Economic Survey predicts 11% growth next fiscal
- India’s economy is firmly in the middle of a V-shaped recovery and will bounce back to record 11% growth in 2021-22 after an estimated 7.7% contraction this year, as per a “conservative” estimate in the Economic Survey for 2020-21.
- Economic Survey 2020-21 has termed this a “lockdown dividend” from the country’s stringent response to the COVID-19 pandemic.
NEED GOVERNMENT SPENDING:
- Survey has made a strong pitch for the government to loosen its purse strings to spur the economy with a “counter-cyclical fiscal push” till the country returns to its pre-COVID-19 growth path.
- The Survey which was tabled in Parliament on Friday, defended the conservative fiscal stimulus during the initial phase of the pandemic, stating that pushing down on the accelerator while the brakes are clamped “only wastes fuel”.
- With Indian economy’s resurgence from the collapse in the first two quarters, Chief Economic Adviser Krishnamurthy Subramanian indicated that it was time to switch fiscal gears to a more aggressive approach.
- CEC indicated that the Union Budget for 2021-22 could be cautiously expansionary.
- “The V-shaped economic recovery while avoiding a second wave of infections make India a sui generis case in this unique, synchronised global recession,” the Survey said.
- It added that a rapid vaccination roll-out this year could boost recovery in the services sectors as well as stir up private consumption and investment.
- While absolute growth numbers may be remarkable in 2021-22 due to the low base effect, returning to pre-pandemic growth and output levels would take longer.
- India is expected to emerge as the fastest growing economy in the next two years as per International Monetary Fund.
- The Survey argued that the country’s ‘mature policy response to this “once-in-a-century” crisis provides important lessons for democracies to avoid myopic policy-making and demonstrates the significant benefits of focusing on long-term gains’.
- The global economy, including India, has been set back in time by the pandemic induced crisis.
- In the five years before 2020-21, Indian economy grew at an average growth of 6.7%. In 2021-22, a sharp recovery of real GDP growth of 10%-12% is expected based on a low base effect and inherent strengths of the economy.
- It is assumed that the economy grows at its trend growth rate of 6.5% in 2022-23 and 7% in 2023-24, aided by the structural reforms.
- If two scenarios of 12% growth and 10% growth in 2021-22 are envisaged, India would be 91.5% and 90% below the trend level of output, respectively, by 2023-24,” the Survey noted.
CEA says it is time to switch fiscal gears from cautious stance to ‘counter-cyclical’ push Rapid vaccine roll-out can boost ailing services sectors, spur consumption and investmentIndia’s response to ‘once-in-a-century’ crisis a lesson for democracies to avoid myopic policy.
Govt. tightens oversight on funds received by NGOs
- The Union Home Ministry has laid down a charter for banks.
- It says that “donations received in Indian rupees” by non-governmental organisations (NGOs) and associations from “any foreign source even if that source is located in India at the time of such donation” should be treated as “foreign contribution”.
- FCRA regulates foreign donations and ensures that such contributions do not adversely affect the internal security of the country.
- As per the existing rules, all banks have to report to the Central government within 48 hours the “receipt or utilisation of any foreign contribution” by any NGO, association or person whether or not they are registered or granted prior permission under the FCRA.
- Last September, the Foreign Contribution (Regulation) Act, 2010, was amended by Parliament and a new provision that makes it mandatory for all NGOs to receive foreign funds in a designated bank account at the State Bank of India’s (SBI) New Delhi branch was inserted.
- All NGOs seeking foreign donations have to open a designated FCRA account at the SBI branch by March 31.
- The NGOs can retain their existing FCRA account in any other bank but it will have to be mandatorily linked to the SBI branch in New Delhi.
- The Ministry has laid out a series of guidelines and charter to make the NGOs and the banks comply with the new provisions.
- The charter for the banks said, it may be noted that foreign contribution has to be received only through banking channels and it has to be accounted for in the manner prescribed.
- Any violation by the NGO or by the bank may invite penal provisions of the FCRA, 2010.
- It added that “donations given in Indian rupees (INR) by any foreigner/foreign source including foreigners of Indian origin like OCI or PIO cardholders” should also be treated as foreign contribution.
‘Delink boundary dispute from ties’
- China recently said it “appreciates” External Affairs Minister S. Jaishankar emphasising the importance of India-China relations, but reiterated its calls for the boundary dispute to “not be linked with the overall bilateral relations”.
- In a speech on Thursday, Mr. Jaishankar said the relationship needed to be built on “mutual respect, mutual sensitivity and mutual interests”.
- The Minister outlined eight propositions to take the ties forward after what he called a year of “exceptional stress”.
‘PREREQUISITE FOR TIES’:
- Mr. Jaishankar underlined India’s view that peace on the border was a prerequisite for the rest of the relationship to develop.
- China’s actions last year had “not only signalled a disregard for commitments about minimising troop levels”, but also “showed a willingness to breach the peace and tranquillity” on the border that had been the foundation of the relationship.
- The advancement of ties, he added, was “predicated on ensuring that peace and tranquillity was not disturbed, and the Line of Actual Control [LAC] was both observed and respected by both sides”.
- Asked by the official media in Beijing to respond to his remarks, China’s Foreign Ministry spokesperson Zhao Lijian said the Ministry “noted Minister Jaishankar’s remarks”.
- “He stressed the importance of India-China relations; it shows the Indian side attaches importance to the ties with China, we appreciate this,” Mr. Zhao said.
‘WORK WITH US’:
- China stresses that the boundary issue shall not be linked with the overall bilateral relations.
- That is important experience we have gathered through the countries many years efforts to keep the ties moving forward.
- We hope the Indian side will work with us to properly manage difference, promote practical cooperation and bring bilateral relations back on track.
