.84 12%
MINISTRY OF POWER 9642.00 1492.94 15% 9642.00 1415.26 15%
75 Ministry of Power
Gross 15123.04 1776.00 12% 14694.00 1569.21 11%
Less : Recoveries 5481.04 283.06 5% 5052.00 153.95 3%
Net 9642.00 1492.94 15% 9642.00 1415.26 15%
MINISTRY OF ROAD TRANSPORT
AND HIGHWAYS 25359.91 10964.05 43% 22247.75 10353.06 47%
81 Ministry of Road Transport and
Highways
Gross 41568.13 13490.86 32% 36400.01 12368.75 34%
Less : Recoveries (Central Road
fund & Bridge fee fund) 16208.22 2526.81 16% 14152.26 2015.69 14%
Net 25359.91 10964.05 43% 22247.75 10353.06 47%
MINISTRY OF RURAL DEVELOPMENT 90376.00 35071.18 39% 87800.00 36766.85 42%
82 Department of Rural Development
Gross 129876.20 27947.40 22% 138418.00 31281.23 23%
Less : (i) Recoveries (National
Emp. Gur fund/CR fund) 56701.20 551.22 1% 64318.00 520.36 1%
(ii) Receipts
Net 73175.00 27396.18 37% 74100.00 30760.87 42%
83 Department of Land Resources 3201.00 2007.44 63% 2700.00 1419.89 53%
84 Department of Drinking
Water Supply 14000.00 5667.56 40% 11000.00 4586.09 42%
MINISTRY OF SCIENCE AND
TECHNOLOGY 5975.00 3004.17 50% 5679.00 2651.92 47%
85 Department of Science and
Technology 2477.00 1336.21 54% 2349.00 1059.40 45%
86 Department of Scientific and
Industrial Research 2013.00 901.82 45% 1930.00 948.74 49%
87 Department of Bio-Technology 1485.00 766.14 52% 1400.00 643.78 46%
MINISTRY OF SHIPPING 812.00 164.11 20% 743.00 52.41 7%
88 Ministry of Shipping 812.00 164.11 20% 743.00 52.41 7%
MINISTRY OF SOCIAL JUSTICE &
EMPOWERMENT 5915.00 1836.14 31% 5375.00 2652.44 49%
89 Ministry of Social Justice &
Empowerment 5915.00 1836.14 31% 5375.00 2652.44 49%
DEPARTMENT OF SPACE 5615.00 1271.44 23% 5700.00 1185.75 21%
90 Department of Space
Gross 5615.04 1271.44 23% 5700.04 1185.75 21%
Less : Recoveries 0.04 0.00 0% 0.04 0.00 0%
Net 5615.00 1271.44 23% 5700.00 1185.75 21%
MINISTRY OF STATISTICS AND
PROGRAMME IMPLEMENTATION 4586.00 1615.28 35% 2180.00 1096.08 50%
91 Ministry of Statistics and Programme
Implementation 4586.00 1615.28 35% 2180.00 1096.08 50%
MINISTRY OF STEEL 46.00 10.47 23% 40.00 7.84 20%
92 Ministry of Steel 46.00 10.47 23% 40.00 7.84 20%
MINISTRY OF TEXTILES 7000.00 1554.77 22% 5000.00 1778.85 36%
93 Ministry of Textiles 7000.00 1554.77 22% 5000.00 1778.85 36%
112 MID-YEAR ECONOMIC ANALYSIS
Annex continued
(1) (2) (3) (4) (5) (6) (7) (8)
MINISTRY OF TOURISM 1210.00 432.96 36% 1100.00 516.97 47%
94 Ministry of Tourism 1210.00 432.96 36% 1100.00 516.97 47%
MINISTRY OF TRIBAL AFFAIRS 4090.00 2172.89 53% 3723.01 1980.32 53%
95 Ministry of Tribal Affairs 4090.00 2172.89 53% 3723.01 1980.32 53%
U.T.s WITHOUT LEGISLATURE 4015.20 1294.47 32% 3140.22 1207.23 38%
96 Andaman & Nicobar Islands 1701.43 575.51 34% 1430.45 472.35 33%
97 Chandigarh 737.23 172.10 23% 661.89 335.09 51%
98 Dadra & Nagar Haveli 607.68 317.02 52% 334.14 149.67 45%
99 Daman & Diu 568.25 137.84 24% 324.95 107.50 33%
100 Lakshadweep 400.61 92.00 23% 388.79 142.62 37%
