 come for the basic economics classes I want to go with slowly to see that whether we are all at the same level right survey usually will come in two different volumes volume one and two that was the earlier tradition these days we are getting only one volume which will be also mostly matching with our economics core economics books so the schema of the book which you would have read already will be upon the GDP the first chapter you would have studied upon the national income then you would have studied on the growth and development the indicators which are indicating the economic growth and economic development then you would have studied about the public finance in two to three chapters then comes your money banking inflation then finally the external sector so this organization of the chapters in economic surveys also almost matching except for that external sector being placed as the 10th chapter which is an unusual thing for the survey to be having it towards the end but the first chapter what we are going to start with today will be actually representing the content from almost all the chapters which are going to come subsequently so it will talk bit about public finance about the inflation about the external sector every single thing will be here in this first chapter so what we are going to do is we will pick out the major lessons what we have to look at from the first chapter we are not going to go into the details say for example if there is a graph on the external sector the foreign exchange reserves level whether it is good bad how much are we having whether we will be able to meet with the external debt those kinds of discussions we are going to have when we get into that particular sector that particular chapter so what is relevant for today's class we will pull in all those facts and figures because they are trying to show that the economy is reviving so for the revival we need to have certain indicators if we understand the indicators we understand that the economy has revived to this extent the first chapters data and the evidence and the substantiation will be taken from the rest of the chapters the rest of the discussions will happen as and when when we get into the other other chapters towards the end right anything which is there in the survey they are not going to be newer things for you you had been reading about the current affairs also for the past 10 months at least everyday reading of the newspaper will definitely give you familiarity with whatever is being said in the survey but there is some major question or a major aspect which every chapter is covering there are certain long term perspectives which only the government can think and talk from their side right so we are all participants we are all as part of the households we are all as part of the private sector we look at the economy we read the newspaper but from the government's perspective what is it the government is planning for the next five years next eight years how is it thinking that the economy will move ahead whether it will be contracting whether it will be expanding all their apprehensions all their confidence level all the challenges they are all the things which are there on the chapter so we are not going to learn as such anything I'm not going to sit here and tell you what is fiscal deficits formula of course it is also essential for us to understand the table but when we say that there is a data on fiscal deficit say for example 6.7 percent age you all should immediately able to relate that how much the government has actually borrowed so it is a combination of our basic learning applying into the real-time economics that is what is going to happen in today's class you all have learned to send an bit basic concepts you all have learned about the government schemes and programs whatever you have learned how the government has presented itself is the major thing which you may have to look from the first chapter onwards right so today's chapters will be from the first and second and the third we will be moving up to the public finance topic in the next class we'll look at the inflation and the banking and the rest of the things so for today's class the concepts will be upon the national income GDPs the growth rate the trends the patterns then we will they have not mentioned anything specific about the developmental indicators but there are lots of indices which the survey has introduced which you wouldn't have learned as part of the basic classes maybe they will be helpful for you to remember and recall later for the exam then we are also going to look at the public finance when we get into the public finance we'll also see how much of our basics are helping here to understand right so with this background we'll get into the first chapter online students if you have any doubt or any clarification which is required you can always message I think our academic coordinators are all here to help you the questions will be read out and we will be giving you the answers right so we look at the chapters see when we travel from one one slide to another slide one table to another table don't look for linkages like how we will do in the class that's not what is economic survey survey is presenting entirely about Indian economy in one place so there are going to be lots of things facts figures important to projections everything given here so there wouldn't be a continuation from the slide to the next slide it is not a class kind of a thing it's learning the survey as presented by our finance minister Nirmala Sita right okay so the first seven to eight slides after the class the presentation will be shared with you you will be having the survey with you you can download it from the website these are the major things which you will have to look at from every chapter which will be shared with you once the class is over right the first a few slides what we are going to give you here will be talking about the global level challenges global level measures taken and what are the impact because of the measure always when you learn economics you have to see what is the issue how far it went to the intensity and other issues and then the measures which were taken for it as a result of the measure what actually happened again it will go back to a cycle it will go back to a vicious cycle but let us at least look at these three things at the global level what were the challenges what were the measures and what after the measures were taken what happened to the global economy as well as to Indian economy after 7 8 chapters we will start looking 7 8 slides we will start looking at the Indian economy so initially we are presenting the recent picture the diagram is about the inflationary level you all will be knowing that at the global level the prices are increasing for various reasons so they have given summary from financial year or 2020 I hope we are all on the same platform for the definition of financial year right anything which starts from April 1st to March this is for India okay for the rest of the countries they all go with the calendar year mostly for us only it is like this we call this as fiscal year or financial year most of the other countries they follow from Jan to December so anyways when we look at the year to increase your 20 needless to say that we all know like how much COVID had affected the economy slowly first round second round third round finishing of several rounds of COVID we were moving towards 2022 the variants were also coming we were finally ending up with Omicron and then slowly the economy was about to revive at that time the war started right subsequent to the war production constraints supply constraints prices increasing everything happened at the global level India is also a part of it a victim of it participating in it so therefore when the prices are increasing then comes this concept of monetary tightening which is nothing but your monetary policy tightening means you are going to increase the interest rates so that's the meaning of it nowhere in the period of the history of the economics we have undergone such a different kind of mess right the meaning of this is if you have a war it goes on for certain years the impact of it one kind of dealing if there is a health issue it goes on for some time once in 100 years only we've got this kind of an health issue otherwise there will be some swine clue some some pandemic will happen now and then that will be a thing to deal with then the prices of course a subsequent to the happenings prices will get affected the economy the government everybody is struggling because you want the economy to revive at the global level which means that you have to give them money you have to give them the fiscal stimulus you have to give them the monetary stimulus but because of these supply constraints which has been done by this man-made war now we have to go back in the opposite direction for the policies we are going to tighten everything one side we are hopeful that the economy should revive another side we are tightening the economy because the prices are increasing this is kind of a very very complex situation for all the countries including India to deal with countries which could balance they balance countries which don't which can't balance they are going to again end up with growth issues which is what is also being shown in the graph this is only the prices related graph in the next slide we will again show to you what is the growth related difficulties which the countries are facing so that's about the monetary tightening which is actually complicating the situation right now then you are seeing about the depreciation of currency right we are not actually talking about dollars we are talking about the global level but we are not just talking about the dollars there are lot many other currencies every country has a currency of its own if you want to talk about India itself India's currency depreciated when monetary tightening happened India's currency why should it depreciate when monetary tightening is happening it's a larger statement it's a macro statement who is doing the tightening US is doing the tightening every country is doing tightening for that matter so US is tightening what it's increasing the interest rates obviously dollar supply will reduce when dollar supply reduces what happens US is the only source of dollar supply for the rest of the world of course China has lots of US dollars saved with that that's a different story but originally the dollar has to be supplied only by US not by China right so when the dollar supply from US is actually getting reduced what will happen all other countries will be in panic dollar is not coming I don't want to go for investment I don't want to look at this share market right it's not just not doing it's also withdrawing there are two actions one you can say that no I don't want to involve two I can say I want to get out of this so when people start to withdrawing things from other other countries what will happen that's what we call it as capital flight right every country's capital the capital which came in the form of FII are we all familiar with this word FII foreign portfolio investment or foreign institutional investment that will fly away from our country flying away means getting withdrawn by the investors because they are all in panic why did this panic come into the picture monetary tightening is happening who is tightening it US is tightening they don't want to give the dollars for the so this situation what will happen when the capital flight is happening we are losing the dollars out of the country FDI FII they are all seen as the major capital which are coming inside the country in the form of dollars so one thing is going away so then what will happen when dollar is becoming scarce we have to give more money to get $1 which is what is called as depreciation how much rupee are we giving against to get $1 is what is defined as the exchange rate the exchange rate will start depreciating when depreciation happens what will happen two things will happen one exports I should get louder louder exports I should get increased what will happen to imports imports why will it decrease imports will become passlier keywords you shouldn't forget right imports are going to become costlier exports will actually increase are we in a situation to improve the exports everywhere there is an issue there is a supply constraint of course we did made some opportunistic benefits because we participated in the global value chain certain countries were fighting with certain countries and we were in in between going and supplying things to the rest of the world but generally if you look at the global level it was not a very positive or a good situation where the exports will increase right you remember exports world if you are talking within inside India it is domestic consumption export is foreign consumption everybody agrees you don't consume you are going to give it to some other country some other foreign country is going to consume so whatever you produce inside the country it is domestic consumption whatever you're exporting is foreign consumption whether the consumption is at a higher level level at the different countries only then you can say that I can improve the exports of my country the situation is already gloomy where will I go and improve my exports when the depreciation is happening it's not just happening for India it's a concept for all the countries so everybody is not wanting see one country is exporting another country should import no that fellow's import cost is also increasing why will he import right now when the cost of the import is actually higher are we connecting things your export is somebody else's their imports have become costlier because their currency has also depreciated right you are willing to give they are not ready to take so to whom will I export so the global trade will come down global production has come down global trade has come down right so monetary tightening has resulted in varieties of impacts right from