Economic Survey 2020

Economic Survey 2020: Key Highlights of the Indian Economy


The two-volume Economic Survey 2019-2020, a detailed report card on India’s economic performance throughout 2019, was presented by Nirmala Sitharaman. This year’s Economic Survey was prepared under Krishnamurthy V Subramanian, Chief Economic Advisor. K.V. Subramanian focuses mainly on wealth creation.

The Economic Survey has given 10 new ideas on Indian economy that could be implemented in the upcoming era for the betterment of the economic condition:

  • Wealth creation benefits all
  • Market enables wealth creation
  • Pro-crony policies undermine trust
  • Wealth creation through entrepreneurship at the grassroots
  • Pro-business policies give equal opportunity
  • Remove Anachronistic Government interventions
  • Job creation by “Assemble in India for the World”
  • Targeting Ease of Doing Business in India
  • Banking Sector Sub-scale compared to economy
  • Thalinomics: The Economic of a Plate of Food in India

Key Highlights of the Economic Survey 2019-2020

Following are the key highlight of Indian Economic Survey 2019-2020

Overall Economic Performance of India in 2019-2020: GDP, Inflation

  • A GDP acceleration of 4.8% in the first half of 2019-2020 was witnessed even during weak global trade and demand.
  • A GDP growth of 5% has been predicted for 2019-2020 based on CSO’s first Advance Estimates.
  • A GDP growth of 6-6.5% in fiscal 2020-2021 has been projected by Economic Survey 2019-2020.
  • In H1 of 2019-2020, CAD (Current Account Deficit) contracted to 1.5% of GDP.
  • In December 2019, headline inflation ascended from 3% to 7.35% due to food inflation.
  • The key drivers of CPI inflation in 2019-20 were food and beverages, particularly vegetables and pulses.
  • Improvement in Agriculture and allied activities & Public administration, defense, and other services grew in the first half of 2019-2020 compared to the second half of 2018-2019.

Entrepreneurship and Wealth Creation

  • According to the World Bank, India ranks third in the number of new firms created.
  • The annual growth rate has gone up in the formal sector to 12.2% during 2014-2018 which was 3.8% during 2006-2014.
  • A growth of 10% in the registration of new firms in a district yields a 1.8 % increase in Gross Domestic District Product (GDDP).
  • Literacy and education in a district nourish local entrepreneurship significantly.
  • The impact of literacy on entrepreneurship is more prominent when it is above 70%.
  • According to the census of 2011, eastern India has the lowest literacy rate of about 59.6%. In this part of India, the new firm formation is the lowest.
  • The manufacturing sector is the gem of India as it has the greatest potential to generate jobs for the Indian youth. New firm creation generates from policies that enable ease of doing business and also from implementation of flexible labour laws.

Importance of Pro-Business Policies

  • In order to achieve a $5 trillion economy, pro-business policies play a vital role that unleashes the power of competitive markets to generate wealth.
  • The “Startup India” campaign of the Indian government addresses entrepreneurship as an increasingly important strategy to fuel productivity, growth and wealth creation in India.

Undermining Markets

  • The Economic Survey points out several instances of government interventions and suggests a restriction of the same.
  • “Frequent and unpredictable imposition of blanket stock limits on commodities under the Essential Commodities Act (ECA) neither reduces prices nor brings down price volatility. Approximately 76000 raids under ECA were conducted during 2019.
  • Through the Drug Price Control Orders DPCO 2013, The regulation of drug prices has led to a rise in the price of a regulated pharmaceutical drug vis-à-vis that of a similar drug whose price unregulated.
  • The policies of the Indian government in the foodgrain markets have led to the emergence of government as the largest procurer and hoarder of foodgrains.
  • The analysis of debt waivers provided by States/Centre points out that full waiver beneficiaries consume less, save less, invest less and are less productive after the waiver when compared to the partial beneficiaries.

Job Creation and Growth

  • India can grow its export market share to nearly 3.5% by 2025 and 6% by 2030 which will generate 4 crore well-paid jobs by 2025 and 8 Crore by 2030. This can be done by integrating “Assemble in India for the world” into Make in India.
  • Exports of network products can help to contribute a quarter of the increase in value-added required for constructing India a $5 trillion economy by 2025.
  • India has gained 0.7% growth in trade surplus each year for manufactured products and 2.3% each year for total merchandise.