MINISTRY OF URBAN DEVELOPMENT 7012.12 2407.01 34% 6279.75 3120.55 50%
101 Department of Urban Development 6783.25 2331.18 34% 6068.76 3071.36 51%
102 Public Works 228.87 75.83 33% 210.99 49.19 23%
MINISTRY OF WATER RESOURCES 1500.00 281.96 19% 720.00 239.69 33%
104 Ministry of Water Resources
Gross 1512.00 286.77 19% 732.00 244.86 33%
Less : Recoveries 12.00 4.81 40% 12.00 5.17 43%
Net 1500.00 281.96 19% 720.00 239.69 33%
MINISTRY OF WOMEN AND CHILD
DEVELOPMENT 18500.00 9777.78 53% 12650.00 6650.33 53%
105 Ministry of Women and Child
Development 18500.00 9777.78 53% 12650.00 6650.33 53%
MINISTRY OF YOUTH AFFAIRS &
SPORTS 1041.00 564.81 54% 1000.00 345.08 35%
106 Ministry of Youth Affairs and Sports 1041.00 564.81 54% 1000.00 345.08 35%
RAILWAYS 24000.00 12000.00 50% 20000.00 8175.27 41%
Ministry of Railways
Gross 12108.59 8188.51
Less : Exp.met from Receipts 10.87 13.24
Exp. Met from Reserve Funds 97.72 0.00
Net 24000.00 12000.00 50% 20000.00 8175.27 41%
GRAND TOTAL 521025.00 202739.75 39% 441546.75 177822.59 40%
MID-YEAR ECONOMIC ANALYSIS 113
Annex continued
9. NON-PLAN EXPENDITURE
(` in crore)
GRANT MINISTRY/ 2012-2013 2011-2012
NO. DEPARTMENT BE ACTUALS % BE ACTUALS %
upto upto
09/2012 09/2011
(1) (2) (3) (4) (5) (6) (7) (8)
MINISTRY OF AGRICULTURE 2593.59 1413.60 55% 2653.85 1458.32 55%
1 Department of Agriculture and
Cooperation 322.22 102.77 32% 400.00 99.58 25%
2 Department of Agricultural Research
and Education 2172.00 1256.75 58% 2157.60 1255.55 58%
3 Department of Animal Husbandry,
Dairying and Fisheries
Gross 451.37 222.11 49% 437.95 252.18 58%
Less : Receipts 352.00 168.03 48% 341.70 148.99 44%
Net 99.37 54.08 54% 96.25 103.19 107%
DEPARTMENT OF ATOMIC ENERGY 3632.00 2939.83 81% 3752.46 2156.74 57%
4 Atomic Energy
Gross 4786.60 2819.49 59% 5096.26 2466.58 48%
Less : Receipts 1601.60 649.11 41% 1331.00 690.36 52%
Recoveries 136.00 40.28 30% 153.85 31.05 20%
Net 3049.00 2130.10 70% 3611.41 1745.17 48%
5 Nuclear Power Schemes
Gross 3523.00 931.41 26% 7787.38 6763.57 87%
Less : Receipts 2940.00 121.68 4% 7646.33 6352.00 83%
Net 583.00 809.73 139% 141.05 411.57 292%
MINISTRY OF CHEMICALS AND
FERTILISERS 61088.71 45002.40 74% 50080.00 31445.05 63%
6 Department of Chemicals and
Petro-Chemicals 45.62 34.34 75% 22.00 10.82 49%
7 Department of Fertilisers
Gross 65618.00 46463.54 71% 53612.00 33016.29 62%
Less : Recoveries 4618.00 1515.93 33% 3592.00 1597.22 44%
Net 61000.00 44947.61 74% 50020.00 31419.07 63%
8 Department of Pharmaceuticals 43.09 20.45 47% 38.00 15.16 40%
MINISTRY OF CIVIL AVIATION 738.80 47.27 6% 693.88 213.20 31%
9 Ministry of Civil Aviation
Gross 738.84 47.27 6% 693.92 213.20 31%
Less : Recoveries 0.04 0.00 0% 0.04 0.00 0%
Net 738.80 47.27 6% 693.88 213.20 31%
MINISTRY OF COAL 48.35 12.61 26% 48.72 -6.67 -14%
10 Ministry of Coal
Gross 78.35 42.51 54% 78.72 22.33 28%
Less : Recoveries 30.00 29.90 100% 30.00 29.00 97%
Net 48.35 12.61 26% 48.72 -6.67 -14%
