 Welcome to the Hindu News Analysis by Shankar Ayesakarmi. The news articles along with the page numbers are displayed here for your reference. The PDF link of the handwritten notes and the time stamping of the news articles is given in the description box as well as in the comment section. Now, let us start our today's news analysis. See, we know that the budget session of the parliament is underway. And today, that is on 1st February 2020, the Indian budget for the next financial year, that is for 2020 to 2021, will be presented by the Indian Finance Minister in the Lok Sabha. See, the economic survey was already tabled in the parliament on 31st January, which is prepared by the Department of Economic Affairs under the Ministry of Finance. See, this survey is the detailed report of countries' economic performance for the last financial year. So, we can expect many news articles in the upcoming days regarding the chapters given in the economic survey as well as on the budget. If you look at this news article, which is based on Chapter 9 of the economic survey, which is titled as privatization and wealth creation. The syllabus relevant for the analysis of the news article is highlighted here for your reference. See, in this chapter of survey, the government compares the performance of public sector units with its peer groups, that is, before and after privatization, as the economic survey is also pitching for further disbursement in public sector undertakings. So, in this context, let us discuss the important points given in this chapter. We know that India underwent structural economic reforms such as liberalization, privatization and globalization in 1991. See, the liberalization reforms undertaken in 1991 led to an increased demand for privatization or disinvestment of public sector units. See, the most recent call by the government is for the strategic disinvestment of Air India. Now, we will see in brief about strategic disinvestment. That is, according to the Department of Investment and Public Asset Management or the PUM under the Ministry of Finance, strategic disinvestment means is the sale of substantial portion of the government shareholding of a central public sector enterprises. See, it can be up to 50% or such higher percentage as determined by the competent authority. See, the strategic disinvestment may also include the transfer of management control to the strategic buyer. As a result, it can be another central public sector enterprise or other private enterprise. Now, we will try to understand the impact of disinvestment with an example. That is, in 2019, the strategic disinvestment of government shareholding of about 53.29% in Bharat Petroleum Corporation Ltd. was approved by the cabinet. The economic survey says that since the announcement of BPCL's disinvestment, its stock price has increased as compared to its PO-Industan Petroleum Corporation Ltd. And this increase in value of shares comes around 33,000 crores. And this has obviously led to the increase in the BPCL's overall firm value. And we can also say that there is an increase in national wealth by the same amount. Therefore, the economic survey is pitching for aggressive disinvestment in the selected central public sector enterprises, preferably through the route of strategic sale. See, the survey says that this would bring in higher profitability, can promote efficiency, and it can increase competitiveness, including professionalism in the management of CPSCs. So, in order to substantiate this argument, the survey has analyzed the performance of about 11 central public sector enterprises for a period that is before and after disinvestment. See, these companies had undergone strategic disinvestment from the period that is from financial year 2000 to financial year 2004. See, the analysis is based on several indicators such as net worth, net profit, return on assets, return on equity, then gross revenue, then net profit margin, sales growth, and gross profit per employee, etc. See, based on these parameters, the performance of the privatized CPSCs has improved in the post privatization period as compared to their peer companies. Furthermore, the return on assets and net profit margin turned around from negative to positive surpassing that of the peer firms. It indicates that privatized CPSCs have been able to generate more wealth from the same resources as compared to their peer companies. Know that the return on assets which is mentioned here is the ratio of profit after tax to its total average assets of a company. It simply means that how much net income is derived from its total assets. Similarly, the return on equity that is ROE is the ratio of profit after tax to the average net worth or the shareholders equity. See, increase in both ROE and ROE means value of assets and shareholders of the company is increasing substantially. So, in the economic survey that is in the last part of this chapter, a new way of disinvestment for the future has been given. That is, it recommends the formation of a separate corporate entity for the future disinvestment of selected CPSCs. So, the government would transfer its stake in these selected CPSCs to this corporate entity. See, this entity would be managed by an independent board with a mandate to divest the government stake in these CPSCs over a period of time. As a result, this would increase professionalism and autonomy to the disinvestment program. Ultimately, it would improve the economic performance of these CPSCs. See, the economic