depreciation of currency reducing the global level trade production imports becoming costlier the moment imports becoming costlier what will happen our current account deficit will start widening right we are familiar with the word current account deficit right we are going to see it as part of the chapter later but they are the implications and we are also seeing our why are we mentioning only about China on the board is mainly because China is the major trading partner for many countries right not just for India it's a major trading partner for many countries so if slowdown in China is happening then the supply disruption automatically happens so that is also adding to the woes of the global challenges and they have written a point on the loss of education and income generating opportunities this is mainly from the covid period where they thought people were not getting the good quality education as a result of its children who are finishing their school they did not prepare well and then they come to the college children who are finishing their college they were also not getting good quality education because they just did the online right so there are lots of issues with it and with these kind of quality where will they go and find their jobs right and also there were lots of layoffs which were happening it was not a past thing it is now also happening many software companies are suddenly coming up and saying that they are laying off jobs so because of the global level economic issues there is a loss of quality education there is a lot of income generation opportunities right so these are all the global challenges which these surveys actually presenting in the first chapter in the beginning this is just to show you the difference between the advanced economies and the emerging marketing economies how the prices are very fastly increasing they have presented the prices of both the food and the energy right so basically energy you can go back and think about your petrol and diesel right supply disruptions was very high when we were talking about the war situation so they have given it on a month-on-month basis particularly from February 2022 you can see that there is a steep hike in the prices advanced economies so with all the developed economies and then the right-hand side you see the emerging marketing economies where you can also see India into the picture right so corresponding to this period you can see that Russia's prices were peaking and then now slowly getting moderated so this is all to give evidence about the levels of prices there is another graph which is also given at the global level again comparing between the advanced economies and the emerging marketing economies they're wanting to say about the financial condition index basically finance means you should talk about the interest rates how the capital marketers are doing right then you can talk about the exchange rate exchange rate mainly we are talking main because of this impact of appreciation or depreciation upon the credit situation right so all of these things are actually we don't have to remember what is this financial condition index but if you can if you want to see what all the things there are there in this particular graph you can think about interest rate exchange rate share market things and the credit spreads like to how many sectors they have given usually when you talk about the credit they will see about whether you are giving it to the non-food sector whether you are giving it to the food sector whether you are giving to the industry services varieties of detailing will go into it basically we can see that everything in this recent past like in the 21 it was having a dip and then slowly it is improving even in the emerging economies you can see that in 21 December 21 and all it was lower slowly it is now the financial condition is improving right so India's graph is here in the green color so India's graph is also slowly improving towards the end particularly after June and all in the 2022 we are seeing that the increase is happening right this is a data on the global level growth rate projections right what is growth rate anybody GDPs the rate at which GDP grows what GDP are we talking about nominal GDP real GDP we are familiar with these words nominal and real GDP right so real GDP is after inflation nominal GDP is including the inflationary value before inflation and when you say some economy is growing by 4 percentage we are comparing it to what we are comparing it to the base here concept will base here concept will come when we talk about the real GDP if we talk about the nominal GDP you are comparing it with the previous year right so last year India was earning 100 rupees this year India is earning 104 rupees India's GDP grew by 4 percentage so that's the meaning of this word so now they are giving the growth projections so based upon the 2022 they want to give the projection for 2023 you can see what is the level of projections which are given for the advanced economies the projection is actually very very modest or even when compared to 1.6 they are saying it will grow only by 1 percentage in the future for United States whereas when you come and look at India it's around 6.8 percentage right now and they are still giving 6.1 percentage when they were trying to put down the numbers for other countries in a larger extent to India they have not reduced it to that extent right so we can see that India is still prospective among the different economies see when you look at economics know when you are talking about some numbers several things have to run in the back of your mind USS GDP is growing only by 3 percentage or 1.6 percentage a different meaning is different from what is India's GDP first to India if it is earning 100 rupees US will be earning 1000 rupees right and then you have to apply this rate upon the absolute numbers it's basically the numbers but you have to always relate to that right the only point is we are growing at a base better than other countries that's the point which this table is wanting to make then we have to ask the question why are we growing at a rate better than the other countries then we have to reason it out and we are saying that India is very good they have to give the reason why is it good why is it good mainly because India is a consumption based economy right we are all consuming more we always demand as long as the consumption demand is there production will happen if production happens employment will happen employment happens income will come income comes again they will be coming and consuming so because India is a consumption based economy we are going to still say that this kind of a percentage India is able to manage right and also you can see that the difference they have given April to March for India and Jan to December for the other countries this is purchasers manager managers in the index purchasing managers index you're all familiar with this word PMI purchasing managers index PMI right it takes a value between 0 to 100 any value above 50 your economy is actually good anything less than 50 you are actually contracting which is what they want to show here from August or yeah this the last part from August 2022 they are showing that many economies are actually getting into the contract right because the value the dotted line whatever they have given is corresponding to the value 50 so when the graph is dipping below the 50 they are wanting to show that the economies are actually contracting after August 2022 mainly because this inflationary pressures are happening subsequent to that the monetary tightening is happening when monetary tightening is happening there will be always a problem with the group because credit supply will not happen and say credit is not happening investments will slow down and investment slow down production will slow down income generation will slow down to tax economics on any side it will have a story to tell for itself right so anything which you do it has a consequence so the monetary tightening is also worsening the situation and therefore you're seeing actually the purchasing managers index basically it's all going to talk about the production sector right it's about the purchasing means they are going to look at all the production related indicators how much inventory do we have whether we are buying selling stock of inventories that are finished goods raw goods like that they'll be having their own indicators into it right so this is being produced this index is being produced by S&P global right you have lots of indicators for the share market also like sensex and nifty nifty junior right so like that there are agencies which will be giving you global level indicators one of it is S&P global so they are the people who have given this PMI global level PMI in which they are showing that actually the economies are contract here there is a word which they want to talk as non-financial sector debt right first we have to define what is non-financial sector so that we can talk about their debt you all have studied circular flow of income right first to class what are all the boxes which you recall sectors household business banks government external sector leave the external sector now as of now four sectors in your hand household business banks government apart from the bank all the other three things are non-financial for you to remember easily you know already the circular flow households will also take loan from the banks business sector will also come and take the loans government will also do some loans it can go and ask the loan from the bank it can ask from RBI it can ask from the people anywhere right government can borrow from anybody so government is borrowing households are borrowing private sector business is borrowing all of these things will belong to non-financial sector debt that's the title of this table and they are going and showing that across economies how to read this table let us just focus about India first then you will be able to read about the data for the rest of the economy we have given a box for India you are seeing that household private non-financial which is what is the business things then we are talking about the government they have given Q2 of 2022 changes since Q2 of 2008 right why this particular period 2008 2008 we had a crisis global level crisis we had a very good economic period between 2002 under 2007 8 after that the economy all changed so they are going and seeing towards the end of that particular good period on the current period how this debt is there obviously if it was a good period then the debt would have been like in a reasonable shape so now when they are comparing it they are saying like it has actually reduced what has reduced the house borrowing has reduced the private sectors borrowing has reduced government's borrowing you will never see that it has been reduced anywhere in the history of India so here also you're going to see it as positive but you can see that the overall number is minus 7 are you seeing that minus 7 in this whole column only India will have this minus 7 have we observed that right so this they are saying it on a positive way the hard the economy is reviving reviving people are making money government is borrowing the rest of the people are not into that much of debt therefore India is better one compared to the rest of the world right I will agree for this people they are talking actually about the household thing but if the private sector is not borrowing much then there is a problem that they are not actually also investing that knowledge also you should suppress because that is what they have said in economic surveys so we agree to the point we're going to say that India is actually doing better when compared to the rest of the world because we are the only country who is having an addition of minus 7 here right so they are saying households, credit cards, credit card balance, treasury bills, outstanding all of these things will what will get into this non-financial sector but for the rest of the world they are actually showing high if there is US we will have a look at US for US they have pattern like us households have borrowed less private sector has borrowed less but government has gone ahead in a very highway in US we'll go and see any other developing emerging marketing economies like in case of your brazil or anywhere they have positive negatives everywhere but throughout this table we are the only person who are having a lesser right so this is one kind of a presentation where again they want to show that India is doing very good when compared to the rest of the world one was that projection of the growth where they said we are going to have it more than six percentage two is they are saying we are not going to become that depthful because compared to the rest of the world we are actually less and they are appreciating that the government is actually borrowing more because it will come back to the society now slowly we are moving towards Indian economy that's all the global picture global picture looks big gloomy we have to see what will happen to the economies right coming to India the first thing is economic growth remains a resilent we are showing our strength by increasing the growth rate in the year financial year 2022 and they are projecting even a higher growth rate in the year 2023 or 6.9 percent to 6.1 percent something like that so on the right hand side graph you please see the percentage it is between 4 to 8 percentage it went up to closer to 8 percentage and then it is now between 4 to 8 percentage so that is the and this is all based upon the real GDP I'm sure you're all familiar with what is real GDP so now let us look at what is that actually resulted with the growth in the years which is the graph is representing there was a significant GDP contraction in 2021 recovery they have mentioned recovery mainly they say that India recovered in health even before it recovered in economics because we were the country who are like going ahead for universal vaccination right