Economic policy: Growth and Development

For the Special FC

February 2021

Amir Ullah Khan

India GDP Quarterly Growth Rate Sequentially

India GDP Quarterly Growth Rate (Year on Year)

Expenditure on Health

0

10000

20000

30000

40000

50000

60000

70000

80000

90000

2019-2020 Actuals 2020-2021 Budget Estimates 2020-2021 Revised Estimates 2021-2022 Budget Estimates

Expenditure on Health

Expenditure on health as % of GDP

0.00%

0.20%

0.40%

0.60%

0.80%

1.00%

1.20%

1.40%

1.60%

1.80%

2.00%

2018-19 2019-20 (RE) 2020-21 (BE)

Expenditure on health as % of GDP

Programs Programs outlay

Min. of Health and Family Welfare 73932 Crores

Total outlay for Health and well-being 2,23,846 crores

PM Atma Nirbhar Swasthya Bharat Yojana Rs. 64,180 crore

Integrated Public Health Labs

critical health care hospital blocks in 602

districts.

strengthening NCDC Expanding integrated

health information portal

Introduction of National Commission for

Allied Healthcare Professionals Bill

Mission Poshan 2.0 to improve nutritional

outcomes across 112 aspirational districts.

Pneumococcal vaccine

urban Jal Jeevan Mission

2.87 lakh crore

Air pollution 2217 crores

COVID19 Vaccines Rs. 35, 000 crore

Highlights

National Health Mission in Crores

32500 33000 33500 34000 34500 35000 35500 36000 36500 37000 37500

2019-2020 Actuals

2020-2021 Budget Estimates

2020-2021 Revised Estimates

2021-2022 Budget Estimates

National Health Mission in Crores

Ministry of Health and Family Welfare Demand for grants in

Crores

0

10000

20000

30000

40000

50000

60000

70000

80000

2019-2020 Actuals 2020-2021 Budget Estimates 2020-2021 Revised Estimates 2021-2022 Budget Estimates

Ministry of Health and Family Welfare DFG

Revenue Capital

Schemes (in Crores)

0

10000

20000

30000

40000

50000

60000

70000

80000

Saksham Anganwadi andPoshan

2.0

Rashtriya Swasthya BimaYojna

Umbrella ICDS National AIDS and STDControl Programme

Pardhan Mantri SwasthyaSuraksha Yojana

Schemes

2019-2020 Actuals 2020-2021 Budget Estimates 2020-2021 Revised Estimates 2021-2022 Budget Estimates

Schemes Financial Outlay 2021-22

National Rural Health Mission 30100 Crores

National Urban Health Mission 1000 Crores

Human Resources for Health and Medical Education 4800 Crores

Ayushman Bharat – Pradhan Mantri Jan ArogyaYojana 6400 Crores

Actual Expenditure and approved outlay for 2019-20 for MoHFW in Crore

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2017-18 (BE) 2017-18 (Actual) 2018-19 (BE) 2018-19 (Actual) 2019-20 (BE)

Actual Expenditure and approved outlay for 2019-20 for MoHFW in Crore

Health NHRM Ayush Research NACO

Expenditure on CGHS in Crores

2750

2800

2850

2900

2950

3000

2017-18 2018-19 2019-20 (BE)

Expenditure on CGHS in Crores

State-wise Funds Spent in Micronutrient Supplementation Programmes, Infant and Young Child Feeding (IYCF), Practices,

Nutrition Rehabilitation Centres (NRCs) and Diarrhoea Control

Activties in India in Lakhs

0.00

2000.00

4000.00

6000.00

8000.00

10000.00

12000.00

2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19*

State-wise Funds Spent in Micronutrient Supplementation Programmes, Infant and Young Child Feeding (IYCF), Practices, Nutrition Rehabilitation

Centres (NRCs) and Diarrhoea Control Activties in India in Lakhs

Funds Sanctioned to

Food and Nutrition

Board in India

0

10

20

30

40

50

60

2017-2018 2018-2019 2019-2020 2020-2021

Funds Sanctioned to Food and Nutrition Board in India (Rs. in Crore)

Education

-40

-30

-20

-10

0

10

20

30

40

50

60

2015-16 2016-17 2017-18 2018-19 2019-20 2020-21

GDP growth at constant prices

Q1 Q2 Q3 Q4

-10

-5

0

5

10

15

20

25

30

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Exports of goods and services (annual % growth)

Poverty and inequality

February 10, 2021 21

Concentration of poverty in states

Per capita incomes – a comparative lens on ‘pattern’

Source: Planning Commission, Data Tables; Economist Intelligence Unit; IMF, World Economic Outlook