survey also highlighted about 264 CPSCs under 38 different ministries or departments. Though some of them are profit-making, still they are underperforming. So, we can conclude by saying that in the upcoming days, many news articles on strategic sales can be expected. With this, we have come to the end of analysis of this news article. Now, let us proceed to the next news article analysis. See, this news article is again about the economic survey for the financial year 2020. See, in this discussion, we will see about some important economic indicators such as GDP growth, fiscal deficit, balance of payments, etc. The syllabus relevant for the analysis of this news article is highlighted here for your reference. As we all know that the GDP growth has been decreasing, even the economic survey has stated that India's GDP growth rate for the current financial year is expected to grow at 5%. In addition to this, the economic survey also estimated the growth rate for next financial year. That is, India's GDP growth is expected to grow in the range of 6 to 6.5% in the next financial year. That is the financial year 2020 to 2021. See, this estimation has been made based on the assessment of both the downside risk as well as upside risk for the acceleration in GDP growth. Here, the downside risks include the continued global trade tensions as it could delay the recovery in the growth of global output, which in turn may constrain the export performance of our country. Then the next risk is escalation in US-Iran geopolitical tensions as it may increase the price of crude oil and it will also lead to depreciation of rupee value. Due to this, net foreign portfolio investment inflows may also weaken and as a result it will further add pressure on the rupee value. Then the next downside risk is that the banks have an aversion that is banks may not show strong interest to lend due to the bad loans. See, the implementation of IBC code is making some progress but not to that level as expected. So, unless this speeds up the risk aversion of banks to lend may not reduce further. So, all these risks affect the investment in our country which in turn affects the GDP growth rate. Now, we will see some of upside risks that will enable investments in the country. See, one such risk is reduction in the base corporate tax rate to 15% for new manufacturing companies. This may increase the rate of return on investment and it will increase a surge in new investments. Like this, many upside risks are listed in the economic survey. After this, the economic survey talks about the fiscal deficit. As we know that the fiscal deficit is the difference between total revenue and total expenditure of the government and fiscal deficit occurs when a government collects lesser money than it spends. It precisely indicates how much a government needs to borrow from the markets to meet its expenses. But know that any increase in expenditure at a time of shrinking revenues will put additional pressure on the fiscal deficit. So, in this way, the economic survey warns against a widening fiscal deficit. However, the survey says the government may need to relax its fiscal deficit targets for the current financial year in order to revive growth rate. See, if the fiscal deficit widens, then it will be the third year in a row in which the government deviates from its fiscal consolidation path. See, in 2019, the government targeted to contain the fiscal deficit at about 7.04 lakh crores or 3.3% of GDP from about 6.49 lakh crores or 3.4% of GDP in the previous year. Even the medium term fiscal policy statement that was presented along with the last year budget fixed the fiscal deficit target for the current financial year is at 3.3% of GDP. See, the fiscal deficit is expected to follow a gradual path of prediction and can attain the targeted level of 3% of GDP in the financial year 2021. And it is also expected to continue at the same level in the financial year 2022 that is at 3% of GDP. After this, the economic survey also throws light on what should be done in order to strengthen India's balance of payments position. That is, balance of payments is an outcome of the total transactions of an economy with the outside world in one year period. Basically, it is the net outcome of the current account and the capital accounts of an economy. See, in recent times, India's tariff regime has come under pressure from the trade partners because they have been pressurizing to reduce our basic custom duties. However, India has defended its tariff regime stating that it is necessary for protecting the vulnerable businesses in India. That is, for protecting the domestic businesses, mainly micro-small medium enterprises. However, the economic survey notes that the government is aware that some reduction in tariff rates may have to be done in respect of intermediate inputs and raw materials to correct the presently inverted duty structure. As a result, a corrected duty structure will reduce the cost of intermediate inputs that are imported for manufacturing of exports. And thereby, it will make the country's exports more competitive. So, it will result the increase in exports from India. Therefore, the resulting increase in exports will strengthen overall India's BOP position. Therefore, a reduction in basic custom duties on intermediate inputs will not only correct the inverted duty structure by creating the right incentives for boosting manufacturing, but it will also increase the growth of exports of consumption goods that