INDIAN ECONOMY CURENT-2020

Chanakya group of economics

INDIAN ECONOMY

UGC-NET PAPER-2 (ECO),pgt Eco, UPSC, IES

Gdp, fiscal deficit, Iip-2020

Ministry of Finance Department of Economic AffairsEconomic Division

MONTHLY ECONOMIC REPORT March 2020

Global Growth

1.ECONOMIC GROWTH

As per IMF’s World Economic Outlook, April 2020, the global economy is projected to contract sharply by –3 per cent in 2020-21

The global economy is projected to grow by 5.8 percent in 2021.

India’s Economic Growth in 2019

As per IMF’s World Economic Outlook, India is projected to grow at 4.2 per cent in 2019-20 with a 2 per cent growth in Q4 2019-20.

The growth rate of real GDP was 4.7% for Q3 Of 2019-20.Q1- 5.6%Q2- 5.1%Q4- 4.7%

Inflation in 2019-20 Consumer Price Index (CPI)– Combined inflation was 5.9 per cent in March 2020, as compared to 6.6 per cent in February 2020 and 2.9 per cent in March 2019 .

The annual consumer price inflation increased to 4.8 per cent in 2019-20 from 3.4 per cent in 2018-19.

Consumer Price Index (CPI)

Food inflation based on Consumer Food Price Index (CFPI) decreased to 8.8 per cent in March 2020 as compared to 10.8 per cent in February 2020, mainly due to decrease in inflation of pulses and products, meat and fish, egg, fruits and vegetables.

CPI core inflation (non-food non-fuel) stood at 4.0 per cent in March 2020 as compared to 3.9 per cent in February 2020 and 5.1 per cent in March, 2019.

Inflation based on CPI (Industrial Workers) for February 2020 stood at 6.8 per cent as compared to 7.5 per cent in January 2020 and 7.0 per cent in February 2019.

Inflation based on CPI (Agricultural Labourers) and CPI (Rural Labourers) stood at 10.1 per cent and 9.8 per cent respectively in February 2020.

Inflation based on Wholesale Price Index (WPI)

WPI inflation rate decreased to 1.0 per cent in March 2020, as compared to 2.3 per cent in February 2020 and 3.1 per cent in March 2019.

WPI inflation declined to 1.7 per cent in 2019-20 from 4.3 per cent in 2018-19.

The Budget Estimate of the fiscal deficit as per cent of GDP at current market price for 2019-20 had been set at 3.3 per cent, which was revised to 3.8 per cent of GDP in 2019-20 Revised Estimates (RE).

The Revised Estimates for revenue deficit as per cent of GDP at current market price for 2019-20 has been pegged at 2.4 per cent, as compared to 2.3 percent in 2019-20 (Budget Estimate).

Fiscal Development

absolute figures in April-February 2019-20 are as follows: Gross tax revenue declined by 0.8 per cent to ₹16.8 lakh crore.

Revenue Receipts (net to Centre) increased by 8.9 per cent to ₹13.8 lakh crore.

Tax revenue (net to Centre) grew by 1.9 per cent to ₹11.1 lakh crore.

Non-tax revenue increased by 53.2 per cent to ₹2.6 lakh crore.

Revenue expenditure grew by 12.8 per cent to ₹21.6 lakh crore.

Capital expenditure increased by 11.4 per cent to ₹3.1 lakh crore. Total expenditure increased by 12.6 per cent, amounting to ₹24.7 lakh crore.

EXTERNAL DEMAND

Merchandise Trade Merchandise exports and imports declined by 4.8 per cent and 9.1 per cent respectively in 2019-20.

Oil imports declined by 8.2 per cent and non-oil imports declined by 9.5 per cent in 2019-20.

Merchandise exports witnessed positive growth of 2.9 per cent in February 2020 (yon-y) after a gap of 6 months.

India’s Balance of Payments India’s current account deficit (CAD) was 0.2 per cent of GDP in Q3 of 2019-20, as compared to 2.7 per cent of GDP in Q3 of 2018-19

The contraction of CAD in Q3 of 2019-20 was primarily on account of lower trade deficit and higher invisible receipts.

INDIA’S EXPORT&

IMPORT

Exports $330 billion (2018–19)

Export goods •Agricultural products 12.8%•Fuels and mining products 13.8%•Manufacturers 70.5%•Others 2.9%

Main export partners • Arab League 17.37%• European Union 17.34%• United States 15.88%• ASEAN 11.38%• China 5.08%

Imports $514 billion (2018–19)

Import goods •Agricultural products 8.1%•Fuels and mining products 30%•Manufacturers 51.7%•Other 10.2%

Main import partners • Arab League 19.88%• China 13.68%• ASEAN 11.53%• European Union 11.35%• United States 6.92%• Hong Kong 3.50%

Foreign Exchange Reserves

Foreign exchange reserves stood at US$ 474.7 billion as on 3rd April 2020, as compared to US$ 412.9 billion at end-March 2019

SECTORAL GROWTH

Real GVA growth of Agriculture and allied sectors is estimated at 3.7 per cent in 2019-20 as compared to 2.4 per cent in 2018-19

All India production of food-grains:

As per the 2ndAdvance Estimates for 2019-20, the total production of food-grains during 2019-20 is estimated at 292.0 million tonnes compared to 285.2 million tonnes in 2018-19

Industry and Infrastructure

Real GVA growth of industry sector in 2019-20 is estimated at 1.8 per cent , lower than 4.9 per cent in 2018-19

Index of Industrial Production (IIP)

IIP registered a growth of 0.9 per cent in April-February 2019- 20, as compared to 4.0 per cent during April-February 2018-19.

The manufacturing sector’s growth during April-February 2019-20 was 0.6 per cent, lower as compared to 3.9 per cent during the corresponding period of previous year.

In terms of Use Based classification, primary goods registered growth of 7.4 per cent, capital goods (-) 9.7 per cent, intermediate goods 22.4 per cent,infrastructure/construction 0.1 per cent and consumer durables (-) 6.4 in February 2020.

Services Sector

Real GVA growth of services sector is estimated at 7.0 per cent in 2019-20 , lower than 7.7 per cent in 2018-19.

Index of industrial Production(iip-2020)

Chanakya group of economics

INDIAN ECONOMY

Iip -2020 , base, weightage and growth