$0 $5,000 $10,000 $15,000

Ethiopia

Bihar

Rwanda

Madhya Pradesh

Uttar Pradesh

Assam

Rajasthan

Orissa

West Bengal

Uttarkhand

Andra Pradesh

India

Karnataka

Kerala

Tamil Nadu

Gujarat

Punjab

Maharashtra

Delhi

China

Chandigarh

Brazil

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

40.0

45.0

50.0

An

dh

ra P

rad

esh

Ass

am

Bih

ar

Ch

hat

tisg

arh

Gu

jara

t

Har

yan

a

Him

ach

al P

rad

esh

Jhar

khan

d

Kar

nat

aka

Ke

rala

Mad

hya

Pra

des

h

Mah

aras

htr

a

Ori

ssa

Pu

nja

b

Raj

asth

an

Tam

il

Utt

ar P

rad

esh

Utt

arak

han

d

Wes

t B

en

gal

Ind

ia

Income Education Health HDI

Percentage loss in the three inequality adjusted indices

Global GDP share

20,494

(24.2%)

13,407

(15.8%)

4,972

(5.9%)

4,000

(4.7%)

2,829

(3.3%)

2,717

(3.2%)

1,868

(2.2%)

1,619

(1.9%)

US

China

Japan

Germany

UK

India

Brazil

Korea

* World GDP: 84,740

Source: IMF Global Outlook, April 2019

The 5 trillion dollar club

• Ambitious?

The 5 trillion dollar club

• Challenges – Scale, Education, Migration, Wages, Trade and exchange rates, Unemployment, Tax revenue, Hunger and …........

SECTORS

Growth and Challenges

INDIA’S TOP 20 COMPANIES BY MARKET CAPITALISATION

1990 2000 2010

Tata Steel Wipro Reliance Industries

ITC Hindustan Unilever ONGC

Tata Motors Infosys Technologies TCS

Century Textiles Reliance Coal India

Hindustan Unilever ITC Infosys Technologies

Mafatlal O N G C SBI

Reliance Industries HCL Technologies NTPC

Grasim Pentamedia Graphics Bharti Airtel

G S F C Zee Entertainment ITC

ACC M T N L ICICI Bank

SIV Industries I O C L Larsen & Toubro

Colgate-Palmolive St Bk of India Wipro

Hindalco H F C L MMTC

Bajaj Holdings Satyam Computer BHEL

Saurashtra Cement Tata Communications NMDC

Uniphos Enterprises Ranbaxy Labs. HDFC Bank

Bombay Dyeing H D F C HDFC

JCT Cipla Indian Oil Corp

Larsen & Toubro NIIT Tata Motors

Nestle India Nirma SAIL

Largest Companies by Market Cap (2018)

926.9

777.8 766.4 750.6

541.5 499.4 491.4 491.3

387.7 344.1 341.3 325.9 313.5

0100200300400500600700800900

1000

Source: Statista (2019)

CORPORATE CONCERNS

• TAX

• INTEREST RATES

• EXCHANGE RATES

• CSR

• LABOUR LAW

• LAND ACQUISITION

Foreign trade timeline post Independence

30

0

5

10

15

20

25

30

35

40

45

50

1950-51 1960-61 1965-66 1970-71 1975-76 1980-81 1985-86 1990-91 1995-96 2000-01 2005-06 2010-11 2011-12 2015-16

X 1

00000 C

RO

RE ₹

Growth of Foreign trade in India

Import Export Total

Exports from India – FY 2018-19 31

Total commodity export USD $330 Billion

Total Services export USD $186.8 Billion

Petroleum Products

Pearl, Precious, Semi

Precious stones

Drug Formulations,

Biologicals

Gold and Other precious metal Jewelry

Iron and Steel

Organic Chemicals

RMG Cotton Incl

accessories

Motor Vehicle / Cars

Electric Machinery & Equipment Products of

Iron and Steel

% OF TOTAL EXPORTS

Export to various regions 32

Asia 49%

America 21%

Africa 9%

Europe 19%

CIS & Baltics 1%

Unspecified Region 1%

EXPORT TO REGIONS

Region Value (in Million

USD)

Asia 160,723.97

America 68,855.04

Africa 28,541.92

Europe 64,380.88

CIS and Baltics 3,467.25

Unspecified region 3,567.09

Tax to GDP ratio

Growth and Challenges

Goods and Services Tax

• One tax slab

• Value added

• Refunds

• Revenue neutral or revenue negative?

GDP Growth rate in %

GDP Growth Slows down?