significantly use imported intermediate goods. So, it will boost manufacturing and can create employment and growth of exports of consumer goods. Then the economic survey also provides a suggestion to boost the employment in our country. So, to achieve this, India must focus on a group of industries that are referred to as network products. See, in this network products group of industries, production processes are usually globally fragmented. That is, they are controlled by leading multinational enterprises in short M&Es. See, these multinational enterprises control their production processes within their producer-driven global production networks. Here, some examples of network products include computers, electronic and electrical equipment, telecommunication equipment, road vehicles, etc. See, in this network products group of industrial production, we can take the example of China, because China's remarkable export performance is primarily driven by deliberate specialization at large scale, then in labor-incentive activities, especially in the network products, where the production occurs across global value chains that are operated by multinational corporations. Now, what China does? So, in this example, what China actually is doing is that they import components and assemble them in China for the world. So, by doing this, China has created millions of jobs. So, by taking the example of China, what India can do is, we can integrate, that is, assemble in India for the world into making India. Again, by doing this, the economic survey estimates that India can rise its export market share to about 3.5% by 2025 and even it can rise its export market share to 6% by 2030. The survey also estimates that in this process, India would create about 40 million well-paid jobs by 2025 and about 80 million well-paid jobs by 2030. So, network products production process is a great solution to create jobs in our country. So, these are some of the inputs that we can take from the economic survey. With this, we have come to the end of analysis of this news article. The display practice question will be discussed at the end of this session. Now, let us proceed to the next news article analysis. This editorial is again with reference to the recently released economic survey. In this analysis, we will see two things mainly. First, we will see various factors that have played important role in decreasing the GDP growth rate in the present financial year. Then, we will see important observations from one of the chapters of economic survey. Then also, some of the relevant points that are mentioned in other news articles in relation with this editorial. The syllabus relevant for the analysis of these news articles is highlighted here for your reference. Now, we will see the important points that are mentioned in one of the chapters of the economic survey. That is, the chapter is titled as undermining markets. That is when the government interventions are hurting more than it is helping. If you look at the editorial, the author mentions some of the reasons that are cited in the economic survey. These are some of the reasons for the drop of growth in Indian economy in present financial year. See, we know that recently the GDP growth of the financial year 2018-19 was also revised downward. It was revised from 6.8% to 6.1%. And in the present financial year, that is, financial year 2019-20, the GDP growth rate is also expected to be around 5%. Furthermore, even the IMF has also revised India's growth projections downward. That is, for the present financial year, it was revised from 6.1% to 4.8%. Now, let us see some of the factors that has led to this downward revision. One of the reasons is the weak growth in consumption expenditure, which indicates weak demand for the produced goods in the country. Then the second reason is the drop in fixed investments in various sectors of Indian economy. See here, the second reason is induced by the first reason. That is, a sharp decline in fixed investments is induced by a sluggish growth of real consumption. This means that there is a drop in investment because of weak demand. Then the third reason is that the current weakness of the non-banking financial companies. See, the economic survey mentions this as financial fragility in the NBFC sector. We know that non-banking financial companies or NBFCs play a very important role in providing finances for infrastructural and developmental activities that will have direct bearing on the growth rate of Indian economy. When their balance sheets are in trouble, this means there will be a drop in credit flow to the developmental or growth related activities. Therefore, the financial fragility of the NBFCs is also a reason for the present sluggish economic growth. See, we can say two recent examples for the crisis in NBFCs. One is that IL and FS crisis and the other is the crisis in the Divan Housing Finance Limited. See, the two subsidiaries of infrastructure leasing and financial services defaulted their payments in 2018 whereas Divan Housing Finance Limited defaulted their payments in 2019. So, to better handle the situation with respect to NBFCs, the survey suggests a dynamic index to act as a health score for NBFCs. This index is presently constricted to capture the risks in the NBFC sector. See, the index is planned in such a way that it can also be used as an early warning system to anticipate liquidity crisis in the NBFC sector. Now, we'll see the other reasons for sluggish economic growth, that is