MINISTRY OF COMMERCE AND
INDUSTRY 3125.25 2030.47 65% 4700.58 874.37 19%
11 Department of Commerce
Gross 2927.50 1948.34 67% 4516.08 795.66 18%
Less : Recoveries 4.50 10.35 230% 4.50 6.87 153%
Net 2923.00 1937.99 66% 4511.58 788.79 17%
114 MID-YEAR ECONOMIC ANALYSIS
Annex continued
(1) (2) (3) (4) (5) (6) (7) (8)
12 Department of Industrial Policy
and Promotion
Gross 202.25 92.48 46% 189.01 85.59 45%
Less : Recoveries 0.00 0.00 0.01 0.01 100%
Net 202.25 92.48 46% 189.00 85.58 45%
MINISTRY OF COMMUNICATIONS AND
INFORMATION TECHNOLOGY 11082.16 8200.59 74% 9332.06 7137.35 76%
13 Department of Posts
Gross 14195.48 7519.00 53% 13240.48 6675.25 50%
Less : Receipts 7793.31 2047.33 26% 7517.70 1725.30 23%
Recoveries 665.05 16.78 3% 695.11 38.88 6%
Net 5737.12 5454.89 95% 5027.67 4911.07 98%
14 Department of Telecommunications 5294.04 2716.97 51% 4255.78 2210.46 52%
15 Department of Information Technology 51.00 28.73 56% 48.61 15.82 33%
MINISTRY OF CONSUMER AFFAIRS,
FOOD AND PUBLIC DISTRIBUTION 76502.45 67766.50 89% 61841.57 53063.35 86%
16 Department of Consumer Affairs
Gross 383.09 233.26 61% 375.36 135.77 36%
Less :Recoveries 21.80 0.00 0% 19.80 0.00 0%
Net 361.29 233.26 65% 355.56 135.77 38%
17 Department of Food & Public
Distribution .
Gross 86835.66 67790.16 78% 72211.32 53102.38 74%
Less: Receipts 10000.00 0.00 0% 10000.00 0.00 0%
Recoveries 694.50 256.92 37% 725.31 174.80 24%
Net 76141.16 67533.24 89% 61486.01 52927.58 86%
MINISTRY OF CORPORATE AFFAIRS 213.50 98.98 46% 210.94 100.22 48%
18 Ministry of Corporate Affairs 213.50 98.98 46% 210.94 100.22 48%
MINISTRY OF CULTURE 583.00 339.26 58% 553.00 325.08 59%
19 Ministry of Culture 583.00 339.26 58% 553.00 325.08 59%
MINISTRY OF DEFENCE 238205.53 104938.64 44% 202572.30 96286.21 48%
20 Ministry of Defence
Gross 16598.24 6763.85 41% 13156.81 7152.47 54%
Less : Receipts 10800.00 3012.98 28% 9000.00 3144.92 35%
Net 5798.24 3750.87 65% 4156.81 4007.55 96%
21 Defence Pensions 39000.00 16263.15 42% 34000.00 19041.86 56%
DEFENCE SERVICES 193407.29 84924.62 44% 164415.49 73236.80 45%
22 Defence Services-Army
Gross 80025.82 39749.71 50% 65985.05 34692.64 53%
Less : Receipts 1869.64 814.40 44% 1695.62 887.18 52%
Recoveries 41.82 0.00 0% 37.88 0.00 0%
Net 78114.36 38935.31 50% 64251.55 33805.46 53%
23 Defence Services-Navy
Gross 12748.02 5894.98 46% 10789.06 5434.99 50%
Less : Receipts 200.00 82.67 41% 200.00 59.38 30%
Net 12548.02 5812.31 46% 10589.06 5375.61 51%
24 Defence Services-Air Force
Gross 18325.19 8203.34 45% 16520.87 7158.67 43%
Less : Receipts 619.38 329.15 53% 592.92 270.43 46%
Net 17705.81 7874.19 44% 15927.95 6888.24 43%
25 Defence Ordnance Factories
Gross 1801.68 3070.45 170% 795.88 1905.87 239%
Less : Receipts 1836.77 654.87 36% 1647.63 599.66 36%
Recoveries 500.00 0.00 0% 325.00 0.00 0%
Net -535.09 2415.58 -451% -1176.75 1306.21 -111%
MID-YEAR ECONOMIC ANALYSIS 115
Annex continued
(1) (2) (3) (4) (5) (6) (7) (8)