Promoting Ease of Doing Business

  • India’s rank has jumped up to 63 in 2019 from 142 in 2014 in World Bank’s Doing Business rankings. However, it still resumes to lag behind in some categories- Ease of Starting Business (rank 136), Registering Property (rank                154), Paying Taxes (rank 115), and Enforcing Contracts (rank        163).
  • The survey demands a close connection between the Logistics Divisions of Union Ministry of Commerce and Industry, Union Ministry of Shipping, Central Board of Indirect Taxes and Customs and the port authorities. Some sectors require a more focused approach like the tourism sector and the manufacturing sector among

50th Anniversary of Bank Nationalisation

  • 2019 was marked as the golden jubilee year of Bank Nationalisation. The survey talks about the proportionated growth of the Indian banking sector with the overall growth of the Indian economy. However, only one Indian bank is listed in the Global Top 100 This is the same as countries that are a fraction of its size: Finland (about 1/11th), Denmark (1/8th), Norway (1/7th), Austria (about 1/7th), and Belgium (about 1/6th).
  • The survey suggests the setup of A GSTN type of entity to ensure better tracking of borrowers through artificial intelligence and machine learning.
  • Through an employee stock ownership plan (ESOP), bank employees should be given stakes.
  • The insolvency resolution process should be speeded up under Insolvency and Bankruptcy Code (IBC).

The NBFC Sector

  • The economic survey investigates the key drivers of Rollover Risk of the shadow banking system in India in light of the current liquidity crunch in the NBFC sector.
  • The key drivers of this risk are ALM Risk, Interconnectedness Risk and Financial and Operating Resilience of an NBFC.

Wealth creation and Privatisation

  • The survey suggests privatization boost job and wealth creation.
  • The survey examines the before and after the performance of over 10 CPSEs that had undergone strategic disinvestment and a notable improvement is evident in the net profit, net worth, return on assets (ROA) & equity (ROE).
  • The Strategic disinvestment in BPCL has resulted in an increase of over Rs. 30,000 crore wealth in India.


The Economic Survey attempts to quantify what a common person pays for a Thali across India. The costs of a vegetarian Thali have decreased significantly since the 2015-16. However, this cost grew in 2019-20. The affordability of Indian vegetarian Thalis improved by 29% and the affordability of non-vegetarian Indian Thali improved by 18% during 2006 – 2020.

Fiscal Developments

  • In 2019-2020, higher growth in H1 was registered by revenue receipts.
  • Approximate monthly GST collection crossed Rs 1 Lakh crore for five times in 2019-2020 till December 2019.
  • The States have resumed on the way of fiscal consolidation and contained the fiscal deficit within the set-out targets by the FRBM Act.

Monetary Management and Financial Intermediation

  • RBI’s monetary policy remained accommodative in 2019-20.
  • The repo rate was cut in four meetings out of five meetings held in 2019-20 (till December). The repo rate has been reduced by 110 bps in 2019-20 till now.
  • The ratio of Non-Performing Advances (NPA) remained unchanged for Commercial banks at 9.3% during March-September 2019.
  • The growth (YoY) of loans from NBFCs went down to 9.9 percent at the end of September 2019 from 21.6 percent in December 2018.
  • During April-December 2019, there was a net inflow of 1.9 lakh crore into the mutual fund’s sector as compared to a net inflow of 0.8 lakh crore into the mutual funds for the corresponding period in last year.
  • AUM or Asset Under Management of all mutual funds increased by 18.4% to 26.3 lakh crore at the end of December 31, 2019 from 22.2 lakh crore at the end of December 31, 2018.