slow pace of insolvency resolution in our country. See, recently we have seen a good example of insolvency resolution with respect to SOR still. So, in general, we can say that the insolvency resolution has started in our country, but it is moving in a slow pace. This is also reason in hindering us from realizing a better growth rate. See, when such a resolution is delaying beyond a reasonable time, then it will increase the impacts of insolvency on various stakeholders of the economy. So, in addition to these reasons, which are domestic in nature, there are some international factors that influence the growth rate of India. Say, for example, the escalation of geopolitical tensions in West Asia. See, this can affect the cost of crude oil in the international market and therefore can affect the import bill of the government of India. Then the other reasons for the drop of economic growth is because of the trade uncertainties in the global economy. See, as long as there are uncertainties, we cannot work for a stable trade policy. This will also affect our exports and imports and can also affect the entire economic chain associated with exports and imports. See, uncertainties in global economy is a serious issue. This is because when it comes to market, to have a stable growth, we need a stable market for our products and services to achieve the targeted growth rate. Therefore, these are some of the factors that have led to the downward revision of India's growth in this financial year. Then the author also talks about one of the chapters in the economic survey. See, the title of the chapter is undermining markets when government intervention hurts more than it helps. See, the economic survey speaks about some of the government interventions which are really hurting the market rather than helping. For example, the government is enforcing the Essential Commodities Act. So under this act, the government imposes stock limits on commodities to ease the volatility in the prices. See, the survey observes that frequent and unpredictable imposition of blanket stock limits on commodities are issued under this act. For example, recently, the stock limit for onions was imposed under this act in September 2019. So in contrast to easing pressure on prices, the survey observes that the actions taken under the act has spiked up the volatility of the wholesale and retail prices. So the survey calls for throwing away the legislation. Then the survey also points to the regulation of prices of drugs through the Drug Price Control Order 2013. See, the author says that regulation through this order has led to increase in the prices of some of the regulated pharmaceutical drugs against the prices of unregulated drugs. Therefore, author says that DPCO has failed in achieving its objectives that is to make medicinal drugs affordable to the people. So sufficient actions need to be taken in this regard. Then the author also mentions that failed interventions can be seen in the government policies in food grains markets also. The survey states that government policies in the food grain markets has led to the emergence of government as the largest procurer and hoarder of food grains. And this adversely affects competition in the markets related to food grains. Therefore, the role of the government as per the survey has to be reexamined. So these are some of the examples where the government interventions has heard the markets rather than helping the markets. Now if you look at the other news articles which mentions that some of the solutions such as pro-business policy, bigger banks etc. are vital for India to become a 5 trillion economy by the financial year 2025. Therefore, the author concludes the article by saying that the observations made by the economic survey in this regard will cheer up the markets and traders. But the author also implies a caution that is taking curative actions is subjected to how efficiently the government changes its role with respect to these matters and how efficiently the associated risks are going to be managed. So these are some of the information with reference to the analysis of these news articles. The displayed practice question will be discussed at the end of the session. Now let us move on to the next news article analysis. This news article discusses a complete chapter called Ptoleonomics that is the economics of a plate of a food in India which is discussed in the volume 1 of the economic survey. In this chapter of Ptoleonomics an attempt has been made to quantify what a common man pays for Ptole. That is a plate of food across India. So in this context let us discuss the calculation methodology of Ptoleonomics and its findings from this chapter. The syllabus relevant for the analysis of this news article is highlighted here for your reference. We saw that Ptoleonomics is an attempt to quantify what a common man pays for Ptole. See the main purpose is to understand the evolution of food prices over a period of time through this exercise. The time period taken for the calculation is from the financial year 2006-7 to the first of the current financial year. Now we will see why food is focused. This is because price of a plate of food has the most direct effect on the common man. This survey tells that food and beverages constitute around 45.9% in the combined consumer price index. Now let us see how the Ptole prices have been calculated and then we will see how the affordability factor to purchase the Ptole has been calculated. See the Ptole prices