0

10

20

30

40

50

60

70

1700 1870 1950 1980 2010 2030 2050

% o

f G

lobal G

DP

Fall and Rise of the Share of Developing Countries in Global

Economic System

Per capita income at constant prices (1950-51=100) India

100

150

200

250

300

350

400

1950 1960 1970 1980 1990 2000

Percentage Share of Industries in GDP in the

Low and Middle Income Countries

Percentage Share of Industries in GDP in China

Percentage Share of Industries in GDP in India

Directions of Intervention

• Liberalising FDI in select sectors

• Rollback of controversial foreign portfolio investment

• Big bang Reforms including the enhanced surcharge levied on capital gains made by foreign portfolio investors

• Reduction in Rapo rate of RBI

• Credit Flow to non-banking financial nstitutions

• Increase in govt expenditure backed up by the extra funds provided by RBI

Middle Income Trap hypothesis Explored

• Current growth driven by 100 million people in upper and middle class

• Phenomenal growth in Automobile, mobile and other items of upper and middle class consumption

• Plateau in the demand of this class

• Sluggish growth in the base of middle class

• Car industry accounting for 7 % of GDP more than housing of 5 %

• Real estate producing vacant houses with 11 million vacant houses in urban areas

Urbanisation

Growth and Challenges

Urban Population %

0

10

20

30

40

50

60

70

80

90

India 1880 China 1920 Indonesia Pakistan Bangladesh Nigeria Ethiopia 1860 Vietnam Phillipines United States

2001

2011 Urban Population… Where is growth happening?

2011

India vs. China

Urbanisation

0

5

10

15

20

25

30

35

40

1950 1960 1970 1980 1990 2000

India

China

Per cent Urban Population and Urban Growth Rates 1901-11

Census years

1971 1981 1991 2001 2011

Total 29.1 30.3 27.4 30.1 37.5

Male 17.5 17.2 14.7 17.0 22.6

Female 41.7 44.3 41.2 44.6 53.2

Table : Percentage of migrants (POLR) in the population as per decennial censuses

Source: Compiled from Census tables on Migration.

Europe Africa Less

Developed

Countries

World

Average

Developed

Countries

Asia South

Central

Asia

India

Percentage of Population in Cities with

Population over 5 million to Total Urban

Population

7.5 9 15 15.5 16 18 23 23.5

Implications of top heavy urban structure: high infrastructural cost, energy

consumption, regional disparity and threat to sustainable development.

Proportion of urban population in different size categories, 1901–2001

0%

25%

50%

75%

100%

1901 1911 1921 1931 1941 1951 1961 1971 1981 1991 2001 2011

Class I Class II Class III Class IV Class V Class VI

Trends in all-India average monthly per capita consumption at constant

prices (Rs.) 1972-73 to 2011-12

0.0

20.0

40.0

60.0

80.0

100.0

120.0

140.0

160.0

1972-73 1977-78 1983 1987-88 1993-94 1999-00 2004-05 2009-10 2011-12Rural Urban

Bunker fuels are used for international transport is 3.1% of global emissions. Statistical differences between the global estimates and sum of national totals are 1.2% of global emissions.

Source: CDIAC; Le Quéré et al 2016; Global Carbon Budget 2016

Empirical Results : Relationship between energy use and PCI & HDI

• Regressing energy consumption on PCI and HDI for 1982 and 2002 using the data for UNDP

• Three categories of countries (a) Below 1,000 KOE

(b) Between 1000 KOE and 3000 KOE and (c) Above 3000 KOE ( 60, 30 and 32 countries respectively)

(c) Relationship strong and positive for low KOE, low for medium an none for high KOE countries

(d) Relation over time remains strong in 2002 but becomes weak for others

Linear Functions relating Level of Urbanization with Per Capita

Income

% U

rban P

opula

tion

Gross National Income (at constant prices of 2005, PPP )

Power Plant Type Cost $/kW-hr

Coal with CCS $0.12-0.13

CC Natural Gas $0.05

CC with CCS $0.075

Nuclear $0.093

Wind onshore $0.059

Wind offshore $0.139

Solar PV $0.063

Solar Thermal $0.165

Geothermal $0.045

Biomass $0.095

Hydro $0.062

COST COMPARISON OF ENERGY SOURCES 2018

Adapted from US DOE2

A Perspective of Policy for Sustainable Development in India

• A strong case for spatially balanced urbanisation permitting increase in emissions for meeting their poverty reduction and other MDG targets. “common but differentiated resp.”

• Erroneous to be complacent about developed countries and India must have self restraining policies and sustainable energy sources

• Change in Life style: A more balanced strategy of urbanisation and shift in energy source like Hydel

• The 12th Plan for distributed urbanisation and development of small towns as in SDG 11.