bringing back the contact intensive services right so vaccination was a major point which they want to mention and then the fiscal stimulus we're all familiar with this word fiscal stimulus government is giving credit packages to the business yes it is one of the fiscal stimulus is that the only fiscal stimulus any more examples creating inflation we will talk about inflation when we get into it we will talk about now what government is actually doing government is giving you credit you're all stimulated done anything else reducing tax labs very good so you should be left with some money in your hands to buy things is it not so when I reduce the tax rates on the tax lab then I have some money in my hand with that money I will go on buy things so that the demand the production everything will be moved on so it's giving you money right or giving you credit or giving you subsidies not exactly the consumer subsidies alone I also mean the producer subsidies so somewhere the subsidies have also increased so there are many ways income generation employment generation giving off subsidies giving off finance reducing the tax rates any of these things could be called as a fiscal stimulus but most of these things were done during the period of 2021 to revive the economy so that is also helping us to get back and strong demand revival and they have a very detailed explain about this demand revival throughout the chapter will again see about this point but as we said earlier India is a consumption based economy so the demand means you should assume that it is the demand from the household sector basically for the consumption purposes then when we look at the challenges though we are growing we have we are part of the globe and therefore we are also facing all the challenges what we mentioned for the global economy so we are also having impact because of the global trade getting down the inflationary conditions happening the monetary tightening at the happening at the global level and therefore the demand is getting suppressed so in this chapter we will give a outlook towards the end outlook means how this year is going to be upcoming year is going to be based upon whatever has happened so far right so now when you studied the GDP you would have studied about methods of calculating GDP 2-3 methods can you mention the methods income method expenditure method and product method out of the three things which is the most followed one I'm getting all answers I thought I will hear only one word louder production method we had a production method is called as product method what is your answer expenditure method anybody is having an idea that we are following expenditure method no no income method they are there but they are not the major methods what we follow income and expenditure are difficult to be captured if you ask the income data they won't report to you if you ask the expenditure data they will report to you but they won't have the bill unless you are billed under GST I won't believe that the expenditure has happened so both the methods are difficult to be followed therefore the product method therefore the product method graph this is product methods graph right so you are able to see agriculture industry services you would have divided the economy into primary sector secondary sector tertiary sector you'd have seen the final quantity multiplied it with the prices added up the value which is what is the GDP according to the product method. what you're able to recall what we studied in the first class you would have divided the economy into primary sector secondary sector tertiary sector you would have minus to the intermediate consumption you would have taken the final quantity you would have multiplied it with the prices then comes the answer called as the value which is what is called as the GDP we remember the product method now right so that product method the primary secondary tertiary they are giving the presentation across the difficult years which we are into discussion right now are you seeing a slump for the for the what services and industry but agriculture managed right so being an agriculture country is a very good fact forever so even in the covid time we were able to sustain a good like economic growth rate with agricultural sector but why is the service slumping below industry this is shocking for us is it not we all thought industry is the thing which will be hit very badly services sector was still surviving why is it slumping below industry contact-based industry so you have to call it as which one is the contact-based industry you have to rename now contact intensive services we are also trained to call the industries and services if we have a difficulty put the word enterprises enterprises is a common word for both industries and services right right now we will have the specific thing about the services we have to divide the services into contact intensive and non-contact services non-contact services survived all the contact services slumped give me some example of contact services hotels transportation tourism education did happen partially online but yes of course we lost the contact right only thing which survived with the contact was medical industry right so the services lumped then the industry slump but then there is a revival which we are seeing on the services side now mainly because we are allowing the contact intensive services also to happen the right hand side graph is there now this is your expenditure method can somebody tell me the formula for expenditure method GDP calculation C plus I plus G plus H minus M plus R minus P R minus P is not in the picture here as such you will not see government also into this but this is P this PFC private final consumption expenditure is the consumption C should I write out on the this is C this is I this is X and this is I what is this I you thought it was government right gross fixer capital formation it's actually not the full I full I will be gross capital formation should be written just as GCF where GFC of plus that bullion and change in stock inventories all those things should come but they are all meager amounts therefore they are put in the major amount of the I which is called as a GFC of so C plus I plus X minus M that's what is given here and then they are showing that the data as soon as you first look at the graph the first thing is consumption is dominating are you observing that the bars of the consumption is only so taller and then they are talking about the financial different different financial years and all these financial years in the the latest one is they are again projecting consumption will be very good the investment is going to increase exports are expected to increase imports are also expected to increase there is no other projection for imports right exports is slumping and then slowly they are expected to increase so this is the growth across the sectors one this is the expenditure method this is the product so that's about implicating that the growth is driven by demand and investment because these are the two major bars here consumption is otherwise called as the demand and of course the service sector and everything has also revived so now we are showing that India is driven by demand followed by investment sometimes they'll put it into that private final consumption expedition actually into the private they shouldn't add the government they wouldn't because mainly it is on the other side what to say in the formula you will write no government taxes collection minus the expenditure side see basically when you study the circular flow of income every sector will have an income every sector will have an expenditure right the income of the government is mostly the taxes and other things and the expenditure is actually higher actually the government is in deficit so coming and putting that into this is difficult so they prefer sometimes not to put so then what we if you put that in in that particular way no the circular flow will not tally circular flows condition is one rupee which is inserted should be running continuously actually governments spending will be more its earning will be less so inserting it will be difficult right so these are all the projections and the substantiations to show that India's growth is driven by demand and investment right this graph is actually moving towards the external sector where we have this widened the current account to deposit obviously for the reason the currency was depreciating our exports were not promoting much imports were becoming costly right so that is also there they have given it across 2021-22-23 when you say Q2 of 22-23 we stand up to September right up to the second quarter we can see that the current account deficit is actually widening widening mainly because it is slumping down like this and basics of the current account I don't have to get into it right you're all familiar of it you know the balance of trade balance of services inside the balance of services you will be having investment income also India Pachamani rukha as one of the law yeah we are familiar with all of these words what is there inside the current account goods account services account goods export import you call it as balance of trade services export import balance of trade balance of invisible apart from that you would have also studied something called as investment income after the balance of trade balance of invisible inside the balance of invisibles that is inside the services there is one investment income have you read about that we have read about FDI FII coming into the capital account if you get the FDI what should you give back FDI what is FDI very good what is foreign direct investment somebody coming and investing in the business inside India when you do business what will you get you have to share back the in the form of back to the country to whom they brought in the capital so when from where will you give the dividends you will give it under the services account only he understood similarly apart from this FDI FII there are external commercial borrowing and other borrowings that are happening under the capital account short-term commercial borrowing all those things when you borrow from any other country what should you give back loader where will you give this interest from services account right apart from this there is some remittance that will also be coming under the services account have you studied all the three components of the services right investment income is a huge factor in this because one thing export not increasing imports increasing your trade will wider trade deficit will wider or the what to say current account deficit will wider are we relating to what we are talking exports not increasing imports increasing what will happen we are not earning but we have to spend therefore what will happen our current account deficit will wider this is because of that own account my own current account I'm suffering but I will also suffer because of my capital account how will I suffer if I take more FDI I have to give back more loader dividends if I take more loans I have to give back more right because of capital account also current account will suffer both the ways understood right small small things you have to keep only under current account big big things you have to keep only under capital account but whatever bigger thing you're doing in the capital account it will have an impact on the current account that is why they are mentioning this as the goods and services account yes of course there will be an impact not much because of the services but because of the goods mostly services will be in positive you all agree export of services will be more than the import of services so services will learn for the country but export of goods will be lesser than the import of goods so goods will be mostly in negative then this investment income will also be in negative why will it be negative are we not doing FDI across the world India doesn't do FDI India is very good in receiving FDI that we all know does India do FDI in other countries yes so we should also get the profits right from other countries number FDI we should get back the profits what we get as a profit will be small understood what we have to give as the profit will be when we give large and we begin when we get less again it will become negative similarly is India giving loans to other countries historical India giving loans to other countries you should believe yes sometimes we do give loan to other country like we helped I didn't know that we helped Turkey right so we did we do help to the rest of the world when we do like that what will happen we'll also get some rate of interest yes or no but we borrow more than what we give so again that also will end up in negative so therefore that that part which is called as the income that will also be negative that when that widens when FDI comes more we'll end up in deficit in current account when borrowing have happening more we'll end up in widening of deficit in the current account so this is also worsening right so we have to be you would have studied something called as is getting that capital account surplus boon or a bane for the country we'll see about it when we get into the external sector as of now we are trying to say that the global economic scenario did worsen the current account deficit mainly because of the covid situation war situation price situation depreciation situation and we ourselves we are not able to give much surplus in this kind of a situation and export the commodities so that's this part and then the right hand side green part is about the foreign exchange reserves then the title of the table or the graph they have given as adequate foreign exchange reserves to finance cad cad is a current account deficit right so then they are questioning do we have adequate finance this foreign exchange reserves to finance the current account deficit I hope you all know the definition of foreign exchange reserves what is that inside and how the foreign exchange reserves are accumulated