were constructed for 25 states and union territories using the average monthly price data for the given period that is from April 2006 to October 2019 from Labour Bureau data. Here two types of Ptole were considered for the analysis. One is vegetating Ptole and the other is non-vegetarian Ptole. For each Ptole, quantities of cereals, vegetables, pulses and non-vegetarian items were taken assuming that at least two full meals would be consumed in a day. So based on this the Ptole prices were calculated. Therefore the Ptole prices include the cost of raw cereals, vegetables and protein as well as the spices, condiments, cooking oil and fuel that are needed to prepare the meal. Then coming to the affordability factor which was calculated using daily wages that were derived from the annual survey of industries. We will see the findings of the economic survey. The survey has found that a worker had spent about 70% of their daily wages on two vegetarian Ptole's a day for a household of five members in the financial year 2006-07. Whereas in 2019-20 the same worker is spending about 50% of their income for the meals. So the affordability of vegetarian Ptole has improved about 29% since 2006-07. Now if you take the state-wise data for this year, the most affordable meal was in the state of Jharkhand. Where two vegetarian Ptole's for a household of five members requires about 25% of a worker's daily wage. So from this analysis the survey tries to tell that the cost of food prices has reduced. The survey tells that there was a shift in the dynamics of the Ptole prices from 2015-16 because it was the time period when many reform measures were introduced by the Government of India in order to enhance the productivity of the agricultural sector. These measures include Pradhanamantri Krishi, Sinsa Yojana, Soil Health Codes scheme etc. And also many reform measures were introduced to increase the efficiency and effectiveness of agricultural markets for better and more transparent prices. These measures includes E-NAM, PM Asha etc. So as you can see in this picture that all these measures reflected in a slowdown in the cost of food prices since 2015-16. Then the survey intends to conclude that due to various initiatives by the Government of India, the cost of food prices have reduced and this intern has increased the affordability of a common man. Now let us look at the criticism which is reflected in the calculation methodology. We saw that the affordability factor was calculated using daily wages that were derived from the annual survey of industries. See the issue with this data is that this data deals with workers engaged in the organized manufacturing sector only. So this set of workers represents only 28% of the total manufacturing workforce. So we can see that it excludes workers from the unorganized sector as well as rural and agriculture workers are also excluded. Therefore we can say that the data does not represent the actual affordability scenario for the whole country. So this is all about Ptolenomics chapter that you need to know. Therefore to summarize this news article we have seen about Ptolenomics chapter from economics survey where we discussed the calculation methodology of Ptolenomics and its findings. And finally we saw an issue which is related to the calculation methodology that does not reflect the actual affordability scenario of India. With this we have come to the end of analysis of this news article. Now let us move on to the next news article analysis. This news article is also regarding economics survey where it has discussed the challenges of the poor and underprivileged sections of society in gaining access to higher education in the country. See it is discussed in chapter 10 of volume 2 which is titled as social infrastructure, employment and human development. So in this context let us see the government's expenditure pattern in social sectors and the challenges related to access of higher education which are discussed in the economics survey. The syllabus relevant for the analysis of this news article is highlighted here for your reference. See improvements in social sectors like education, health care, etc. has a huge impact on the quality of life of the people as well as to the productivity of the economy. So in this regard the government has taken many steps to improve the social sectors. Therefore from this graph you can see that the government's expenditure towards education as a percentage of GDP is about 3.1% for the financial year 2018-19 and also for the financial year 2019-20. And towards health as a percentage of GDP it has increased from 1.5% in the financial year 2018-19 to about 1.6% in the financial year 2019-20. See despite various efforts taken by the governments the economics survey has noted that high fees structure at the institutes of higher education is pushing the poor and underprivileged out of the higher education system. The economics survey has quoted that the national sample survey report which is titled as the national sample survey report on key indicators of household social consumption on education in India for the year 2017-18. See this report highlights increased participation in the education system across various indicators but still there are some challenges in terms of affordability, quality and distribution of education infrastructure. That is in 2017-18 as many as about 13.6% of those in the age group of 3-35 years were never enrolled for education. See one of the main reasons for not pursuing education