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Economy at takeoff stage, says Chidambaram Industrialisation Agriculture
Population to stabilise in 20 yrs
India shining, indeed!
Environment
Healthcare
In Graphics
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Economy at takeoff stage, says Chidambaram
New Delhi, February 27 Tabling the Economic Survey for 2006-07 in the Lok Sabha today, growth in agriculture was at 6 per cent in 2005-06 and just 2.7 per cent in 2006-07. Even as services displayed vigorous growth performance, there were distinct signs of sustained improvement on the industrial front. "With an upsurge in investment, the outlook is distinctly upbeat. The overall macroeconomic fundamentals are robust, particularly with tangible progress towards fiscal consolidation and a strong balance of payments position," Mr Chidambaram observed. The economy appears to have decidedly "taken off" and moved from a phase of moderate growth to a new phase of high growth. Achieving the necessary escape velocity to move from tepid growth into a sustained high growth trajectory requires careful consideration of two issues and three priorities. He listed the issues as sustainability of high growth with moderate inflation and the inclusive nature of such high growth. For the priorities, Mr Chidambaram underlined the need to rise to the challenges of maintaining and managing high growth, bolstering the twin pillars of growth through fiscal prudence and high investment and improving the effectiveness of government intervention in critical areas such as education, health and support for the needy. On inflation, the survey notes that starting with a rate of 3.8 per cent, the rate of inflation in 2006-07 has been on a general upward trend with intermittent decreases. With a shortfall in domestic production and hardening of international prices, prices of primary commodities have been on the rise during the year under review. Wheat, pulses, edible oils, fruits and vegetables and condiments and spices have been the major contributors to the higher rate of primarcy articles. The average inflation in the 52 weeks ending February 3, 2007, remained at 5 per cent. The government has closely monitored prices on a weekly basis and initiated measures to enhance domestic availability of wheat, pulses, sugar and edible oils by a combination of enhanced imports, export restrictions and fiscal concessions. The survey said the total foodgrain production in 2006-07 was marginally higher at 209.2 tonnes compared to 208.6 million tonnes in 2005-06. During the year under review, India's exports grew by 36.3 per cent in the first nine months to reach $ 89.5 billion. Buoyancy of exports was driven by the resurgence in the manufacturing sector and sustained demand from major trading partners. The survey pointed out the upbeat mood of the capital markets reflecting the improved growth prospects of the economy. This was also on account of the steady progress made on the infrastructure front. The overall index of the six core industries -- electricity, coal, steel, crude oil, petroleum refinery products and cement registered a growth of 8.3 per cent in April-December, 2006, compared to 5.5 per cent in April-December, 2005. On the transport and communications front, the Railways maintained its nearly double digit growth in the first nine months of the current fiscal. The survey called for revisiting the multiplicity of poverty alleviation schemes coupled with providing alternative mechanisms for subsidy delivery for income transfers to the truly needed. Even as FDI rose by 98.4 per cent in the first half of 2006-07, foreign exchange reserves touched $ 180 billion. Momentum in the growth of financial services was maintained with a growth of 11.1 per cent. The survey said sustained and high levels of economic growth in the recent years provided a unique opportunity and momentum for faster social sector development. Availability of resources alone would not guarantee faster social sector development. Efficacy of the programmes would depend a lot on the manner in which states implement various social sector programmes. Accountability and transparency through the Right to Information Act needs to be emphasised to ensure good governance and delivery of quality services through public action for most social sector programmes. The outlook on infrastructure development would depend on how investment was facilitated in this sector. Such investment required long-term funds with long pay back periods. Thus success on the infrastructure front would be facilitated by the pension and insurance reforms. A single unified exchange-traded market for corporate bonds would help create a mature debt market for financing infrastructure. The outlook on urban infrastrucutre, however, depended critically on how fast the finances and functional efficiency of urban local bodies were improved. It said movement towards fuller capital account convertibility might also require a sound system of monitoring of the external sector variables and hence a modern real time system of data management was imperative lest the ability of the country to diagnose the symptoms of a crisis in time and take corrective action stands compromised.