- China has in recent months hit out at India’s economic measures, such as the banning of apps and tightening the curbs on investment, saying events on the border should not be linked to other aspects of relations.
- India has reiterated its view that such a proposition is untenable, and normal relations can’t be restored until there is peace on the border and a full restoration of the status quo, prior to last summer’s transgressions.
Mr. Jaishankar underlined that view in his speech, saying that any expectation that the events on the border “can be brushed aside and that life can carry on undisturbed despite the situation in the border is simply not realistic”.
To assess equity, Economic Survey introduces a bare necessities index
- Inequalities in access to bare necessities like drinking water, sanitation, hygiene and housing conditions continue to exist between urban and rural India despite “widespread” improvements in each of these aspects, the Economic Survey for 2020-21 has shown, using a newly constructed “Bare Necessities Index” (BNI).
- The BNI builds on the idea of Thalinomics in the Economic Survey for 2019-20, through which it had sought to examine the access to food in the country.
- The BNI summarises 26 indicators on five dimensions — water, sanitation, housing, micro-environment, and other facilities — and has been created for all states for 2012 and 2018 using NSO data.
- The index classifies areas on three levels of access — high, medium, low — to bare necessities.
- The Survey has underlined the need to focus on reducing variations in the access to bare necessities across states, between rural and urban areas, and between income groups.
- “Government schemes such as the Jal Jeevan Mission, SBM-G (Swachh Bharat Mission-Gramin), PMAY-G (Pradhan Mantri Awaas Yojana), may design appropriate strategy to address these gaps.
- This should be done to enable India to achieve the SDG (UN Sustainable Development Goals) goals of reducing poverty, improving access to drinking water, sanitation and housing by 2030.
- There should be effective targeting of the needier population be they in urban or rural areas or across states,” it has said.
VARIATIONS AMONG STATES:
- In 2018, access to bare necessities was the highest in states such as Kerala, Punjab, Haryana, and Gujarat, and lowest in Odisha, Jharkhand, West Bengal and Tripura, the Survey has said.
- In terms of urban-rural divide, all states barring Delhi, Punjab, Goa, Kerala, and Sikkim had medium or low access to bare necessities in their rural areas. In 2012, only rural Delhi had high access to bare necessities.
- In 2018, the lowest access in rural India was recorded in Uttar Pradesh, Madhya Pradesh, Bihar, Jharkhand, West Bengal, Odisha, Assam, Manipur, and Tripura.
- J&K, Punjab, Rajasthan, Gujarat, Maharashtra, Karnataka, Chhattisgarh, Tamil Nadu, Andhra Pradesh, Kerala, Goa, Meghalaya, and Arunachal Pradesh showed improvement in access to bare necessities in rural areas between 2012 and 2018.
- By contrast, in urban India, no state showed the lowest level of BNI in 2018. In 2012, urban areas of only Bihar and Manipur fell in the lowest BNI category.
- Between 2012 and 2018, access to bare necessities for the poorest households improved disproportionately more when compared to the richest households, across both rural and urban areas.
- “The improvement in equity is particularly noteworthy because while the rich can seek private alternatives, lobby for better services, or if need be, move to areas where public goods are better provided for, the poor rarely have such choices,” the Survey noted.
- As civic amenities in urban areas are also provided by local self government, there must be effective convergence in scheme implementation at the Centre-state and local levels, the Survey said.
- “For this purpose, a BNI based on large annual household survey data can be constructed using suitable indicators and methodology at district level for all/targeted districts to assess the progress on access to bare necessities,” it said.
India, Bangladesh foreign secys review ties, discuss PM Modi’s visit to Dhaka
- FOREIGN SECRETARIES of India and Bangladesh carried out a comprehensive review of the overall bilateral ties and held discussions on preparations for Prime Minister Narendra Modi’s likely visit to Dhaka on March 26.
- The Ministry of External Affairs (MEA) said both sides reviewed progress in the bilateral relationship, including in the areas of defence and security, border management, trade, connectivity, power, energy and cooperation in dealing with the coronavirus pandemic.
- Bangladesh Foreign Secretary Masud Bin Momen arrived here on Thursday on a three-day visit, primarily to prepare ground for Modi’s upcoming visit to Dhaka.
DIMENSIONS IN COOPERATION
- In the talks held under the framework of India-Bangladesh foreign office consultations, Foreign Secretary Harsh Vardhan Shringla and Momen agreed to maintain the steady momentum of bilateral cooperation and people-to-people ties.
- “Both sides held a comprehensive review of the progress achieved in the bilateral relationship, including in the areas of Covid-19 cooperation, trade, connectivity, development partnership, power, energy and water resources, regional and multilateral cooperation as well as border management and security and defence cooperation,” the MEA said in a statement.
- At a virtual summit with his Bangladesh counterpart Sheikh Hasina last month, Modi described the neighbouring country as a “key pillar” of India’s ‘Neighbourhood First’ policy.
- The MEA said discussion also focussed on preparations for the forthcoming visit of Modi to Dhaka and events relating to the commemoration of the 50th anniversary of establishment of diplomatic ties between the two countries.
- “Both sides also agreed to hold the next home secretary level talks, commerce secretary level talks and the secretary level meeting of joint rivers commission before the March summit,” it said.
- It said both sides noted with appreciation the cooperation on the coronavirus-related issues, including India’s gift of two million doses of Covishield vaccine to Bangladesh in keeping with its ‘Neighbourhood First’ policy.
The two countries underscored the importance of the year 2021 in the context of the 50th anniversary of the liberation of Bangladesh, the 50th year of bilateral diplomatic ties as well as the birth centenary of Bangabandhu Sheikh Mujibur Rahman.