26 Defence Services - Research and
Development
Gross 6035.56 2296.75 38% 5659.87 1953.95 35%
Less : Receipts 40.00 19.63 49% 35.00 54.95 157%
Net 5995.56 2277.12 38% 5624.87 1899.00 34%
27 Capital Outlay on Defence Services 79578.63 27610.11 35% 69198.81 23962.28 35%
MINISTRY OF DEVELOPMENT OF
NORTH EASTERN REGION 24.33 15.09 62% 21.58 12.36 57%
28 Ministry of Development of North
Eastern Region 24.33 15.09 62% 21.58 12.36 57%
MINISTRY OF EARTH SCIENCES 387.00 205.70 53% 347.00 188.69 54%
29 Ministry of Earth Sciences
Gross 391.39 207.33 53% 349.22 188.86 54%
Less :Recoveries 4.39 1.63 37% 2.22 0.17 8%
Net 387.00 205.70 53% 347.00 188.69 54%
MINISTRY OF ENVIRONMENT AND
FORESTS 199.41 110.14 55% 191.97 94.86 49%
30 Ministry of Environment and Forests
Gross 452.41 136.40 30% 441.97 105.11 24%
Less :Receipt 253.00 26.26 10% 250.00 10.25 4%
Net 199.41 110.14 55% 191.97 94.86 49%
MINISTRY OF EXTERNAL AFFAIRS 8161.97 3849.45 47% 6306.00 3237.62 51%
31 Ministry of External Affairs 8161.97 3849.45 47% 6306.00 3237.62 51%
MINISTRY OF FINANCE 435380.00 171212.84 39% 374130.52 162010.00 43%
32 Department of Economic Affairs
Gross 62899.98 5587.54 9% 18551.59 8814.66 48%
Less :Recoveries 1651.65 0.23 0% 1590.60 0.00 0%
Receipts 42123.32 0.00 0% 8767.75 0.00 0%
Net 19125.01 5587.31 29% 8193.24 8814.66 108%
33 Department of Financial Services
Gross 8349.24 3539.36 42% 15855.94 329.27 2%
Less : Recoveries 0.01 259.05 6000.00 24.82 0%
Net 8349.23 3280.31 39% 9855.94 304.45 3%
34 Interest Payments
Gross 324769.43 140863.02 43% 272330.28 128036.33 47%
Less : Receipts 5010.00 9698.27 194% 4344.11 5537.70 127%
Net 319759.43 131164.75 41% 267986.17 122498.63 46%
35 Transfers to State and UT
Governments
Gross 69022.46 19961.52 29% 60173.62 18692.22 31%
Less : Receipts 5720.00 1689.53 30% 6025.00 1447.89 24%
Recoveries 4620.00 1002.50 22% 4525.00 455.26 10%
Net 58682.46 17269.49 29% 49623.62 16789.07 34%
36 Loans to Govt. Servants etc.
Gross 250.00 79.33 32% 300.00 94.81 32%
Less : Receipts 445.00 198.75 45% 490.00 221.26 45%
Net -195.00 -119.42 61% -190.00 -126.45 67%
37 Repayment of Debt
Gross (Excluding MSS) 3786074.35 1679744.89 44% 3155216.93 1767652.94 56%
Less : Receipts 3786074.35 1679744.89 44% 3155216.93 1767652.94 56%
Net 0.00 0.00 0.00 0.00
38 Department of Expenditure 131.25 46.03 35% 96.97 52.71 54%
39 Pensions
Gross 19800.00 8970.99 45% 17000.00 8213.15 48%
Less : Receipts 1000.00 0.00 0% 1000.00 0.00 0%
Net 18800.00 8970.99 48% 16000.00 8213.15 51%
116 MID-YEAR ECONOMIC ANALYSIS
Annex continued
(1) (2) (3) (4) (5) (6) (7) (8)
40 Indian Audit and Accounts Department
Gross 2568.49 1407.94 55% 2398.56 1248.37 52%
Less :Recoveries 152.79 116.12 76% 145.48 87.15 60%