we know definition of our acts what is inside for us first we have foreign currency assets gold SDR I am a gold you keep here or wherever I am a gold is taken into account reserve tranche position RTP where is the foreign exchange reserves the definition poor things right what are the four things foreign currency assets gold SDR RTP what is RTP I am right so all the four things inside the foreign currency assets what are the major foreign currency which we are storing dollars comma euro pounds sterling Japanese and Chinese ruble we're all the major currencies which we are storing right of all these things whatever you say I'm storing in the form of gold SDR RTP whatever it is finally you will represent the foreign exchange reserves in terms of dollars which is what is written on the board here so they are going to say that we are having between 500 to 600 foreign exchange reserves that is the US dollar and this dollar is it enough to meet with the current account deficit what are you going to answer is it enough or not not it is enough there are different standards when I get into the sector chapter I'll tell you as of now for India there is one formula for one year of import I have money to pay I think that I will be able to meet the current account of this is India stand you know we had a balance of payment crisis in 1991 crisis we didn't have money to pay even for two weeks of imports that's the definition of that crisis right so now you put into your mind one whole year if I am ready to pay the import bill of one year for India I will think that I have adequate reserves I have more reserves much beyond that how did we accumulate this research that and I will talk later as of now we are declaring to the rest of the world see I am having money I can import and I have adequate this is not what I am of says I am of says if you have money for three months of imports itself is it is enough but India says I will look for one year right so both these things you remember we have a very pretty amount of foreign exchange reserves with us which is good for us or bad for us we see it when we get into the later discussion now comes the projection for India whether India will become resilient and which are all the things which is going to make India resilient right we need some stimulus there are some keywords which are being given in the economic survey we look at it but before that in this graph all of these things are agencies x-axis different different different agencies how much are they projecting as India's growth rate that's this graph on an average they are saying India will grow at 6.8 percentage so we are making sure that we will grow because of these reasons what are the reasons first thing they want to say that our private consumption has become resilient which is what we've already showed then the contact intensive services are coming back which also we mentioned then they call this word contacting intensive as because of the vaccination coverage we they're all able to come and sit in the class like this they call this as bazaar effect like we are able to come physically and meet each other and do the business so they are mentioning that with the word bazaar effect and they are also giving you one more new word pent up demand right so the demand has increased agreed but the demand has increased after a period of slump that is what they want to call it as pent up demand suddenly shooting up demand we were having very low levels of demand when this covid situation was there or the demand was not the demand was there but we were not able to address we shouldn't say that at the time of covid the demand was not there though the demand was there we were not able to meet or we were not able to serve it but now we are able to come back to the market and then meet with the demand so therefore it's called as pent up demand the spent upward repeatedly they have made use throughout the survey so learn the language of economic survey right so they are saying like the demand how did it pent up like slowly they were also getting credit then they went for the loans including the housing loans and the construction sector started reviving laborer coming in laborer were being given with income that income that fellow will go and take and consume so there was a mooting up of the demand across different different sectors so that is what is the projection for the country pent up demand is something which is completely in a low level suddenly it is increasing that low level of demand also we are asking you to think that it was not actually low the demand was there but we could not address it I wanted to study but I couldn't go to the college my demand was there but it was not addressed but now it is getting addressed so suddenly there is a shoot up of demand which we call as the pent up demand these are all indicators which another two three slides you are going to see different indicators which different sources are presenting mostly RV is coming up with the index you're all familiar with this business expectation index BEI which is given by RBI it is showing that the BEI of India is actually increasing all you need to mainly know about this is it takes a value between 0 to 200 above 100 if the if the graph is moving above 100 then there is a very good business expectation like how you study for the purchaser purchasing managers index above 50 similarly you can keep it as above 100 here so this is also given by RBI based upon production inventory employment exports several indicators so this is called as business expectation index one of which is also capacity utilization say for example we have four halls all the four halls is our capacity and it should be completely utilized what if there are no students here and the halls are there then it is meaning that we don't utilize the capacity which means that there is no business but if we are making every hall utilize then it shows that there is a very good business happening here so similarly they are also showing that the capacity utilization also had a slump in 2021 and now it is all improving along with the business expectation index this again about the private consumption they have given a graph but the right-hand side graph is much more important for us you can see that there are two indices which are being again given by RBI you can see that current situation index and future expectations index you can see the current situation index is at least slightly on a lower level but the future expectation index is better than the current situation index I have given the values of this this is taken from the RBI's website so what they do is they go and do this survey across different metropolitan cities and what do they ask is what are what is your income what is your spending what is your employment what is the price level so this they are asking in comparison with the previous year current situation means compared to the previous year how are you feeling about the prices now compared to the previous year how is your income now compared to the previous year how is your spending now like that they are asking the question and future expectation means what do you think in next year it will be like how will you think like how much income you will be getting in the following year how much spending are you going to do the next year like that they are giving the questions across 6000 households in the major metropolitan cities and they are generating two indices out of it current situation index compared to the previous year future expectation index compared to the following year and that is the graph which you are seeing in the previous slide so this is all published in the economic survey saying that the future expectation is very good so India's economy is actually reviving now we come to the government side to see what exactly government is doing I hope in the budget you would have studied the structure of the budget and you tell me the two major accounts under the budget heading revenue account and what is there under the revenue account two major headings again revenue receipts revenue expenditure capital receipts capital expenditure right when we say cap x it means the capital expenditure right so now we are seeing that the government is actually focusing more upon the capital expenditure usually there will be a trend with the government's budget that they are spending more on the revenue expenditure but nowadays the government is consciously thinking of increasing the capital expenditure by capital expenditure what do you understand it will increase the spending on what infrastructure right technologies R&D right basically infrastructure and other things which will also be resulting in employment generation so state and center they have given both the governments are responsibly consciously increasing their capital expenditure why we have to tell this mainly because we want to revive the economy when we have to revive we need to give them employment and income so we are giving some evidence from the government side how much they are taking efforts to improve the employment and income and then comes the question when the government is wanting to spend more on the capital how is that the government getting suddenly money to do this see basically if it is a subsidy if it is a smaller amount you will be able to manage by taking the money from the taxes or anything but you know capital infrastructure and all will be long gestation you know the meaning of the word long gestation it will take 5 years 10 years 15 years and all so once you touch the project you have to spend continuously for several years so which means that you need to have very good the source of resources in your hand to do it so then we are asking the government how suddenly in the middle of all this fiscal stimulus you've got money to do this so then the government is answering I am having now more buoyancy in the direct collections tax collections as well as indirect don't think that I'm going and borrowing and spending for this people are paying more taxes are you all paying more taxes we are all paying more taxes because we are all part and parcel of louder GST so private investments are also picking up but basically government side we can definitely say that government is showing with evidence that have you heard about the word buoyancy what is buoyancy they are going to compare two rates one is the tax collection the trade and the GDP is growth rate okay when the tax collection rate is higher than the GDP is growth rate then it's going to be called as boy right we are going to show it with evidence bit later as of now we have we are saying that yes government is also making efforts now we come to the finance side where we are seeing whether the credit is going to the economy to say that they are all being held here they are particularly focusing upon the MSME sector right then they are saying you can see in the graph MSME is the blue colored one and it's on the top large industry services they are also getting good credit particularly after February 2022 in the recent past year they are getting credit but MSME sector is getting the maximum attention even in the time of this Covid period they were getting it how is this possible everybody was suffering suddenly MSME alone is getting very good attention scheme there was one emergency credit guarantee scheme linked to scheme right so that's one major thing which the government says even after taking the credit they were very good in repaying the credit because NPAs inside that particular scheme was less and even the small small companies they were very very prompt in their paying back capacity so they are saying that MSME sector was helped in distress mainly through that particular emergency credit guarantee linked to scheme and you can see that that was getting credit throughout not just during covid or any other period it is consistently doing well and you can also see that the public sector banks are performing well how will you say that the bank is performing well as a layman you have to see two things one NPAs issued come down number two it's a car should be higher we are all familiar with the word car capital adequacy ratio that should be good and the bank should be having lesser NPAs right if these two things are there then we can say yes the banks are performing good so there is an there is a presentation of both the things are being good particularly after this insolvency and bankruptcy code coming into the picture many companies have started exiting from the industry and therefore the NPAs are actually falling down and this last point you have to be very very carefully remembering it now there is less dependence on external commercial borrowings and corporate bonds this this survey has written in many places saying that the banking sector is doing very well now the bank is giving good amount of loans and the loans are reaching the MSME or any other service of the industry so because there is a global level issue going on the capital market is getting very easily affected because of the global situation but our banking system is very good very like very strictly followed with the rules and regulations so the impact on the banking system is actually less but the impact on the stock market is very high when the global situation is changing therefore now all the industries and the services are looking at the banking system for the funding source instead of going and taking it from the capital market that is why the word is given here as external commercial borrowing has also come down depending upon the corporate sector bond values other things a share market all these things have also come down now the people and the business sector is much more depending upon the financial system rather than the capital market system right so that is one major change which survey is not only presenting in this particular chapter is telling throughout later we'll be talking about the banking's chapter also they are also they'll mention this is a point to remember this is to show that how the gross NPA of the banks