Robust growth and
steady fiscal consolidation have been the hallmark of the Indian economy
in the year 2010-11 so far. The growth rate has been 8.6 percent in
2010-11 and is expected to be around 9 percent in the next fiscal year.
The growth has been broad based with a rebound in the Agriculture sector
which is expected to grow around 5.4 per cent. Manufacturing and
Services sector have registered impressive gains. Savings and investment
are looking up while exports are rising. However food inflation, higher
commodity prices and volatility in global commodity markets have been a
cause of concern underscoring the need of fiscal consolidation and
stronger reserves. These are some of the high points of the Economic
Survey 2010-11, presented by the Finance Minister Shri Pranab Mukherjee
in Lok Sabha today.
Recognizing the fact that inflation continues to be high even though it
has come down markedly from where it was at the start of the fiscal
year, the Survey underlined the need to monitor emerging trends in
inflation on a sequential monthly basis. In order to check food
inflation, it has suggested, the Government should improve the delivery
mechanisms by strengthening the institutions and addressing corruption.
The survey has pointed out that the inflation is expected to be 1.5
percent higher than what would be if the country was not on the growth
The Survey has observed that a rise in savings and investments and pick
up in private consumption has resulted in 9.7 per cent growth of GDP at
market prices (constant) in 2010-11.Savings rate has gone up to 33.7
percent while the investment rate is up to 36.5 percent of GDP in
The Survey points out that the agriculture sector growth in the first
four years of the 11th Plan (2007-12) is estimated at 2.87 per cent. The
foodgrain production went up to 232.1 billion tonnes from 218.1 billion
tonnes in 2009-10. With a relatively good monsoon the agriculture-sector
is expected to grow at 5.4 per cent during 2010-11. The rising food
inflation and the critical role of agriculture underline the need for a
larger investment in agriculture enroute to the second green revolution.
The Survey reports that the industrial output growth rate was 8.6 per
cent while the manufacturing sector registered a growth rate of 9.1 per
cent in 2010-11. During April-November 2010 telecom, crude oil
production, civil aviation sectors performed well while the power
generation, cement and fertilizer production, railway freight traffic
and cargo handling at major ports have grown at comparatively lower
rates. Six core industries registered a growth of 5.3 per cent
(provisional) in April-December, 2010 as against 4.7 per cent during the
same period in 2009-10.
Economic Survey 2010-11 has highlighted the increasing role of
infrastructure services which have been deepening rapidly with rising
investments. However unmet gaps still remains large and accelerated
investments will be needed in the next Plan period for addressing
delays, cost overruns and regulatory and pricing impediments. The
telecommunications sector has done exceedingly well as the tele density
has increased from 20.74 per cent in 2004 to 143.95 per cent in 2010 in
urban areas. While in the rural areas it has gone up from 1.57 per cent
in 2004 to 30.18 per cent in 2010.
Lauding the role of services sector as the potential growth engine, the
Survey has called for the policies to promote further opportunities in
new areas in global demand such as accounting, legal, tourism,
education, financial and other services beyond the IT and business
The Survey points out that the exports in April-December 2010 went up by
29.5 per cent while the imports during the same period registered a
growth rate of 19 per cent. The trade gap narrowed down to US $ 82.01 bn
in the same period. Balance of payment situation has improved due to
surge in capital flows and rise in foreign exchange reserves which have
been accompanied by rupee appreciation. During current fiscal foreign
exchange reserves increased by US $ 18.2bn from US $ 279.4 bn in end
April 2010 to US $ 297.3 bn in end December 2010.
The inclusive growth agenda of the Government is reflected in the 59 per
cent rise in Net Bank Credit . The expenditure on Social sector programs
has been stepped up by 5 percent point of GDP over the past five years.
The Survey points out that Gross Fiscal Deficit is 4.8% of GDP in
2010-11 as against 6.3 percent of GDP in the previous year. The Revenue
deficit in the current financial year has been 3.5 percent of GDP as
against 5.1 percent in the previous year.
The Economic Survey 2010-11 has expressed satisfaction at the progress
of fiscal consolidation and the role of monetary policy on tackling
inflation, ensuring availability of funds and expansion of credit
growth. It has called for efficient taxation of goods and services by a
new GST, raising revenues, installing stronger safeguards and measures
to accelerate financial inclusion.
The Economic Survey 2010-11 has lauded the Government’s efforts in
addressing social and financial inclusion. The specific schemes for
Scheduled Castes, Tribes, OBCs and the regions such as North-East,
expansion of Mahatma Gandhi NREGA, Sarva Shiksha Abhiyan , National
Rural Health Mission, in terms of coverage as well as the spending and
monitoring have found specific mention in the report. The survey has
advised that a better convergence of the schemes to address the issues
of unemployment and poverty alleviation could avoid duplication and
A call for reforms in the university and higher education and correcting
the demand supply mismatch in the job market has been made in the
report. It says the gap in resources for higher education may be met on
the basis of public private partnership without diluting the regulatory
oversight of the Government.
The Survey has also made specific mention of Government’s active
engagement on issues related to climate change with expanded financing
of programs and better policies.
The Economic Survey has suggested that in the long run the potential
engines of growth for the country could be from skill development and
innovative activity and therefore, efforts should be made to promote
Regarding the outlook for the Indian economy, the Survey says that
despite the risks of global events, such as volatility in commodity
prices like crude oil exacerbated by political turmoil in the
Middle-East, the Indian economy seems poised to scale greater heights in
terms of macro economic indicators. It sums up by stating that the real
GDP growth is expected to reach the 9 per cent mark in 2011-12 and the
next two decades may well see the economy growing faster than it has
done any time in the past.