Economic survey 2020-21: Some highlights

Finance Minister Nirmala Sitharaman tabled the Economic Survey 2020-21 in the Parliament on January 29, 2020 - the first day of the Budget session. The survey has analysed various topics from economic growth, fiscal stance, state of banking and more.

Here are the top highlights related to some sectors.

Agriculture and food management

• As per the Census 2011, about 54.6% of the total workforce in the country is still engaged in agricultural and allied sector activities. This accounts for approximately 17.8% of the country’s Gross Value Added (GVA) for the year 2019-20 (at current prices).

The resilience of India’s agriculture sector can be seen from the fact that despite the COVID-19 pandemic, its performance in output was strong. The sector came up with a robust growth rate of 3.4% at constant prices during 2020-21 (first advance estimates).

• The sector and allied sectors including animal husbandry, dairying and fisheries has got renewed thrust due to various measures on credit, market reforms and food processing under the Atma Nirbhar Bharat announcements.

Under the government’s food management programme under the Pradhan Mantri Garib Kalyan Anna Yojana, 80.96 crores beneficiaries were provided additional foodgrains, i.e. above the NFSA mandated requirements, of 5 kg per person per month free of cost till November, 2020. Over 200 LMT of foodgrains were provided amounting to a fiscal outgo of over 75000 Crores. Also, under Atma Nirbhar Bharat Package, 5 kg per person per month was distributed for four months (May to August) to benefit approximately 8 crores migrants who are not covered under NFSA or state ration card entailing subsidy of 3109 crores approximately.

• There is low coverage of agricultural credit in the north eastern region.
• Both production and post production in agriculture needs urgent reforms. Increase in area under irrigation, adoption of hybrid and improved seeds, increasing variety replacement ratio and augmentation in seed testing facilities will help address low productivity concerns. Adequate storage and remunerative markets for agricultural products should be the main focus of post-production management.
• It is also important to integrate agriculture with nutritional outcomes by means of food fortification of staples.

On the post-production front, measures like village level procurement centres, linkages between production and processing, development of rural markets, option of selling outside the APMC markets – warehouse upgradations and strengthening of railways freight operations, dedicated freight corridors among others are needed and are being taken up. These measures will not only reduce post-harvest losses but will also help realize the objective of doubling farmers’ income.

• During the last 5 years ending 2018-19, Food Processing Industries (FPI) sector has been growing at an average annual growth rate of around 9.99% as compared to around 3.12% in agriculture and 8.25% in manufacturing at 2011-12 prices.

Sustainable development and climate change

• Sustainable development remains core to India’s development strategy and it is committed to the 2030 agenda for Sustainable Development with 17 Sustainable Development Goals (SDGs) and associated targets encompassing a comprehensive developmental agenda integrating social, economic and environmental dimensions.

Several initiatives have been taken at both the national and the sub national level to mainstream the SDGs into the policies, schemes and programmes of the Government. India has been taking several proactive climate actions to fulfill its obligations as per the principles of common but differentiated responsibilities and respective capabilities and equity.

• As mandated in the UNFCCC and its Paris Agreement, the climate actions of the developing countries would have to be supported by finance flows from the developed to the developing countries. The Nationally Determined Contribution (NDC) submitted by the country has been formulated keeping in mind the developmental imperatives of the country and is on a “best effort basis”.

In its NDC, India has sought to reduce the emissions intensity of its GDP by 33 to 35 per cent below 2005 levels by the year 2030; achieve 40 per cent of cumulative electric power installed capacity from non-fossil fuel sources by 2030; and enhance forest and tree cover to create additional carbon sink equivalent to 2.5 to 3 billion tons of carbon dioxide by 2030.

• The country is on its track to successfully decoupling its economic growth from GHG emissions. As per the second Biennial Update Report (BUR) submitted in 2018, India’s emission intensity of GDP reduced by 21 per cent in 2014 over the level of 2005.
• The country is relying on domestic resources to implement adaptation and mitigation action on mission mode. The financing considerations will remain critical especially as the country steps up the targets substantially.

The implementation of NDC has started from 1st January 2021. There is a huge gap  between resource availability and the requirements, implementation of wide-ranging NDC goals presents a major challenge COP 26 now scheduled in 2021 is expected to discuss and arrive at a consensus on transparency mechanism; Article 6 (market and non-market mechanisms); common time frames for nationally determined contributions; long-term climate finance etc.

• On finance matters, it is essential to arrive at a consensus on the definition of climate finance and on a common accounting methodology for assessment and evaluation of climate finance.
• In 2017, to give push to green bonds issuances in India, SEBI issued guidelines on green bonds including their listing of green bonds on the Indian stock exchanges. The cumulative issuance of global green bonds crossed US$ 1 trillion mark in 2020.

Climate risk insurance is an important tool for providing security against loss of livelihoods and of assets as a consequence of disasters. Thus, given the significant contribution of the agricultural sector in the Indian economy, coupled with looming “climatic aberrations,” crop insurance becomes a necessity to mitigate the risks associated with a majority of the country’s farmers.

• We need to strive for equity across nations and within a nation, and equity across and within the generations. The COVID-19 pandemic and the iniquitous impact of the consequent lockdown reemphasizes the fact that sustainable development is the only way forward.

The economic survey can be accessed here