are actually coming down this is about the performance of the banks so you can see that this is for the public sector banks private sector banks foreign banks schedule commercial banks what are schedule commercial banks banks which are registered with RBA basically so all of these things put together you can say here right public sector banks private sector bands foreign sector bands everybody will be called as the scheduled commercial banks but you can see that the graph is actually coming down basically to show that the NPA is actually coming down how is this the public sector banks NPA is coming down tell something which is believable no interest rates are not kept a different between the public sector bank and the private sector bank there will be some difference but you can't say it is very widely different between the two sectors see basically public sector banks they have to be very very cautious because if this is the whole economy ok 75 percentage of the economy is being addressed by the public sector bank only 10 to 15 or maximum 20 percentage of the loans to the whole economy goes from the private sector bank so 75 percentage of the loans coming from the PSB the probability of them having the more NPAs will be more private sector bank they will have less NPA because they're giving itself is less that's the first picture second thing is private sector banks can restrict by keeping many other norms and regulations they can even say no to not giving loans and other things but public sector banks they just can't hold the funds like that they have to give the loans and you are familiar with the concept of priority sector lending norm so you have to give the loan to various priority sectors also with all these situations falling of the NPAs now they are going for the early identification of the NPAs that's one of the things which RBA has made the banks to do and then comes your surface act that and all went out now comes the IBC which is actually helping to identify the NPAs at the earlier stage so that it doesn't actually fall into NPA and in worst case the government is being like giving funds into the bank they call it as the infusion of capital into the public sector banks so that is also actually happening which it can't go and do with the private sector banks private sector banks they have to run their business on their own whereas public sector banks will get the capital from the RBA or from the government and now one then so infusion of capital will also happen so by doing several of the measures only today we have reached to the situation where there is a reduction in the growth NPA right this particular chapter is talking about India's inclusive growth from my employment perspective because the definition itself is this box growth is inclusive and it creates jobs that is what is written in the survey right it's one of the aspects of inclusive growth or inclusive development you heard the word inclusive development this time Nirmala Sita Raman repeatedly telling yes or no so inclusive growth means here they have mentioned creating jobs then immediately they are getting into the urban picture to talk about the jobs then they are giving some data that urban unemployment has actually fallen down mainly because people were able to get back to the jobs production motor demand motor everything motor so therefore we are saying that from 9.8 percentage to 7.2 percentage the unemployment has actually fallen down right what is unemployment they are seeking for a job but they are also willing to do a job when they are willing but they are not getting a job are you all willing you're all willing to do only one job which is eyes right so as of now you are all not being considered as part of our unemployment study but unemployment here they have taken from the age of 15 you are eligible to do employment but the rate is actually higher from 9.8% to 7.2 percentage they have reduced right so that is that then pent up demand which we have already discussed export demand also improved employment so they believe that in some sections we were able to perform better in terms of the exports like the some of the agriculture based sector some of the automobiles based sector so there and all our slowly our employment is improving and this employee this is not the employee emergency credit line guarantee scheme which we recently mentioned as a support for the MSME system so that was also a very good thing which helped us for generation of production and the employment then they talk about the rural employment level through the NREGA you know about NREGA which is off season employment generator so they just don't call it as employment generation program it's also an asset generation program so that is also doing well and there is a lot of transfers happening through the NREGA these days and there are certain specific schemes which helped the poor like Kisan credit scheme, PM Kisan scheme, Garib Kalyan Yojana all those things which were targeted towards the poor and then they are also saying along with the level of employment they have given one specific rural health indicator I'll show you the table there are two indicators into it global hunger index means if this is the population of the country how much proportion is malnourished how much children in the country are malnourished and what is the child mortality rate these are the three indicators which comes under global hunger index in that child malnourishment they will see two things now height and the weight that's the stunting and the wasting so that that is what is exactly written here height for the age the proportion of children who are stunted see these three diagrams know it is a negative aspect which they have discussed so when the negativity is actually coming down you should appreciate it have you understood how to read this graph proportion of children who are stunted is coming down from 38.4 to 35.5 between two national family health survey presentations so they are appreciating that in the rural region children's stuntedness and the wasting problems are actually coming down that's the graph how did this happen and all you should not ask at this point we will answer it when we go to the agriculture thing or we will answer it when we talk about the food subsidies okay so Garib Kalyan Yojana achieved this we will know you're gonna achieved this we can say many answers to this but they are generally mentioning that there is an improvement in the employment level and the health level which has resulted in inclusive growth in India that's what this particular chapter claims and they have given certain words which you can make use when you are writing your main examination they are saying like India has recouped from what was lost renewed itself and what has passed and what is it re-energized itself from the slowdown so all this jargon you can make use when you write your main exam right so basically this is to show that the unemployment rate at four year low and all they are presenting so people are getting back to jobs so this is the last slide for the first chapter so they are presenting what will be the challenges for the upcoming year and what will be the outlook for the upcoming year basically to say that negatives and the positives there will be issues but you have to look at it positively that's the meaning of this what are all the challenges what is already there it is going to continue basically they are saying global growth is actually going to slow down because of the inflationary pressures there will be tightening and issues related to it imports becoming costly or current account deficit widening all the things what we discussed on the right hand side they are saying India is actually recovering in the health side and in the economy side much better than the other countries that's one thing right the second thing is inflation may come under control it's already coming under control if you see the everyday today news it is coming under control but the third point is an important point they are saying that because now that the monetary tightening has started happening across the world because of the inflation interest rates high now the growth has slowed down you saw that across the globe growth was slowing down whenever the growth slows down slowly they will actually think to stimulate it so they may not tighten the monetary situation they can at least restore it back to normalcy tightening is increasing the interest rate they may not reduce the interest rate and give more money to the people but at least they can normalize it to the previous situation by which again the fund flows will start coming that fund flows will come to India also then we will get the capital coming inside India also then our currency will not depreciate this badly then the situation will slowly normalize then the global trade will slowly improve so these are the outlook which they are mentioning so this is the always the challenge between two major macroeconomic objective of any country one is to have growth good growth of the GDP number two is keeping the prices under control if you have studied inflation class on the two basics of it the demand to pull inflation on the cost to push inflation always keep in your mind the demand to pull inflation is the one which should be controlled you cannot control the cost to push inflation the challenge will come only when the inflation comes through the cost to push if it is demandable you can put all the monetary tightening bring it down then ensure that the growth is happening but if a cost to push inflation if you do this monetary tightening it is only going to worsen the situation and it will affect the growth so you will not know what to do that's when the fiscal comes into the picture that is why monetary policy by itself it won't be able to achieve the normalcy situation it won't be able to take the economy out of depression which is why the role of government is very very important at that situation where it comes and rolls out all all of its capex now we know what is capex so capex then the infrastructure comes in then the employment comes in then the income that is a very good way of generating income not through the monetary policy so we have to understand the power of the different types of policies also in this situation so they are going to say that hopefully things may improve in the future private sector investments will also improve so we are done with the second first chapter we are moving towards the second chapter so we move on to the second chapter we are all ready we are going to travel into history of economics it is talking about the medium term optimism and hope right very hopeful India but its so the timeline is going to spread from 1991 and they are going to give a projection for the future you know I'll tell you the overall story then you go and fit it up into the different different slides they are going to say that whenever India was having undergoing a difficult period then it came back with very good the resilience ok 1991 we had a very bad crisis following to that privatization liberalization FDA coming in globalization everything happened but did we enjoy the fruits of all such things immediately no even before we started realizing the fruits of that thing a period came like 1998 2002 which according to the survey is a very very difficult period because both drought happened then this nuclear test to happen then this US twin tower blast happened lots of problems after 2002 India recovered very resilently because of the things what we did from 1991 to 1998 so slow that time we used to call it as a hung FDI hung FDI FDI would have come it wouldn't have completed so it was called as hung FDI but now the FDI will start maturing when after 2002 then the economy is going into a boom till up to when 2007 8 again in 2008 what happens US is housing loan sector creates a problem then slowly 2010 euros on crisis will start and we reach very bad shape till up to 2013 then again reforms following the bad period we should do reforms right so the form is being done between 2014 to 2022 so they have taken a long period this time it is not like 56 years it's a quite a long period eight years of time so now they are saying after 1998 to 2002 having a very bad time we had a very superb time similarly we have done reforms gearing up the economy in the last eight years so after this eight years now from 2023 we are again going to become a superstar resilient so they've already mentioned all the recovery phase they have mentioned the higher growth rates of projections everything so now for this story which is running from 1991 to 2022 they are going to give you some evidence I did this policy I did this scheme I did this project like that they are going to spread it across the different heading that is all is there in this chart stories over now we look at the evidence right you have to travel with the timeline from now so the first box you have to remember they are actually talking about the last 80 years medium term usually when we say medium term it will be five years but for survey this is eight years right so then they are saying there are lots of positive reforms happening whatever I refer to in this slide is corresponding to the eight years 2014 to 2022 so they are saying there are some goods and bads good is like my ease of doing business has improved a lot right I have done a lot of facilities in the digital technology these are the two major strengths which I'm going to show but I did have issues I had issues with the financial system there was a twin balance sheet syndrome we know the syndrome have you heard about this twin balance sheet syndrome fiscal deficit and current account deficit is in deficit syndrome I am asking about a twin balance sheet syndrome do we know that basically it's a I'm a company I won't take loan from the bank I get into trouble bank also gets into trouble so my balance sheet into trouble banks a balance sheet also into trouble that is all what you already know this was a very famous term in terminology find the by survey