Unemployment

Growth and Challenges

Income 3$ a day

0

10

20

30

40

50

60

70

80

90

India China Indonesia Pakistan Bangladesh Nigeria Ethiopia Vietnam Phillipines

UNEMPLOYMENT

Phillips curve - tradeoff between unemployment and inflation

Consumption demand

• Middle income trap

• Savings rate

• Real growth rate 9%

• Investment to GDP ratio - 39%

• Monetary transmission?

Consumption demand

• Middle income trap

• Savings rate

• Real growth rate 9%

• Investment to GDP ratio - 39%

• Monetary transmission?

Consumption Spending as % of GDP

0

10

20

30

40

50

60

70

80

90

India China Indonesia Pakistan Bangladesh Nigeria Ethiopia Vietnam Phillipines UnitedStates

0

10

20

30

40

50

60

Fuel andLight

Rent Beverages Transport OtherServices

MedicalInstitutional

Durablegoods

Middle class consumption of different items as percent to total consumption

Rural

Metro Cities

Metro cities consuming higher

percentage than towns and villages Rural consuming

higher percentages

SDG Goals

Growth and Challenges

Population growth

Growth and Challenges

Growing India

Population - TFRs of Indian states

Source: Sample Registration System, ORGI, 2014

2.3

1.6 1.7 1.7 1.7 1.7

1.8 1.8 1.8 1.9 1.9

2.1 2.2

2.3 2.3

2.6 2.7

2.8 2.9

3.1

3.4

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

Tota

l fe

rtilit

y r

ate

Highest and lowest TFRs

• Niger 7.63

• Somalia 6.61

• Mali 6.35

• Chad 6.31

• Angola 6.20

• DR Congo 6.15

• Burundi 6.08

• Uganda 5.91

• Timor-Leste 5.91

• Gambia 5.78

• Hong-Kong 1.20

• Singapore 1.23

• South Korea 1.26

• Moldova 1.27

• Bosnia 1.28

• Portugal 1.28

• Spain 1.32

• Hungary 1.34

• Greece 1.34

Source: World Population Prospects: The 2015 Revision, UN Population Division

Highest and lowest LE0

• Swaziland: 49.2

• Lesotho: 49.5

• CAR: 49.54

• Sierra Leone: 50.2

• Chad: 51.1

• Angola: 51.7

• Nigeria: 52.3

• Mozambique: 54.6

• Zimbabwe: 54.8

• Hong Kong: 83.7

• Japan: 83.3

• Italy: 82.8

• Switzerland: 82.7

• Singapore: 82.6

• Spain: 82.3

• Australia: 82.1

• Sweden: 81.9

Life expectancy - The average number of years a person can expect to live given the current age-specific mortality rates

World Population Prospects: The 2015 Revision, UN Population Division

Highest and lowest LE0, India

• Chhattisgarh: M-56.0; F-60.0

• Assam: M-57.6; F-58.8

• Madhya Pradesh: M-58.0; F-60.0

• Orissa: M-58.3; F-59.8

• U P: M-59.5; F- 59.4

• INDIA: M-61.8; F-64.1

• Andhra : M-61.4; F- 65.9

• Rajasthan: M-62.1; F-65.2

• Bihar: M-63.6; F-62.7

• West Bengal: M-64.7; F-67.4

• Maharashtra: M-64.4; F-68.1

• Punjab: M-66.2; F-68.9

• Himachal: M-67.3; F -70.9

• Kerala: M-69.3; F-75.2

Population Projections for India & States 2001 – 2026: Table 1: Page No.13

INEQUALITY

Growth and Challenges

0.0

20.0

40.0

60.0

80.0

100.0

120.0

140.0

160.0

1972-73 1977-78 1983 1987-88 1993-94 1999-00 2004-05 2009-10 2011-12

Rural Urban

Consumption (Rs.) 1972-73 to 2011-12

Poverty and inequality

February 10, 2021 82

Concentration of poverty in states

Per capita incomes – a comparative lens on ‘pattern’

Source: Planning Commission, Data Tables; Economist Intelligence Unit; IMF, World Economic Outlook