was financial constraints. Now if you look at this table which gives an idea of how the expenditure towards education is distributed. This table gives the total data, rural and urban wise split up of the expenditures. From this picture you can see that course fees contributes about half of the average expenditure. Then the second largest component of average expenditure on education by student is books, stationery and uniform. Here you can see that an average student in rural areas is surprisingly spending more than 10% for books, stationery and uniform as compared to urban areas. So the absence of suitable financial support system and higher burden of course fees especially in higher education pushes the poor and underprivileged sections of the society out of the education system. As a result they prefer to engage themselves in economic activities for their survival due to the financial constraints. So these are the some of the challenges which are mentioned in the economic survey. So to summarize we have seen the government's expenditure pattern in social sectors and also the challenges which are related to accessing higher education that are discussed in the economic survey. With this we have come to the end of analysis of this news article. The displayed practice question will be discussed at the end of the session. Now let us move on to the next news article. This article speaks about the points of view of the chief economic advisor and the reasons given in the economic survey to improve the ease of doing business in India. The syllabus relevant for the analysis of this news article is highlighted here for your reference. Now kindly notice that chapter 6 of the economic survey for the financial year 2019-20 is titled as targeting ease of doing business in India. We know that we are aspiring to be a $5 trillion economy by the financial year 2025. So it is essential to simplify and maintain a business friendly regulatory environment to ensure proper growth for the country. So in order to understand the constraints in ease of doing business in India we must compare our progress with the leading economies on various parameters. See the best source for ease of doing business data is the annual ease of doing business report which is released by the World Bank. We know that in the 2020 ease of doing business report India is ranked at 63rd position out of 190 economies across the world. See the doing business report is based on performance of a country in several aspects of business regulation. These aspects include starting a business, dealing with construction permits, getting electricity, resisting property, getting credit, then protecting minority investors, then paying taxes, then trading across borders, enforcing contracts and resolving insolvency. See India has made substantial gains in the ease of doing business rankings that is it has improved from 142 in 2014 to 63rd position in 2019. See some of the factors which helped India to improve its ranks are the goods and services tax that is GST and the insolvency and bankruptcy code. However India's performance is very poor in other factors such as ease of starting business, then resisting property, then paying taxes and enforcing contracts. So the economic survey is of the opinion that we need to improve mainly these four factors to make a business friendly and growth oriented environment. See as per ease of doing business report New Zealand is the best place in the world to do business. Therefore the economic survey has compared India's performance on several parameters in comparison with New Zealand. Now let us discuss these parameters one by one in comparison with New Zealand. Now let's take up the parameter that is ease of starting a business. Not present in India it takes an average of 18 days to set up a business. Whereas in New Zealand it takes half a day with a single form. So we can say that India has significantly reduced the time and cost of starting a business but a lot more is to be done. Therefore the article has given one example to substantiate this data that is to open a restaurant in Delhi and individual needs to obtain 45 documents from the Delhi police. Whereas buying a gun it requires just 19 documents. So this is one of the examples of documentation that is required for starting a business. Now let us compare in terms of registering a property in India. That is to register a property in India it takes a minimum of 49 days, 9 procedures and involves a cost of 7.4 to 8.1% of the property value. Whereas in case of New Zealand it has only 2 procedures and a minimal cost of 0.1% of the property value. This indicates that we are far behind the best practice when it comes to registering a property to start business. It is to be noted that in terms of registering a property India's rank worsened from 93 in 2009 to 154 in 2019. Then the third parameter for comparison is the ease in payment of taxes. Here we compare the number of payments involved and the time taken for paying taxes. In India that is over the last decade the number of payments per year has significantly reduced from 59 to 12. But the time spent on paying taxes has not reduced much. So in India it takes about 250 hours per year to pay the taxes. Whereas in New Zealand it takes about 140 hours a year. Then the last parameter for comparison is enforcing contracts. And this parameter measures the ease of enforcing contracts and resolving disputes. See this is one parameter in which India's performance has been very poor over the