only in the years 14 15 and all if you go and visit the economic survey volumes they would have written so many things about twin balance sheet syndrome subsequent to that only they made lots of efforts right from the bad banks they were trying to bring in many measures to resolve the issues then only they finally resulted with the Chakra Vewha ABC right you know Chakra Vewha no heard about it Abhimanyu will go inside very lover at the exit problem that's been this is the name which they named in the chapter of economic survey I am not telling anything out of the book it's all go visit the older surveys these are all the names which are there inside it right so therefore exit is a problem if you are not able to perform please exit that's what they started saying that's when the IBC came in right so therefore the these were the problems which are coming with the financial sector as well as with the non banking financial sector you'd have heard about NBFCs right they are also financing lots of sectors in the economy so they were also having issues all of them they had to sort out and global shocks of course in the last eight years we have had health shocks war shocks several shocks so they are all the negative context this is the question in the survey in this particular chapter this is the answer what is the question after this one-off shock mainly to say that there's there is a shock now after this shock period will India will become again revived then it is saying yes I have a very big history one I have had the product and capital market reforms which it is going to refer back to 1991 then it is going to say that I also had reforms through this eight period eight years period and now I also have certain good things with me to say that I will definitely become better off so this is the kind of answer which it is presenting so the chapter is split with this question and the answer the answer is going through period after period the timeline what I told you to give us an evidence to satisfy this question right so now the first box first answer initiation of the reforms I am into this box history of the product and capital market reforms initiation of the reforms 1991 period apart from this globalization privatization liberalization tell me any other things which you know one major thing which is changed at that time after the crisis was exchange rate became a floating exchange rate earlier it was a fixed exchange rate that also brought in a lot of change for us to become self sufficient in terms of the foreign exchange results right we shouldn't just call it as floating exchange rate we do have RBA's intervention but still it is floating exchange rate and currency convertibility I hope you know we were made fully convertible in terms of current account and partially convertible in terms of capital account so these were the other major changes which happened we're going to see more of the reforms but all of these things you can see the financial years written only by 2007 2008 this period the FDI started coming inside India it was not in the period when we actually opened up immediately after we opened up we didn't get much of FDI the FDI inflow actually started after 2005 6 only coming inside India in a larger way so they say that the maturity of the economic reforms it takes some time for it to reap and then get because initially we wouldn't have known the norms the procedures who will come and invest we had to attract people to come and invest in different states the state should have infrastructure to receive the kind of investments which are coming from abroad so there are lots of initial hiccups and after which we are seeing finally the FDI inflow is actually becoming bigger this is continue continuity in reforms basically in that particular period what are all the things which came in we can say that even today this box is being repeatedly asked in your preliminary examination what is a non-debted capital for India they'll give you answers like FDI, FII and external commercial borrowings, NRI deposits they'll give you several things so this is a non-debted creating instrument imagine you know the components under capital account FDI, FII, ECB, short-term deposits and some other funds which comes from the international institutions like World Bank, IMF and all they'll give us some funds those borrowings from the international organizations imagine on the capital account there is no FDI no FII you're able to imagine what is left behind external commercial borrowings, short-term borrowings, borrowings from the IMF and so until we started calling this FDI and FII into the capital account there was no non-debted creating capital in the capital account I hope I conveyed my point debt to creating capital is what was coming inside debt to creating capital is external commercial borrowing, short-term borrowings, borrowings from IMF World Bank everything is debt to create non-debted creating capital right that is FDI and FII right so that is why they are making use of this word very very specifically that this has become the major source right then we have privatization starting up in that particular period disinvestment privatization everything coming into the picture so that is also becoming into reform and policies were strengthened right from the air India everything started getting privatized slowly they got in this golden quadrilateral basically this is a road infrastructure nothing but there's a name of the road infrastructure project where they started connecting north, the west, east, south everything through this national highways and Surfacy Act which is a very major act needless to explain to you what is surfacing securitization and asset reconstruction financial assets and the enforcement of security interest what does this act whom does this act empower banks to do what if there is an NPA you can go for the recovery of it without approaching a court right you are being given with the power to recover the non-performing assets that's the surface here this is all the beginning of that NPA's recovery situation then we got this FRBM act what does FRBM act fiscal responsibility and budget management act mainly disciplines what government government's fiscal deficit only fiscal deficit borrowing from RBI okay then four things in fiscal responsibility budget management act avoid currency printing in need monetization of the deficit okay so we should stop monetization of deficit eliminate revenue deficit reduce the fiscal deficit reduce the governments borrowing by one person every year right later other committees came they did money change the percentages and everything later and what was the fiscal deficit targeting which was given in that how much should be the fiscal deficit in a year targeting of fiscal deficit initially FRBM act said that fiscal deficit should be three percent now there are lots of changes we'll talk about it again when we get into the public finance chapter what all these policies trying to do is it is regulating the economy it is creating some easiness it is helping the business people financial system everybody to perform better that's the meaning of this FDI is coming in as a capital which is helping the investment then there is privatization this investment's happening which means that there is efficiency which is being brought in into different sectors we are seeing the infrastructure is also improving which will again attract more capital later surface the act is trying to reduce the NPAs in the country FRBM act is trying to discipline the government these are the various reforms which were taken till up to the period of 2003 and here also we can see that after this implementation of this FRBM act the fiscal deficit actually started falling down and we can also see that in this particular period the schedule commercial banks started giving more loans on the non food side food side is basically your priority sector lending and all they call it mostly on the agriculture side as a food side so now they are saying to the industry to the services they started giving more loans so that is all the evidence this later apart we will talk again later but in the initial period which we are still discussing till after 2002 we can see that the non food the credit is slowly improving by the scheduled commercial map this is the slump which we again said that between 1998 and 2002 there were lots of global level issues as well as India's issues with the nuclear testing and other things so India had two major problems one is this Pokran testing the second thing is the drought which the country faced for us at the global level we can see that the technological change was coming in they call it as a technological boom but we were not ready to accept it because not many of us were skilled enough to do it you've heard about structural unemployment you have to withdraw yourself from one thing and then get into another thing you have to enable your skills for it so 2000s where the period when we started looking at the computers coming into the system and also the mobile phones are slowly getting into the system so the technological change we were not ready so that particular four year was a difficult period right so balance sheet problems of financial sector and corporate sector so this was also there now comes the boom period between 2003 and 2008 so investment was good the demand was good economic activity was also good so they are saying that structural reforms will lag the effects on economic growth whatever you did in the period from 1991 to 1998 followed by a very difficult period of 98 to 2002 now the structural reforms are getting a lagged effect upon the economic growth so we started reaping the benefits of the economic policies which we did from 1991 now comes the subcavics so now they are going to say that after 2008 no they now jump into the period for 2014 to 2022 in between period discussion is getting integrated slowly so we know us crisis eurozone crisis slowly ended up in 2013 after which again from 2014 the reforms are increasing the chapter is discussing this reforms in four different headings right they are saying we are making everybody to participate for all the people who are participating first public goods are getting created so for this people will definitely participate second thing is they are going with the trust-based governance then they are asking the private sector also to participate well then the agricultural productivity so these are the four things which they are splitting from now onwards a chapter into title to say that these are the structural reforms which we are doing which we have done in this past 80 years from 2014 to 2022 so we'll go into the details of every single thing in this so first thing is creating public good I am sure you would have read all of these schemes where it shows Sagar Mala, Bharat Mala, Parvatha Mala anything left electrification railways airport seaways everything becoming better off and you are familiar with this national infrastructure pipeline national monetization pipeline right so these are all things which are going ahead for improving the physical infrastructure which is about the creating public goods I will ask you one difference between two things then we go ahead we know privatization we know disinvestment we know monetization we know difference between disinvestment and monetization we know what is disinvestment I'll come again I am a company I have 100 shares up to how much you should I call I have this investor less than that half 50 percentage I can call if I give more than 50 percentage then I have to listen to whoever is holding measure private place okay privatization then what is this monetization monetization is also public sectors goods only you are monetizing here they are bringing in a bit more of information they say there are certain assets of the government which is unutilized underutilized right and I lease it out suppose there is a road nobody is using I come and say private sector you go and take it up the road then that fellow goes and works on the road it is being leased out to that fellow then that fellow will be managing it then the revenue will be generated which will be shared between the public and the private right so monetization disinvestment privatization with all these three keywords you have to be very very clear but they're all basically to bring in more infrastructure into the economy right so this graph is showing between 2014 and 20th this is the period in which we are discussing about that eight years period you can see the purple color dot moving much ahead this is for the electricity installed capacity cargo handling capacity also you can see there is a very good distance between the purple and the green dot which shows that the cargo handling capacity has increased a lot not much with the railway tracks but with the national highways again they are showing a good difference so they are basically trying to say that these kind of physical infrastructure improvement has happened in a good way in India in this particular reforms period it's not just the physical infrastructure which the survey is talking they're also talking about the digital infrastructure right with the digital infrastructure you should start with other then the phone number then your bank account linking then the ek yc now what is they are asking a lot of kyc request from the banks to update your the things then you have your digital signatures digital lockers right so these are all for the betterment of the subsidy allocation betterment of the formalization of the economy all those things then slowly you have this open network for digital commerce you're all familiar with this yndc it's a it's a network it will enable many people to come and put up their markers it's like helping people to develop the commerce right and account aggregator framework but this is also a very important framework assume i am having account in state bank of india kenara bank id vi ic ic i right then i am going and applying in ic i say i want a load then this fellow has to go and