Net 2415.70 1291.82 53% 2253.08 1161.22 52%
41 Department of Revenue
Gross 1178.59 332.49 28% 13356.90 1169.38 9%
Less : Receipts 366.73 171.20 47% 312.00 191.26 61%
Recoveries 42.22 0.00 0% 53.97 0.00 0%
Net 769.64 161.29 21% 12990.93 978.12 8%
42 Direct Taxes
Gross 3880.46 1699.44 44% 3881.55 1645.36 42%
Less :Recoveries 2.00 0.64 32% 2.00 5.52 276%
Net 3878.46 1698.80 44% 3879.55 1639.84 42%
43 Indirect Taxes
Gross 3601.08 1851.54 51% 3378.89 1671.73 49%
Less : Recoveries 0.50 0.26 52% 0.50 0.22 44%
Net 3600.58 1851.28 51% 3378.39 1671.51 49%
44 Department of Disinvestment 63.24 10.19 16% 62.63 13.09 21%
MINISTRY OF FOOD PROCESSING
INDUSTRIES 10.54 5.01 48% 10.09 4.39 44%
45 Ministry of Food Processing Industries 10.54 5.01 48% 10.09 4.39 44%
MINISTRY OF HEALTH AND
FAMILY WELFARE 4011.00 2687.32 67% 3696.00 2294.68 62%
46 Department of Health and
Family Welfare
Gross 5853.29 3003.48 51% 5341.33 2622.17 49%
Less :Recoveries 2278.29 521.91 23% 2004.33 550.76 27%
Net 3575.00 2481.57 69% 3337.00 2071.41 62%
47 Department of Ayurveda, Yoga &
Naturopathy,Unani, Siddha and
Homoeopathy (Ayush) 188.00 117.90 63% 188.00 95.06 51%
48 Department of Health Research 248.00 87.85 35% 171.00 128.21 75%
MINISTRY OF HEAVY INDUSTRIES
AND PUBLIC ENTERPRISES 465.60 200.08 43% 464.34 54.82 12%
50 Department of Heavy Industry 456.67 195.92 43% 456.65 50.41 11%
51 Department of Public Enterprises 8.93 4.16 47% 7.69 4.41 57%
MINISTRY OF HOME AFFAIRS 42308.10 23016.83 54% 37357.85 21644.89 58%
52 Ministry of Home Affairs 835.69 461.49 55% 1713.39 1257.91 73%
53 Cabinet 741.87 465.22 63% 434.61 353.79 81%
54 Police
Gross 38816.26 21189.63 55% 33584.99 19155.66 57%
Less :Recoveries 230.00 24.57 11% 360.00 77.49 22%
Net 38586.26 21165.06 55% 33224.99 19078.17 57%
55 Other Expenditure of the
Ministry of Home Affairs 1558.28 632.56 41% 1416.86 672.51 47%
56 Transfers to UT Govts. 586.00 292.50 50% 568.00 282.51 50%
MINISTRY OF HOUSING AND
URBAN POVERTY ALLEVIATION 8.00 3.63 45% 7.60 4.06 53%
57 Ministry of Housing and
Urban Poverty Alleviation 8.00 3.63 45% 7.60 4.06 53%
MINSTRY OF HUMAN RESOURCE
DEVELOPMENT 12649.00 5024.18 40% 11306.00 4935.46 44%
58 Department of School Education
and Literacy 2812.00 1339.93 48% 2494.00 1728.16 69%
59 Department of Higher Education 9837.00 3684.25 37% 8812.00 3207.30 36%
MID-YEAR ECONOMIC ANALYSIS 117
Annex continued
(1) (2) (3) (4) (5) (6) (7) (8)
MINISTRY OF INFORMATION AND
BROADCASTING 1832.32 919.65 50% 1782.64 1242.33 70%
60 Ministry of Information and
Broadcasting
Gross 1832.39 919.67 50% 1782.71 1242.41 70%
Less : Recoveries 0.07 0.02 29% 0.07 0.08 114%
Net 1832.32 919.65 50% 1782.64 1242.33 70%
MINISTRY OF LABOUR AND
EMPLOYMENT 1929.80 1735.02 90% 1861.00 1643.00 88%