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Industrialisation
New Delhi, February 27 According to the survey, the debate about the SEZs illustrates the kind of considerations that have to be taken into account in the formulation of policies. Apprehensions have been voiced regarding displacement of farmers with meagre compensation, loss of prime agricultural land having serious implications for food security, revenue loss and generation of little new activity due to relocation of industries to take advantage of tax concessions. The survey highlights that SEZs have been established in many countries as testing grounds for the implementation of liberal market economy principles. They are viewed as instruments to enhance the acceptability and credibility of the transformation process, to attract domestic and foreign investment, and for the opening up of the economy. In India, the SEZs, which have its origin in the export processing zones (EPZs), seek to promote value addition component in exports, generate employment and mobilise foreign exchange. The successful instances of China and other ASEAN countries is cited in setting up EPZs and SEZs in the 1970s and 1980s to create regional islands, where export-oriented manufacturing could be undertaken. Not that EPZs have not had their share of early difficulties. They provided scope for cultivating manufacturing competitiveness when licensing, labour rigidities and high import duties and taxes acted as a disincentive for investment in the rest of the areas. But, the EPZ experiment in India was not exactly an unequivocal success. Since 1965, when the first EPZ in Kandla was set up, a total of 11 such zones have come into existence. The EXIM policy of 1997-2002 introduced the more comprehensive and liberal SEZ concept, after which a Bill was drafted and passed by Parliament in the form of the SEZ Act, 2005, it said.
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Agriculture
New Delhi, February 27 The total foodgrain production in 2006-07 has been put at 209.2 million tonne, which is marginally higher than the production of 208.6 million tonne in 2005-06. The production of wheat and pulses is expected to increase by 4.5 per cent and 8.2 per cent, respectively. The production of commercial crops is expected to be significantly higher. The survey said the growth of agriculture at only 2.7 per cent in 2006-07 is a cause of concern. Low investment, imbalance in fertiliser use, low seeds replacement rate, a distorted incentive system and low post-harvest value addition continue to be a drag on the sector’s performance. Poor agricultural performance as the current year has demonstrated, can complicate maintenance of price stability with supply-side problems in essential commodities of day-to-day consumption. The survey, however, suggests that the recent spurt of activity in food processing and integration of the supply chain from the farm gate to the consumer’s plate has the potential to redress some of the root causes. In order to encourage farmers to increase production of wheat as well as to enhance procurement in rabi marketing season 2007-08, the government has announced an MSP of Rs 750 per quintal, which is Rs 100 per quintal more than last year’s MSP. In order to enhance procurement of rice during the kharif marketing season 2006-07, an incentive bonus of Rs 40 per quintal for paddy crop 2006-07 up to March 31, 2007, has also been announced. The survey indicated that the increase in the MSP will help the government to fill up the buffer stocks. The decentralised system of procurment helps to cover more farmers under the MSP operations, improves efficiency of the PDS, provides varieties of foodgrains more suited to the local taste and reduces the transportation costs of the FCI. There was record procurement of 10.9 million tones of rice under this scheme by 11 states/Union Territories in the kharif marketing season 2005-06.
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Population to stabilise in 20 yrs
New Delhi, February 27 Stressing that addressing issues like child survival, safe motherhood and contraception was the mantra for population stabilisation in the country, the survey tabled in Parliament today by finance minister P. Chidambaram stated that the annual population growth was expected to gradually decelerate from 1.6 per cent in five years ending in 2006 to 0.9 per cent in five years ending in 2026. According to predictions by the technical group on populations projections constituted by the National Commission, as also mentioned in the survey, India’s population is estimated to have gone up from the census 2001 figure of 1,029 million to 1,112 million in 2006. The population is projected to further increase to 1,400 million by 2026. The well-known “demographic dividend” will manifest in the proportion of population in the working age group of 15-64, increasing steadily from 62.9 per cent in 2006 to 68.4 per cent in 2026, the survey adds. With the high proportion of the population in the reproductive age group, the total population will continue to grow for another 25 to 35 years before stabilising around 2045. To ensure population stabilisation, the survey calls for addressing issues of child survival, safe motherhood and contraception. It points out that wide interstate, male-female and rural-urban disparities in outcomes and impacts continue to persist, while inadequacies in existing health infrastructure have led to gaps in coverage and outreach services in rural areas, all resulting in current increase in the country's population.
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India shining, indeed!
New Delhi, February 27 Consider the following statistics given by the survey. India’s Foreign Exchange reserves were pegged at a record $ 185.1 billion on February 9, 2007, a far cry from a hopeless situation when the then Chandra Shekhar government had to pledge national gold in London in 1991 to get $ 200 million for keeping the national economy afloat. The Forex reserves figure is likely to cross $ 200 billion mark before the current fiscal year ends. $ 200 billion is enough to have an import cover of over an year. When the Forex reserves figure had crossed $ 100 billion mark, the then Vajpayee government had celebrated the event with gusto and portrayed it as an indicator of its good performance. Foreign investments continued to pour in India. The buoyancy of foreign investment flows was best exhibited by the bullish BSE Sensex which rallied from a low of 8929 on June 14, 2006 to all-time intra-day high of 14,724 on February 9, 2007. The rally from the 13,000 mark to the 14,000 mark in only 26 trading sessions was the fastest ever climb of 1,000 points. The incidence of poverty came down to about 22 per cent in 2004-05 from a level of 26.1 per cent in 1999-2000 in terms of the mixed recall period, data for five non-food items — clothing, footwear, durable goods, education and institutional medical expenses. The UN World Tourism Organisation noted in January 2007 the “emergence” of South Asia as a tourist destination with a growth of 10 per cent in tourist arrivals in 2006, which was more than double the global growth. The survey quotes the UN body as saying that the growth of tourism in South Asia was “boosted by India, the destination responsible for half the arrivals to the sub-region.” Then, there is another important manifestation of the movement of the Indian juggernaut. India’s external debt stood at $ 136.5 billion (Rs 638,181 crore) at the end of September 2006. In other words, it means that the external debt liability per Indian is Rs 6381.81, taking the total population of India to the round figure of 100 crore. India comes at number eight on the table of external debt after China, Brazil and Russia.