Sustainable Development and Climate Change

  • India is going upwards on the path of SDG implementation. India’s performance in the composite SDG index is remarkable and the score has improved from 57 in 2018 to 60 in 2019.
  • The Indian government has hosted COP-14 of UNCCD which resulted in the adoption of the “Delhi Declaration”.
  • India strictly committed itself to implement the Paris Agreement at COP-25 of UNFCCC at Madrid.
  • After China, India is the second-largest Emerging Green Bond Market.
  • One of the major concerns is the burning of agricultural residues that lead to high pollution levels.
  • International Solar Alliance (ISA) has taken up the role of an ‘enabler’ by institutionalizing 30 fellowships from the Member countries.
  • ISA has taken up the role of a ‘facilitator’ by getting the lines of credit worth US$ 2 Billion from EXIM Bank of India and US$ 1.5 Billion from AfD, France.
  • ISA is also performing the role of an ‘incubator’ by nurturing initiatives like the Solar Risk Mitigation Initiative and of an ‘accelerator’ by developing tools to aggregate demand for 1000 MW solar and 270,000 solar water pumps.

Agriculture and Food Management

  • The Survey points out that the largest proportion of the Indian population depends on agriculture for employment opportunities. However, the share of agriculture and allied sectors in Gross Value Added (GVA) of India is continuously falling down due to higher expansion of non-agricultural sectors.
  • The GVA at Basic Prices of ‘Agriculture, Forestry and Fishing’ section expected to improve by 2.8% for 2019-20.
  • Livestock sector has been growing at 7.9% CAGR in the last 5 years. The income from Livestock has become a secondary source of earning for rural families.
  • The Economic Survey intensively focuses on the sustainability of food security by addressing the growing food subsidy bill and revising the rates and coverage under NFSA.

Industry and Infrastructure

  • The industrial sector has witnessed a 0.6% growth in 2019-20 and 5% in 2018-19.
  • The fertilizer sector has showcased a growth of 4% in 2019-20.
  • The steel sector has witnessed a growth of 5.2% in 2019-20.
  • Telephone connections of over 119 crores were provided until September 2019.
  • An announcement has been made regarding the National Infrastructure Pipeline 2019-2025.
  • According to the Index of Industrial Production (IIP), the industrial sector has witnessed a growth of 0.6 percent in 2019-20 (April-November).

Employment, Social Infrastructure, and Human Development

  • The Indian government’s expenditure on services such as health, education other social services as a proportion of GDP increased to 7.7% in 2019-20.
  • India improved its rank in the Human Development Index by acquiring 129th rank in 2018 from 130th in 2017.
  • Gender disparity expanded in the labour market due to a decrease in the female labour force.
  • The number of total formal employment increased to 9.98% in 2017-18 from 8% in 2011-12.
  • Ayushman Bharat and Mission Indradhanush improved citizen’s accessibility of health services.
  • Under Mission Indradhanush. More than 3.30 crore children & 87.18 lakh pregnant women have been vaccinated.

In the Union Budget 2020, the Finance Minister has taken many steps to implement her vision of a $5 trillion dollar economy. The most significant change has been made in the income tax slab 2020. Perhaps, such changes are little steps towards that financial goal. One can choose to switch to the new income tax regime but won’t get deduction benefits. And, people that are willing to continue with the old system with exemptions, can continue to follow the old rates. More than 70 deductions have been removed in the new budget.

Income Tax Slab 2020:

Income between Rs 5 lakh to Rs 7.5 lakh Reduced to 10% from the present 20%
Income between Rs 7.5 lakh to Rs 10 lakh Reduced to 15% from the present 20%
Income between Rs 10 lakh to Rs 12.5 lakh Reduced to 20% from the Present 30%
Income between Rs 12.5 lakh to Rs 15 lakh Reduced to 25% from the present 30%
Income above Rs 15 lakh Continue at 30%, without exemptions

The Indian e-commerce industry is expected to reach $200 billion by 2026 which is a major chunk to build a wealthy India. Online shopping plays a vital role here as a government initiative called Digital India has accelerated the accessibility of the internet. Online shopping is the fuel in the growth of the e-commerce industry.

Krishnamurthy V Subramanian, Chief Economic Advisor, says, “The Economic Survey 2019-2020 makes a humble attempt to craft a framework of policies to foster #wealth creation in India.” The theme also involves the Promotion of pro-business policies and strengthening of trust in the economy and K.V Subramanian fosters the optimistic approach of seeing India as the 3rd largest economy in the world.