61 Ministry of Labour and Employment
Gross 2120.19 1735.02 82% 2041.39 1643.00 80%
Less : Recoveries 190.39 0.00 0% 180.39 0.00 0%
Net 1929.80 1735.02 90% 1861.00 1643.00 88%
MINISTRY OF LAW AND JUSTICE 669.54 252.54 38% 553.45 298.96 54%
62 Election Commission 72.17 20.73 29% 25.93 15.26 59%
63 Law and Justice 485.62 167.67 35% 432.30 223.04 52%
64 Supreme Court of India 111.75 64.14 57% 95.22 60.66 64%
MINISTRY OF MICRO, SMALL AND
MEDIUM ENTERPRISES 320.66 152.30 47% 301.29 138.32 46%
65 Ministry of Micro, Small and
Medium Enterprises 320.66 152.30 47% 301.29 138.32 46%
MINISTRY OF MINES 466.44 276.08 59% 440.28 242.92 55%
66 Ministry of Mines 466.44 276.08 59% 440.28 242.92 55%
MINISTRY OF MINORITY AFFAIRS 19.70 7.03 36% 16.00 6.66 42%
67 Ministry of Minority Affairs 19.70 7.03 36% 16.00 6.66 42%
MINISTRY OF NEW AND RENEWABLE
ENERGY 14.79 7.52 51% 14.38 6.05 42%
68 Ministry of New and Renewable
Energy 14.79 7.52 51% 14.38 6.05 42%
MINISTRY OF OVERSEAS INDIANS
AFFAIRS 114.77 25.81 22% 81.00 28.70 35%
69 Ministry of Overseas Indians Affairs 114.77 25.81 22% 81.00 28.70 35%
MINISTRY OF PANCHAYATI RAJ 0.74 0.28 38% 0.65 0.18 28%
70 Ministry of Panchayati Raj 0.74 0.28 38% 0.65 0.18 28%
MINISTRY OF PARLIAMENTARY AFFAIRS 11.72 5.16 44% 10.48 4.88 47%
71 Ministry of Parliamentary Affairs 11.72 5.16 44% 10.48 4.88 47%
MINISTRY OF PERSONNEL, PUBLIC
GRIEVANCES & PENSIONS 615.67 339.35 55% 506.78 279.76 55%
72 Ministry of Personnel, Public
Grievances and Pensions 615.67 339.35 55% 506.78 279.76 55%
MINISTRY OF PETROLEUM AND
NATURAL GAS 43716.85 39935.74 91% 23676.20 22720.93 96%
73 Ministry of Petroleum and
Natural Gas 43716.85 39935.74 91% 23676.20 22720.93 96%
MINISTRY OF PLANNING 77.03 40.76 53% 76.00 37.51 49%
74 Ministry of Planning 77.03 40.76 53% 76.00 37.51 49%
MINISTRY OF POWER -122.89 56.71 -46% -135.01 -91.61 68%
75 Ministry of Power
Gross 168.56 67.57 40% 137.68 50.74 37%
Less : Receipts 256.66 0.00 0% 272.69 142.35 52%
Recoveries 34.79 10.86 31% 0.00 0.00
Net -122.89 56.71 -46% -135.01 -91.61 68%
118 MID-YEAR ECONOMIC ANALYSIS
Annex continued
(1) (2) (3) (4) (5) (6) (7) (8)
THE PRESIDENT, PARLIAMENT, UNION
PUBLIC SERVICE COMMISSION AND
THE SECRETARIAT OF THE
VICE-PRESIDENT 902.98 453.38 50% 801.59 386.52 48%
76 President 30.24 15.51 51% 27.67 15.34 55%
77 Lok Sabha 435.00 230.75 53% 400.00 195.52 49%
78 Rajya Sabha 284.05 135.33 48% 224.35 100.81 45%
79 Union Public Service Commission 150.57 70.12 47% 146.58 73.46 50%
80 Secretariat of the Vice-President 3.12 1.67 54% 2.99 1.39 46%
MINISTRY OF ROAD TRANSPORT AND
HIGHWAYS 5438.21 1272.57 23% 4190.00 673.95 16%
81 Ministry of Road Transport and Highways
Gross 5578.22 1294.36 23% 4340.50 704.62 16%