check in all of my accounts whether this person has already taken loan what is the crystal so these days everything is linked with pan card other card so account aggregator is the nbrc but that's all what he does is he puts everything into one thing and he gives a profile of you to ic ic i so that they will be checking your profile to give you the loan right so it is enabling to give the credit flow to the person by checking the verification of their financial credibility and the other background things so that's the major role of your account aggregator framework ishram portal this is all basically for the unorganized sector workers to come and register swanidhi street vendors can come and do gst and this is basically our gst network registration and then payment of the taxes so for that also they are you seeing the digital framework udhiyami portal for ms me's they can do the registration once they register with the udhiyam portal then getting the credit and other things becomes actually easier for them then the jhensamarth portal basically to see central government what are all the credit linked schemes in it but both the central and the state you can look at the umang portal then this gati shakti is basically a gis based website which will help you to bring in connectivity of different different sectors seaways airways roadways railways everything put together you can look at and to this uh framework so all of these things they are saying it's going for the digital infrastructure strengthening right basically facts the second point is about the trust based governance it says like i am developing trust with the people and who is this government government is developing trust with people with the business with everybody i am making a very better environment for the investment for people to come and do the get the loans and do the construction or anything so therefore it is saying trust based governance with these factors uh see whenever you are going for governance there should be a set of rules and regulations if the rules and regulations are good people will listen right that's a good governance good governance means you should have very good rules and regulations they are saying we are bringing in more regulatory frameworks like iBC which is already known rara is basically for the construction sector right real estate development and this is one major table which they have given in the survey please make note of it decriminalization of minor offenses under companies act so if i am a company and i have done some offense they are trying to put it under the civil offense instead of putting it under the criminal offense which also gives some ease of doing business then people will come forward to do more business so they are showing the number of defaults and all in the civil liability the last line is there no that kind of offenses are actually increasing whereas the compoundable offenses the second thing and all it is actually coming down the third line they didn't touch it because it's a very serious offense which has to go for the conviction so that they didn't change but whatever could be changed if they have mellowed down right so upon the levels of act they're also talking about archiav laws the older laws there are lots of it like 1100 and 1400 and all it is that we have removed many of them right so it's basically the rules and regulations are made being simpler the complaints will start increasing more so that's what they call it as a trust-based governance here it's not just the rules and regulations so they are also trying to say that we are helping people are they helping people by unified GST that you should only tell it's your own opinion but unified GST is also being given as one of the points as trust-based governance then they have reduced the corporate tax rates that is particularly for the company right from 30% they are slowly reducing it to 25% that is the exemption of sovereign wealth funds and pension funds from taxes right so certain types of funds generation for the capital investment they are excluding them from paying the taxes and there is one dividend distribution tax this will go as part of your income tax that also they are trying to remove and there are lots of other technological improvements suppose if there is an income tax variation or a discrepancy previously and all we'll have to go on submit the papers directly in the nirman Bhavan or whatever the income tax Bhavan but these days they just do the faceless assessment there's a very huge change tomorrow if you get a chance to become an IRS officer you are going to see the meaning of this you don't have to physically call and then do the assessment and all anybody can be assigned earlier there will be circles Ananagar circle Nungambakkam circle so within that particular range only the officer should do this particular thing these days there are lots of technological advancements which are being brought in this assessments which are being done may it be GST may it be income tax they are doing a lot of faceless assessments and GST returns filing mechanisms so in every place they are saying like we are easing out the things for the people and for the business people so that the trust-based governance is being established right then we see the third point which is about promoting the private sector as partner in the development promoting the private sector as partner in the development basically we are only going to say that we are going to do the privatization disinvestment private sectors participation in many sectors except for the strategic sectors we want the private sector to participate in many in the non-strategic sectors and we are going to give them lots of incentive schemes foreign investors are invited we are improving the logistics policy to bring in better transportation system startups have increased this is a major point which they have written in this survey all these initial points you may know but the number of startups you can make you can make note from 452 now we have 84,012 eight last 40,012 kind of numbers of startups are having registered so that's a very good number and the credit linking facility for the MSMEs again they are mentioning an inclusion of retail and wholesale traders as MSMEs this is a very important point for us because it's all the formalization of the economy if you see one grocery shop in your road if that person is going and registering himself as MSME under Udyam then he can also go and apply for the credit in a better way so basically we want everybody to become formalized so there are lots of facilities which are now being created to formalize the economy so when we formalize then their participation in the development will also improve that's the point which they are trying to make in this and you can see that there is a structural shift in the FDI to GDP so they are saying like more FDI is coming into the country mainly because we are allowing lot of the private sector to come and participate in the development right so always remember India has its own story of mixed economy you're all familiar with this word right mixed economy both public and the private sector's presence will be there from the beginning public sector was dominating then slowly we started doing the privatization disinvestment now the private sector is dominating though there is a shift from the public sector towards the private sector even today the rules and regulations are very strictly followed with the private sector so every time the policy will come and say I want the private sector to do well but the kind of treatment what they give to them will always be difficult only so if we have to understand where all this is why this keyword is coming in between ease of doing business how fastly can you open up a business how fastly can you go and apply for a loan how fastly can you register for something as a company all these things are being taken into account in ease of doing business mainly to understand whether the private sector is being encouraged in the economy or not right so we definitely have to see if any initiative is being taken by the government for doing this easiness of doing business it's a good thing for their participation this is about enhancing productivity in agriculture it's a very limited discussion what the survey has given a very small paragraph and most of it you will know how to improve the agriculture productivity this is not the core answer this is from the government's perspective right if you want to really improve your agricultural productivity you should work upon your seeds you should work upon the production methods you should talk about the cropping intensity cropping pattern the rainfall availability many other things but what the government has given is only a limited presentation in the economic survey you can see it soil health cards just to find out what is the type of soil and what will be suitable for the cropping micro irrigation fund this is becoming important because macro irrigation period is all major irrigation period is all over now we are not promoting any dams right we are only promoting watershed management we are not promoting dams right so then returning to organic and natural farming is there a difference between these two things organic and natural farming right then you have the farmer producer organizations here mainly they say that India has lot of small farmers marginal farmers micro farmers right so if we come together only the area can be made bigger if I have a very small area the next person is also having small area then the largest scale farming things cannot be enjoyed mechanization of agriculture will not happen commercialization of agriculture will not happen so to achieve all of these things let us all if we are 10 farmers let us all come together and make one farmer producer organization and make our common area and then do the farming and get the benefits out of it so they are promoting to do this a national agricultural market which is e-norm again a platform where it is helping buyers and sellers to come together right there will be many produce which you can sell through this platform with a reasonable price this is mainly to remove the menace of the intermediaries then we have the agri infrastructural fund so this is also basically to promote the rural infrastructure required which is for the agriculture basically it would be about the irrigation it could be about the storage it could be about the processing it could be about the marketing so it's for the agricultural infrastructure then they talk about the Kisan rail right this is basically to move the perishable commodities faster with better facilities inside it so that the production and the consumption points can be linked better then there is a cluster development program so certain areas are identified as clusters and they want to promote a particular cropping pattern and help the cluster wise development program so these are all some of the things and they say like agriculture was not affected even during the covid times and therefore we still hope that agriculture having 4.6 percentage averaging growth rate is a very good thing once upon a time achieving this 4 percentage was like not at all possible these days when we say 4.6 percentage it's a very good number growing at 4 percentage for agriculture is really a very good number right so we have to appreciate or whatever has happened so far now we go back to that shocks what is there in this there are all the structural reforms which we did in this 2014 to 22 but they do agree there were shocks in this particular period mostly we have already discussed about that twin balance sheets in though my VC and other things but they're also talking about there are certain leasing services which also collapsed in September 28 in that IIFL infrastructure leasing company they all collapsed so basically there was a problem with the financial sector and the NDFCs and the non-financial sector did so basically there was a huge financial sector reforms which was undergoing all the reforms we've already studied but they are recognizing the problem in this particular period then only they are saying from 2015 non-financial debt started declining non-financial debt is what we saw in the first chapter in that particular table where we saw so that has started declining this is a specific table which they have given in the survey to show that 2014 to 2022 this eight year period is analogous to the period 1998 to 2002 first they give the issues then they give the reforms then they give the hope what is the hope after 2002 we revived a lot similarly after 2022 we will revive a lot so that's the hope which they are trying to give issues have been already summarized from the nuclear test we have summarized similarly here we have the summarized of financial issues then in case of the structural reforms where the privatization disinvestment everything started liberalization exchange rate changes everything is summarized here again lots of all the things right from the vaccines rollout they have summarized all the structural reforms finally they say that after this they make use of this word one of shock once this shock is over the economy revives similarly they are saying like now this non-financial sector debt is also coming down so therefore definitely we will revive back as we revived in the period of 2002 so 2003 to 2008 they call it as a boom period so they are projecting that India is going to boom that's the essence of it so if we have to boom we need to have certain features in ourselves to become better off so what are all the things which will help us to get into the boom situation is this healthy financial system we are moving towards it our NPA is reducing progress improving digital revolution and formalization obviously we are strengthening ourselves in this bank credit growth and double digits we showed this particularly for the MSME sectors higher financial inclusion yes of course everybody is coming into the cashless payment governments are skilling initiatives you know