years. See in India it takes almost 4 years to resolve an average dispute. Whereas in New Zealand it takes approximately 1 7th of it that is about 216 days. Even the economic survey 2018-19 had argued that the single biggest constraint to ease of doing business in India is its inability to enforce contracts and resolving disputes. So we must invest more in developing our judiciary to a well functioning legal system. This will have not just economic benefits but also social benefits such as reduction in penance of cases, then quick justice delivery etc. See China which is our neighbor and pure in the developing world face much better than India in all the above parameters. Even other developing economies such as Brazil and Indonesia also perform far better in some parameters especially when it comes to enforcing contracts and resolving disputes. So we need to appreciate the fact that the ease of doing business 2020 report has recognized India as one of the 10 economies that has improved its ranking. But we need to enhance the pace of reforms in ease of doing business to take India into the top 50 economies. So we can conclude by saying that a holistic assessment, a sustained and collective effort to ease business regulations is an essential step to ensure a sustained growth of about 8-10% per annum. Only then we can achieve or accomplish a target of $5 trillion economy by the financial year 2025. With this we have come to the end of analysis of this news article. The display practice question will be discussed at the end of this session. Now let us start our practice question session. Now let us take up this question which is based on Indian economy. Here they have given two statements and you have to choose correct statements. Statement one says fiscal deficit or surplus is the difference between the government's expenditure and its revenue excluding the borrowed money. Then the second statement says the fiscal deficit for last 5 years was below 3.5% of GDP. See this question is based on fiscal deficit which indicates the difference between total revenue and total expenditure of the government excluding borrowed money. See fiscal deficit occurs when a government collects lesser money or lesser revenue than the expenditure. So it precisely indicates how much a government needs to borrow from the markets to meet its expenses. Therefore the given first statement is correct statement. Now if you look at the second statement it says that the fiscal deficit for last 5 years was below 3.5% of GDP. Now look at this diagram which indicates effective revenue deficit, then primary deficit and also fiscal deficit. So from this diagram we can say that fiscal deficit was more than 3.5% in the financial year 2015-16 which is about 3.9% of GDP. Even in the financial year 2014-15 the fiscal deficit is at 4.1% of GDP. So we can say that the second statement is incorrect statement. So for this question you have to choose the correct statements that is option A. One only is the correct option for this question. Look at this question which is framed based on the economic survey that is expenditures on social sector leaves a profound impact on the quality of life of the people as well as to the productivity of the economy. The economic survey of 2019-20 has discussed the trends in social sector expenditure that is as per the survey which of the following expenditures are classified as expenditures on health. They are saying that medical and public health, family welfare, sports, labour and labour welfare and water supply and sanitation. So for this question you have to choose correct statements using the quotes given. So to answer this question you should know about economic survey which has mentioned social services as education, sports, art and culture, then medical and public health, family welfare, then water supply and sanitation, then housing, then urban development, then welfare of SES, STs and OBCs, labour and labour welfare, then social security and welfare, then nutrition, then relief on account of natural calamities, etc. So as per the survey expenditure on health includes expenditure on medical and public health, then expenditure on family welfare and water supply and sanitation. Whereas expenditure on education includes expenditure on education, sports, then arts and culture. So for this question they are asking that expenditures on health which includes medical and public health, then family welfare and then water supply and sanitation. So for this question option C that is 1, 2 and 5 only is the correct option. Now let us take up mains practice questions. The question is if India has to become a $5 trillion economy by the financial year 2025, the first and foremost step is simplifying and maintaining a business friendly regulatory environment, elaborate. This is a 10 marks question and you have to write in 150 words. Now consider this question which is also practice mains question. The question is while the government interventions are to help in the efficient functioning of markets, it is often said that the government interventions hurt more than it helps discuss. See this question is a 15 marks question and you have to write in 250 words. So for these two practice questions you can post your written answers in the comment section and your posted answers will be evaluated and suitable feedback will be given in the reasonable time frame. With this we have come to the end of analysis of today's Hindu News Analysis. 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