Less : Recoveries 140.01 21.79 16% 150.50 30.67 20%
Net 5438.21 1272.57 23% 4190.00 673.95 16%
MINISTRY OF RURAL DEVELOPMENT 59.26 32.90 56% 55.16 29.34 53%
82 Department of Rural Development 46.82 25.91 55% 43.72 23.16 53%
83 Department of Land Resources 7.20 4.05 56% 6.20 3.52 57%
84 Department of Drinking Water
and Sanitation 5.24 2.94 56% 5.24 2.66 51%
MINISTRY OF SCIENCE AND
TECHNOLOGY 1882.61 955.82 51% 1865.92 923.21 49%
85 Department of Science and Technology
Gross 405.86 224.15 55% 393.64 181.77 46%
Less : Recoveries 9.64 11.92 124% 9.64 3.60 37%
Net 396.22 212.23 54% 384.00 178.17 46%
86 Research 1471.00 734.76 50% 1455.00 726.34 50%
87 Department of Biotechnology 15.39 8.83 57% 26.92 18.70 69%
MINISTRY OF SHIPPING 867.49 188.06 22% 1063.00 30.88 3%
88 Ministry of Shipping
Gross 1164.49 300.48 26% 1328.60 130.22 10%
Less : Receipts 190.00 105.92 56% 170.00 96.82 57%
Recoveries 107.00 6.50 6% 95.60 2.52 3%
Net 867.49 188.06 22% 1063.00 30.88 3%
MINISTRY OF SOCIAL JUSTICE &
EMPOWERMENT 93.30 48.91 52% 78.00 49.02 63%
89 Ministry of Social Justice &
Empowerment 93.30 48.91 52% 78.00 49.02 63%
DEPARTMENT OF SPACE 1100.00 603.76 55% 926.00 488.00 53%
90 Department of Space 1100.00 603.76 55% 926.00 488.00 53%
MINISTRY OF STATISTICS AND
PROGRAMME IMPLEMENTATION 357.54 190.61 53% 347.36 183.18 53%
91 Ministry of Statistics and Programme
Implementation 357.54 190.61 53% 347.36 183.18 53%
MINISTRY OF STEEL 69.29 32.35 47% 70.76 33.75 48%
92 Ministry of Steel
Gross 75.89 37.53 49% 77.71 40.70 52%
Less: Receipts 6.60 5.18 78% 6.95 6.95 100%
Net 69.29 32.35 47% 70.76 33.75 48%
MINISTRY OF TEXTILES 836.41 412.51 49% 855.75 340.56 40%
93 Ministry of Textiles 836.41 412.51 49% 855.75 340.56 40%
MINISTRY OF TOURISM 72.98 32.70 45% 70.76 27.85 39%
94 Ministry of Tourism 72.98 32.70 45% 70.76 27.85 39%
MID-YEAR ECONOMIC ANALYSIS 119
Annex continued
(1) (2) (3) (4) (5) (6) (7) (8)
MINISTRY OF TRIBAL AFFAIRS 18.00 8.93 50% 17.00 7.86 46%
95 Ministry of Tribal Affairs 18.00 8.93 50% 17.00 7.86 46%
U.Ts WITHOUT LEGISLATURE 3706.92 2340.56 63% 3408.89 2182.25 64%
96 Andaman & Nicobar Islands
Gross 1390.74 688.18 49% 1285.31 746.57 58%
Less : Recoveries 114.13 44.56 39% 111.41 41.25 37%
Net 1276.61 643.62 50% 1173.90 705.32 60%
97 Chandigarh
Gross 2178.78 1302.23 60% 2068.31 1159.75 56%
Less : Recoveries 374.00 78.84 21% 421.78 76.18 18%
Net 1804.78 1223.39 68% 1646.53 1083.57 66%
98 Dadra & Nagar Haveli
Gross 1780.32 679.96 38% 1527.02 774.51 51%
Less : Recoveries 1673.76 625.91 37% 1429.72 712.95 50%
Net 106.56 54.05 51% 97.30 61.56 63%
99 Daman & Diu
Gross 835.80 469.72 56% 708.00 397.89 56%
Less : Recoveries 722.60 360.94 50% 602.60 333.77 55%
Net 113.20 108.78 96% 105.40 64.12 61%
100 Lakshadweep