that there is a separate ministry now for skill development right so therefore specific initiatives to it India to participate in global supply chains the import raw materials the value added and we are again exporting it do you know that petroleum is the most exported and the most imported item most exported and most import most exported and most imported both that's the role of the global value chain we are in the processing of it right it is written in this year's economic survey i'll tell you when we get into the external sector chapter right earlier it used to do one more thing jewellery thing also it used to import gold make it into jewellery again exported but this year the survey says most exported item is refined petroleum right so reshoring diversification reshoring diversification is all like you bring back the companies mainly because the globe is into trouble they are saying like bring back all your companies to your own country do a lot of diversification will be self-sufficient then you go and export if it is required regionalization will drive the restructuring of global value chains they are saying like you diversify yourself its skills you participate in the global value chains it's not that everything you only have to export you only have to import you can make you can become part of the global value chain and the production sector so you can do also part of it and do the exports on the imports then the magnets are continuing partnership based governance ecosystem this we saw trust based governance system deregulation and simplification of compliance yes government is very seriously working about making the rules and regulations into a easier one and dismantling licensing inspection compliance regime entirely just we don't believe but still we have to mark it as a point in economic survey arrest rising obesity they are making this a specific point probably for the children's sake as we saw in the health indicators so to improve the healthy life secure minerals and metals for energy transition by talking about minerals and metals energy means you will understand renewable energy non-renewable energy why minerals and metals we have to do that semiconductor things and many things so right now so therefore we have to secure more minerals and metals public sector asset monetization scheme which we already discussed and improve the MSMEs performance this is very important because they are the small small small enterprises but they contribute to a larger percentage of GDP if you look at like around 30 to 40 percentage of the GDPs contribution will actually come from MSMEs so though they look like micro small medium their importance is very significant right so these are all the growth magnets we have presented the chapter as presented in the survey right so we are understanding through the government's perspective now we come to the chapter 3 which is upon the fiscal developments basically this chapter is going to tell you about first a central government then the state government we have the budget structure with us there is the revenue account and the capital account receipts and the expenditure right so we are going to give you some facts and discuss whether the government is doing well or not the whole chapter is upon the government and its budget the real hardcore chapter of the budget is this right though we say economic survey is a publication about the budget survey actually speaks upon lots of things the real thing what is about the government is actually being presented only in this chapter so we look at the chapter in the first slide itself what are all the macroeconomic indicators according to you GDP inflation and employment exchange rate yeah tax collections yes when we ask macroeconomic indicators GDP inflation fiscal deficit current account deficit these are the four major things first place from today onwards others and all will fall in place you said about tax collection which will come in fiscal deficit you said about exchange rate which will come in current account deficit so internal health of a country internal health of a country is judged by fiscal deficit external health of the country is judged by current account deficit these are the twin deficits of a country so internal health of the country represented by fiscal deficit external health is represented by current account deficit other than this the other two major indicators which we look at it as GDP inflation these are the four major macroeconomic indicators forever we are not changing the macroeconomic indicators now we are actually studying one of the major macroeconomic indicator which is upon the fiscal deficit so it's all the numbers are slowing down after the financial year 2021 we can see that fiscal deficit is falling up to 6.4% I'm going to show you a table also upon it and they're also showing that this is upon the budget estimate I hope you're all now familiar with the REA provisional I don't have to get into the details of it right yes budget estimate is for the future year so for the whatever they thought it will happen in a percentage of it half of the year they are very much under control that's the meaning of this I don't know if I have said the meaning of it in this table we are going to go further we will talk about it but at least in this graph make note of one feature our fiscal deficit is falling right how did it fall that's the question so we are going to answer this question through the evidence which is going to come be in the next table subsequent tables this table is also having lots of numbers but we are only concerned about understanding the table with one example we can't just read everything and then remember for the examination sake but we can read it to certain extent what is the reading I had a estimate I had a projection which was very reasonable so I achieved it I almost achieved it I'm actually achieving better than that assume that you are going to say that I'll study two chapters tomorrow and you are reading three chapters or two and a half chapters like that so you are fulfilling your estimation more than what you actually thought this estimation now you have to apply it to the gross tax revenue basically I thought this is India one country and I'm trying to collect the taxes from you I thought I will collect 100 rupees from you people are giving me 120 rupees 130 rupees so I'm feeling very happy about it that's the kind of presentation what the government is giving so I had a budget estimate but in the half year are you seeing this half year April to November so when I say 100 rupees I will collect in this full financial year and I have already collected 60 70 rupees of it half year I'm collecting more than that no then I have a feeling that if I am collecting 69 rupees or 70 rupees now then double it no then I will be collecting maybe 140 rupees but I thought only 100 rupees will come so they are saying that I had a very modest estimate of what I will be able to achieve but I'm doing well that's the presentation and then they go into the details of how they are able to collect that much as the gross tax revenue which they will go into the details of the direct tax collections and the indirect taxes collection so then I'm not getting into this non-debt receipt immediately it's a larger word first let us just look at the word tax receipts okay so this page you will you will see direct taxes you will see indirect taxes right so what you have to see is this as percentage of budget estimate in this April to November 2022 or if you just want to see the numbers in lakhs this first three column no you can see that the direct taxes corporate profit tax income tax they are all better than the previous year April to November 2021 April to November 2022 so you can compare between the similar period between with the previous year and you can see that the numbers are actually from 7 to it is 8.67 it has increased and 3.54 to 4.28 so the collection of the taxes direct taxes the two major direct taxes is the corporate profit tax and the personal income tax both of them are increased and then when you come to the indirect taxes here also you can see that the customs duty have also increased uni excise duty has moderated a bit mainly because I think they brought down the excise duty when the oil prices increased right earlier there was very rigid policy whatever may be the oil price these people they will never reduce excise duty but nowadays they are moderating a bit when the oil prices are becoming high tax becomes low when the oil prices are becoming low tax becomes higher so the that way they are moderating and then collecting the revenue therefore the excise duty is actually coming down a bit then the service tax which is into GST right now but you can see from the GST there is a increase in the collection so therefore they are saying this is why they mentioned the word buoyancy the taxes collections are actually increasing as the economy is reviving that's the right way of seeing this if I say everybody is performing good here then that should really reflect in the mass what you get right this is something like that when I say that economy's GDP is reviving my tax collection should also be correspondingly increased so which is what we are seeing here as the thing many other things which you already know formalization of economy tax base is increasing tax compliance is increasing right you're all familiar with the tax base tax rate when we have the direct taxes doing more than 50 percentage this is a very important point for us to remember when you see that I collect direct taxes from all of you I get 100 rupees on the direct tax I collect taxes from all of you and I get 100 rupees out of the 100 rupees 50 rupees and above should come from the direct taxes you know GST is the major indirect tax and these days GST slowly overpowering the direct taxes and I don't want it to happen it should not be the happening the moment you see the indirect taxes topping the direct taxes the economy will be called as a regressive economy as long as my direct taxes are higher than the indirect taxes I will be called as a progressive economy no stage I actually be that regressive for many years we were regressive after this 2004-05 that good economy period only we slowly started becoming better off with the corporate profit tax and the income tax but now the way how the GST is being collected know there is every chance that the economy will slip into regressiveness but again they are showing that this percentage is adding up slightly above 50 percentage you can see that it is 52 percentage you know very scary actually the data is not very clearly supporting this I can show you different tables later but anyways we can see that this is gross tax revenue which is increasing direct taxes increasing the direct taxes component in that also they are saying more than the corporate profit tax it is the personal income tax which is actually increasing a lot but this is all good because formalization of economy is happening only if you get the salary you will pay the income tax right so salary through the account you will be paying the income tax so all of these things are showing the very good formalization of the economy this is what we said customs and the excise duty we saw that there were some ups and downs I hope you know the difference between the customs and the excise excise upon the production of the goods internally right which should also also be inside GST but there are certain products which are still outside the purview of GST which is what we discuss here as the union excise duty right so here that is what we said whenever the oil prices were increasing excise duty was reduced whenever the oil prices were reduced excise duty was increased so they were you making use of this as a flexi fiscal policy so that's being mentioned in the survey then we have this maturing system of indirect tax collections indirect tax collections where they want to show the buoyancy don't be worried about the many numbers on the board just look at two things what we are going to say you see this nominal GDP worth seventh thing and do you see that there is a percentage of it there is one long term average growth rate which they are presenting there is it not CAGR they are taking it from for several years on average rate okay similarly they are also looking at the collections of the GST actually I shouldn't be calling this as GSTs because GST came into the picture in a particular point 2017 also till then it was all excise duty customs duty service taxes separately so what they are trying to show is there were different types of taxes all of them collected and then they became into GST later so that particular percentage is that particular growth rate was this like 11.53 percentage whereas nominal GDP was growing at 11.54 percentage so if you divide this by this you get an answer less than one that's because your numerator is lesser than the denominator right but you come to this post GST period many taxes became into GST that is taxes are subsumed in GSTs central taxes are subsumed in GSTs so all of them now we present it as total GST collection and here you can see that after the implication implementation of the GST they again do this average growth rate so that's this 10.2 percentage including the GST on imports they improve the percentage to 10.9 percentage whereas India's nominal GDP at 9.6 percentage so if you put a 10.2 by 9.6 you will get this answer 1.06 if you put a 10.9 divided by 9.6 you will get this answer which is 1.12 so they are trying to show that the tax collections are buoyant than the GDP's growth right so that's just to indicate to us that what is meant by buoyancy and how do we understand it so before GST tax collections were there but they were not as buoyant as the tax collections are happening after this implementation of the GST period so they call this unified GST also as a major reform which is improving the formalization of the economy and helping us to collect more taxes from the different sectors of the economy right so that's this data