ECONOMIC SURVEY

(2016-17 & 2017-18)

 TRENDS IN INDUSTRIAL SECTOR
 The Industrial sector in India, including construction, is an
important contributor to the growth with the sector
accounting for 31.1% of the total Gross Value Added (GVA) in
2016-17.
 A strong and a robust industrial and manufacturing sector
helps in promoting domestic production, exports and
employment ----> higher growth in the economy.
 Growth of GVA for 2016-17 is estimated at 6.6%, and the
industrial performance has declined from 8.8% during
2015-16 to 5.6% in 2016-17.
 The slowdown of manufacturing sector ---> Twin Balance
Sheet (TBS) problem.
 TBS refers to impaired balance sheets of public sector
banks higher NPAs and precarious financial position of
corporates.
 Slowing down credit offtake ----> slowdown in GFCF --->
industrial growth.
 Credit to industry in 2016-17 has contracted by 1.6%, while
GFCF ---> 2.4% in 2016-17 (6.5% in 2015-16).
 INDEX OF INDUSTRIAL PRODUCTION (IIP)
 IIP is an important measure of industrial performance, released by
Central Statistics Office (CSO).
 CSO revised the base year of IIP in May, 2017 from 2004-05 to
2011-12.
 The latest series with base year 2011-12 is more representative of
the current structure of the industrial sector.
 Industrial growth ---> IIP --> which is the lead indicator of
industrial activity shows positive growth.
 As per the new series of 2011-12, overall IIP grew at 5.0% (2016-
17) --> 3.4% (2015-16).
 IIP registered a 25 month high growth of 8.4 per cent with
manufacturing growing at 10.2 per cent in November 2017.
 With the new base year of 2011-12, there has been an upward
revision in IIP growth rates. The two series do not move in the
same direction and show a contrasting trend in 2016-17
growth rates.
 In 2016-17 Q1, the new series showed a rise in growth to 7.8%,
while the old series showed deceleration to 0.7%. New series
captured the slowdown in industrial growth in Q3 and Q4 post
demonetization, while the old series showed an acceleration in
growth in the same period.
 The improved data is a reflection of expansion of the item
basket, the frame of factories and revision of weights in the new
IIP series.
 CHANGES IN NEW IIP SERIES 2011-12
 The basket of goods for IIP has been revised from the base year of
2004-05 to 2011-12.
 IIP consists of three sectors i.e. Mining, Manufacturing and Electricity.
The new basket consists of 407 item groups with 259 item groups
common with the old basket.
 In the revised IIP basket, data on a total of 109 item groups have
been collected in value terms rather than in quantities.
 This is done so as to avoid jumps in data since many of these
products have a life span of greater than one month. Such items
have been classified as ‘work under progress’.
 The value data collected for these item groups have been deflated
using the Wholesale Price Index (WPI) 2011-12 in absence of a
Producers Price Index.
 The Use based classification has replaced Basic Goods with
Primary Goods.
 A new category named Infrastructure/ Construction Goods has
been introduced.
 EIGHT CORE INDUSTRIES
 The Index of Eight Core Industries measures the performance of eight core
industries i.e. Coal, Crude Oil, Natural Gas, Petroleum Refinery Products,
Fertilizers, Steel, Cement and Electricity.

 In line with the base year change in IIP, DIPP, revised the base year of Index
of Eight Core Industries from 2004-05 to 2011-12.

 Eight core industries comprise about 40.3% weight in the IIP. (37.9%)

 In 2016-17, it grew by 4.8% as compared to 3% in 2015-16.

 The production of Coal, Refinery Products, Fertilizers, Steel and Electricity

registered positive growth, with Steel registering a robust growth of 10.7%
(imposition of Minimum Import Price (MIP), antidumping duty etc. on Steel
imports in February 2016).

 Crude Oil, Natural Gas and Cement registered negative growth.

In India, in the overall Index of Industrial Production, the Indices of Eight Core
Industries have a combined weight of 37.90%. Which of the following are
among those Eight Core Industries? (2012)
1. Cement 2. Fertilizers
3. Natural gas 4. Refinery products
5. Textiles
Select the correct answer using the codes given below:
(a) 1 and 5 only (b) 2, 3 and 4 only (c) 1, 2, 3 and 4 only (d) 1, 2, 3, 4 and 5
In the ‘Index of Eight Core Industries’, which one of the following is given the
highest weight? (2015)
a) Coal production
b) Electricity generation
c) Fertilizer production
d) Steel production
 EASE OF DOING BUSINESS
 The year 2017-18 has been remarkable for India’s global image as a
promising investment destination.
 Moody’s Investor Service upgraded India’s sovereign credit rating to
Baa2 from the lowest investment grade of Baa3 after a period of 13
years.
 India ranked 100 among 190 countries assessed by the Doing
Business Team in the Ease of Doing Business Report, 2018 with an
improvement of 30 ranks over its rank of 130 in the Ease of Doing
Business Report 2017.
 India saw an improvement in six out of ten indicators namely –
Dealing with construction permits, getting credit, protecting
minority investors, paying taxes, enforcing contracts and resolving
insolvency.
 Structural and deep-seated reforms such as Goods and Services Tax
(GST) and Insolvency and Bankruptcy Code (IBC); reforms aimed at
strengthening India’s institutions – Demonetization, mechanism for
inflation targeting via the Monetary Policy; progress in Aadhaar
enrollment and use in targeted delivery of benefits; and
recapitalization of public sector banks.
 The immediate impact was seen in Daily Sensex rising roughly 700
points in a span of few days.
 The immediate impact was also visible in terms of the rupee
appreciation reflecting better investment sentiment and
expectations.
 The rating upgrade is also expected to reduce the cost of borrowing
for the Indian Government.
Several reforms and simplifications already completed but still to be
acknowledged by the Ease of Doing Business Team (EoDB).
Construction Permits - Municipal Corporation in Mumbai and Delhi have reduced the
number of procedures to 8. Likewise, the time frame for approvals during the
construction cycle of a building has brought down to 60 days.

Resolving Insolvency - Reorganization of procedure for corporate debtors through

insolvency ecosystem, namely, NCLT, NCLAT, IP, IPA, and Insolvency and
Bankruptcy Board of India has been carried out.

Trading Across Border – steps taken to simplify trade -->

 online message exchange system for import clearances of agricultural
commodities;
 limiting the number of documents for import and export to 3;
 establishment of Import Data Processing and Management System (IDPMS) for
data processing for payment of imports and effective monitoring;
 reduction in the “Gate in” time period for export containers from 5 days to 4 days.
Enforcing Contracts - Various reforms have been undertaken to improve the
enforcement of contracts. Maharashtra and Delhi High Court have established
Commercial Division benches and Commercial Appellate Division benches.

Getting Credit - The amended SARFAESI Act 2002 provides priority to secured
creditors to be paid first over all other debts and all revenues, taxes, cesses and
other rates payable to the Central Government or State Government or local
authority.

Paying Taxes – The Government has introduced project ‘RAPID- revenue,

accountability, probity, information and digitalization’ for administrating the
tax reforms to make tax compliances more taxpayer-friendly, transparent with
the aim of widening the tax base.