Gross 503.06 317.44 63% 483.05 275.29 57%
Less : Recoveries 97.29 6.72 7% 97.29 7.61 8%
Net 405.77 310.72 77% 385.76 267.68 69%
MINISTRY OF URBAN DEVELOPMENT 2673.87 1419.49 53% 2261.71 1229.30 54%
101 Department of Urban Development
Gross 946.17 475.27 50% 786.51 395.05 50%
Less : Recoveries 0.04 0.00 0% 0.04 0.00 0%
Net 946.13 475.27 50% 786.47 395.05 50%
102 Public Works
Gross 1686.55 915.83 54% 1443.45 789.37 55%
Less : Recoveries 61.15 11.14 18% 65.44 5.51 8%
Net 1625.40 904.69 56% 1378.01 783.86 57%
103 Stationery and Printing
Gross 264.42 116.09 44% 253.24 113.78 45%
Less : Recoveries 162.08 76.56 47% 156.01 63.39 41%
Net 102.34 39.53 39% 97.23 50.39 52%
MINISTRY OF WATER RESOURCES 541.00 291.22 54% 502.73 255.77 51%
104 Ministry of Water Resources
Gross 555.60 296.85 53% 517.33 261.41 51%
Less : Recoveries 14.60 5.63 39% 14.60 5.64 39%
Net 541.00 291.22 54% 502.73 255.77 51%
MINISTRY OF WOMEN AND CHILD
DEVELOPMENT 84.00 40.66 48% 83.00 36.31 44%
105 Ministry of Women and Child
Development 84.00 40.66 48% 83.00 36.31 44%
MINISTRY OF YOUTH AFFAIRS &
SPORTS 111.00 80.17 72% 121.00 57.63 48%
106 Ministry of Youth Affairs and Sports 111.00 80.17 72% 121.00 57.63 48%
MINISTRY OF RAILWAYS
Ministry of Railways
Gross 109393.25 60592.26 55% 109393.25 52577.55 48%
Less : Receipts 109393.25 57882.19 53% 109393.25 47846.52 44%
: Reserve fund 0.00 2710.07 0.00 4731.03
Net 0.00 0.00 0.00 0.00
Exp. From Contingency Fund 0.00 240.84
GRAND TOTAL 969900.29 491278.97 51% 816182.08 421269.86 52%
120 MID-YEAR ECONOMIC ANALYSIS
Annex continued
10. RESOURCES TRANSFERRED TO STATE & UT GOVERNMENTS
(` in crore)
2012-2013 2011-2012
DESCRIPTION BE ACTUALS % BE ACTUALS %
upto 09/2012 upto 09/2011
(1) (2) (3) (4) (5) (6) (7)
1 States' share of Taxes & Duties 301921 129395 43% 263458 113174 43%
2 Non-plan Grants & Loans 64296 20138 31% 66396 20236 30%
Grants 64211 20102 31% 66311 20200 30%
Loans 85 36 42% 85 36 42%
Ways and Means Advances (Net) 0 0
3 Central Assistance for State &
UT 122014 38561 32% 101292 36070 36%
Grants 111014 34735 31% 92292 31756 34%
Loans 11000 3826 35% 9000 4314 48%
4 Assistance for Central & Centrally
sponsored Schemes 41592 26041 63% 34045 22139 65%
Grants 41592 26041 63% 34025 22139 65%
Loans 20
5 Total Grants & Loans (2+3+4) 227902 84740 37% 201733 78445 39%
Grants 216817 80878 37% 192628 74095 38%
Loans 11085 3862 35% 9105 4350 48%
6 Less : Recovery of Loans &
Advances 8529 3817 45% 8416 3421 41%
7 Net Resources transferred to
State & UT Governments (1+5-6) 521294 210318 40% 456775 188198 41%
(i) Of Which State Govts. 518182 209121 40% 453882 187350 41%
(ii) Of Which UT. Govts. 3112 1197 38% 2893 848 29%
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