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Environment
New Delhi, February 27 The survey, tabled by Finance Minister P.Chidambaram in Parliament today, cautioned that industrial pollution was concentrated in industries like petroleum refineries, textiles, pulp and paper, industrial chemicals, iron and steel and non-metallic mineral products. It said the small-scale industries, especially foundries, chemical-manufacturing and brick-making, could also be significant polluters. In the power sector, thermal power, which constitutes bulk of the installed capacity for electricity, was the major source of air population. With the impressive industrial growth expected to maintain pace, the survey has enlisted efforts made by the government for the protection, conservation and development of environment while sounding warning bells to contain “the damaging impact of industrialisation on environment.” Some of the major initiatives taken to control environmental pollution include notification of general and source-specific standards for emissions and effluents, regulating siting of industries, regular monitoring for compliance to environmental standards and legal action for non-compliance. Other efforts have been setting up of clean technology mechanisms in polluting industries, common effluent treatment plants(CETPs) in industrial states and waste minimisation circles (WMC) in clusters of small-scale industries. Implementing recommendations of the Charter of Corporate Responsibility for Environmental Protection in 17 categories of highly polluting industries and eco-mark scheme to encourage production and consumption of environment-friendly products; promoting economic instruments to minimise the costs of fiscal incentives for pollution control equipment; setting up of progressive emission norms at the manufacturing stage for controlling vehicular pollution and introduction of cleaner fuels like unleaded petrol, low sulphur diesel and CNG; and setting up of the national clean development mechanism (CDM) authority as per the Kyoto Protocol are the other initiatives taken to control environmental pollution. The CDM authority, which receives projects for evaluation and approval for carbon market, till December, 2006, gave host country approvals to 473 projects, facilitating investment of Rs 36, 408 crore.
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Healthcare
New Delhi, February 27 The 2006-07 Economic Survey clearly states, “India’s position on health parameters compared even to some of its neighbours continues to be unsatisfactory”. The survey shows that country’s life exepectancy between 2000 and 2005 stood at 63 years compared to 74 years in Sri Lanka and 71 years in China. India’s infant mortality rate (IMR) (per 1000 live births) credited to the 2006 UNDP Human Development Report was 62 in 2004. This figure gives India the dubious distinction of having the second highest IMR among Bangladesh, China, Nepal, Pakistan and Sri Lanka.This is more than five times the IMR of Sri Lanka and more than two times that of China. Pakistan’s IMR the same year was 80. India’s maternal mortality ratio (MMR) (per 1,00,000 live births) in 2004 also speaks volumes of the inadequate attention paid to women at the time of delivery. Its MMR stood at 540, more than 10 times that of China and six times that of Sri Lanka.Nepal had the highest MMR at 740. Equally noteworthy is the fact that the IMR and MMR figures of India are at variance with the official figures of the office of the Registrar General of India. The under five mortality rate (per 1,000 live births) in India in 2004 was 85, six times that of Sri Lanka and more than two times that of China. The survey has stressed the need for strengthening primary health infrastructure and improving service delivery. While acknowledging the steady increase in healthcare infrastructure available over the plan period as per the Rural Health Infrastructure Bulletim 2006, the survey points to the shortage of 19,269 sub-centres, 4,337 primary health centres (PHCs) and 3,206 community health centres as per 2001 population norm. It states, “Almost 50 per cent of the existing health infrastructure is in rented buildings...Poor upkeep and maintenance and high absenteeism of manpower in the rural areas have eroded the credibility of the health delivery system in the public sector”. While drawing attention to deficiencies in the public health system, the survey has highlighted the achievements of the ambitious National Rural Health Mission aimed at providing accessible, affordable and reliable primary healthcare facilities to the poor and vulnerable sections of the population.
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Growth rate pegged at 9.2 pc
