Economic Survey 2011-2012: Highs And Lows

Vidrum / 16 Mar 2012

Ahead of the Union Budget 2012-13 the finance minister usually presents an economic survey in the parliament. This is to provide an overall picture of the economic development in the country in the last one year.
Ahead of the Union Budget 2012-13 the finance minister usually presents an economic survey in the parliament. This is to provide an overall picture of the economic development in the country in the last one year. This was done by Pranab Mukherjee yesterday, forecasting or estimating the growth for the next fiscal along with guidance about the various inherent concerns or risks. The following are some the major issues: 

• As per the survey, the Indian GDP is estimated to grow by 6.9 per cent in 2011-12, primarily due to a weakening of industrial growth. The FM has predicted that the GDP growth for 2012-13 and 2013-14 would be 7.6 and 8.6 per cent respectively.
• Industrial growth is pegged at 4 to 5 per cent in the current financial year and is expected to improve as the economy recovers.
• The economic survey expects the growth rate to pick up with the decline in the overall investment rate. As the fiscal consolidation gets back to track, saving and capital formation should begin to rise. These projections are based on assumptions regarding factors like normal monsoon, reasonably stable international prices of oil, etc.
• The survey also suggested that deregulation of the saving interest rate will help increase financial savings and improve transmission of the monetary policy.
• It also forecasts growth of 2.5 per cent for agriculture and the allied sector. It is also expected that the foreign direct investment (FDI) in multi-brand retail would address the infrastructure gaps.
• The survey points out that the planning commission has set a target of one trillion dollars of infrastructure investment in the 12th Five Year Plan.  
• On the issue of comparative rating index for sovereigns (CRIS), the survey notes that India’s CRIS has seen a rise from 23.81 in 2007 to 24.52 in 2012. A rise indicates better opportunities for growth, especially in emerging economies. 
• As per IMF, even at a growth rate of 7 per cent, India is projected to be the second-fastest growing economy after China.
• During the period April 2011 - January 2012, India’s cumulative exports grew at a rate of 23.5 per cent, reaching USD 242.8 billion. The growth was mainly seen in sectors like petroleum and oil products, gems and jewellery, engineering, etc. During the same period imports saw a rise of 29.4 per cent, reaching USD 391.5 billion on the back of oil and lubricants, imports of gold and silver, etc.
• The forex reserves reached an all-time high level of USD 322.2 billion at the end of August 2011. However, it declined to USD 292.8 billion at the end of January 2012. 
• The public sector banks showed 19 per cent growth in priority sector lending from March 2010 to 2011. Also, 98 per cent of the public sector branches are fully computerised. 
• The service sector continues to grow strongly despite the slow GDP growth. The sector grew at 9.4 per cent, which is 10 basis points higher when compared to the previous year.
• The coverage under MGNREGA has consistently increased from 4.51 crore households during 2008-09 to 5.49 crore households during 2010-11.

Overall, the economic survey report says that there will be fiscal consolidation in FY13, inflation will be under control next year and the RBI will start cutting the rates which will help the economy to recover. Investors have to now study the implications of the Union Budget to make their next move.

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