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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
December, 18th 2012
         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

                                                                                       Annex continued
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

                                                                                    Annex continued
Sl. Para              Summary of                                            Status of
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
Annex continued
Sl. Para               Summary of                                           Status of
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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