$0 $5,000 $10,000 $15,000

Ethiopia

Bihar

Rwanda

Madhya Pradesh

Uttar Pradesh

Assam

Rajasthan

Orissa

West Bengal

Uttarkhand

Andra Pradesh

India

Karnataka

Kerala

Tamil Nadu

Gujarat

Punjab

Maharashtra

Delhi

China

Chandigarh

Brazil

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

40.0

45.0

50.0

Andhra

Pra

desh

Ass

am

Bih

ar

Chhatt

isgarh

Guja

rat

Hary

ana

Him

achal Pra

desh

Jhark

hand

Karn

ata

ka

Kera

la

Madhya P

radesh

Mahara

shtr

a

Ori

ssa

Punja

b

Raja

sthan

Tam

il

Utt

ar

Pra

desh

Utt

ara

khand

West

Bengal

India

Income Education Health HDI

Percentage loss in the three inequality adjusted indices

Healthcare

Public Health Indicators

India

(2006)

Bangladesh

(2007) Proportion of children who are fully

immunized (%) 44 82

Proportion of children who started

breastfeeding within 24 hours (%) 40 89

Proportion of children who receive

Vitamin A supplements (%) 25 88

Proportion of diarrhoea-affected children

treated with ORS (%) 43 85

Proportion of households practising open

defecation (%) 50 7.5

Open Defecation, 2012

Per-capita GDP

(PPP)

% of hohos

practicing OD

India 5,050 48

Sub-Saharan Africa 3,171 25

Low-income countries 1,575 21

Afghanistan 1,892 15

Bangladesh 2,364 3

Vietnam 4,912 2

China 10,771 1

Child Immunization Rates, 2012 (%)

BCG DPT Measles

India 87 72 74

Sub-Saharan Africa 84 77 75

‘Least developed countries’ 84 80 78

Bangladesh 94 95 94

Number of countries doing worse

than India 26 16 25

“Poor health at high cost” (Source: Wikipedia entry on Canada health system)

US UK Canad

a Life expectancy (years) 78 81 81

Infant mortality rate (per

1,000)

6.9 4.8 4.5

Physicians per 1,000 people 2.4 2.5 2.2

Per-cap exp on health (US$) 7,290 2,992 3,895

Health exp as % of GDP 16 8 10

% of health costs paid by

govt

45 82 70

Reforms and Initiatives

Insolvency and Bankruptcy Code

Ayushman Bharat

The Motor Vehicle Act

Foreign Contribution Regulation Act

Swachch Bharat

Make in India

Mudra

Ujjwala

What happened to

• Smart cities

• Bullet trains

• Black money

• 40 Rupees to a dollar

• Jobs

• Land acquisition

• Demon

• Soil cards

• Subsidies

• Tourism

• Start Up India

• Labour law reforms

• Skilling

• Rashtriya Gokul Yojana

Now….

• Fiscal deficit

• Trade deficit

• Private investment

• Foreign investment

• Indian investment abroad

• Manufacturing sector

• Jobs

• Exports

• MSMEs

• Share versus Debt market

The Final frontier

Sex ratio – 1901 to 2011

Source: www.nic.in

Gender

Highest and lowest sex ratios at birth, 2015

• Rwanda: 102

• Sierra Leone: 102

• Togo: 102

• Zimbabwe: 102

• Madagascar: 103

• Kenya: 103

• Malawi: 102

• Burundi: 103

• Mozambique: 103

• China: 116

• Azerbaijan: 116

• Armenia: 114

• Vietnam: 112

• India: 111

• Maldives: 110

• Pakistan: 109

• Singapore: 107

• Sex Ratio - The number of male births per 100 female births • Usually ranges from 103 • May be changed by sex selective abortions

World Population Prospects: The 2015 Revision, UN Population Division

Highest and lowest sex ratios at birth in India

• Punjab: 126

• Haryana: 125

• Gujarat: 118

• Uttar Pradesh: 115

• Delhi: 115

• Rajasthan: 114

• Himachal Pradesh:111

• INDIA: 111

• Assam: 102

• Chhattisgarh: 103

• Andhra Pradesh: 104

• Jharkhand: 104

• West Bengal: 105

• Karnataka: 106

• Tamil Nadu: 107

• Kerala: 108

Population Projections for India & States 2001 – 2026

Highest and lowest LE0, India

• Chhattisgarh: M-56.0; F-60.0

• Assam: M-57.6; F-58.8

• Madhya Pradesh: M-58.0; F-60.0

• Orissa: M-58.3; F-59.8

• U P: M-59.5; F- 59.4

• INDIA: M-61.8; F-64.1

• Andhra : M-61.4; F- 65.9

• Rajasthan: M-62.1; F-65.2

• Bihar: M-63.6; F-62.7

• West Bengal: M-64.7; F-67.4

• Maharashtra: M-64.4; F-68.1

• Punjab: M-66.2; F-68.9

• Himachal: M-67.3; F -70.9

• Kerala: M-69.3; F-75.2

Population Projections for India & States 2001 – 2026: Table 1: Page No.13