Economic Survey 2015-16

Finance Minister Arun Jaitley tables Economic Survey 2015-16 report.

Fiscal Deficit

  • India must meet its medium-term fiscal deficit target of 3 percent of GDP

  • Government will adhere to fiscal deficit target of 4.1 percent of GDP in 2014/15

  • Govt should ensure expenditure control to reduce fiscal deficit

  • Expenditure control and expenditure switching to investment key

Growth

  • 2015/16 GDP growth seen at over 8% y/y

  • Double digit economic growth trajectory now a possibility

  • Economic growth at market prices seen between 8.1 – 8.5 percent in 2015/16 on new GDP calculation formula

  • Total stalled projects seen at about 7 percent of GDP, mostly in private sector

Reforms

  • There is scope for big bang reforms now

  • India can increase public investments and still hit its borrowing targets

Inflation

  • Inflation shows declining trend in 2014/15

  • Inflation likely to be below central bank target by 0.5 – 1 percentage point

  • Lower inflation opens up space for more monetary policy easing

  • Govt. and central bank need to conclude monetary framework pact to consolidate gains in inflation control

  • Consumer inflation in 2015/16 likely to range between 5-5.5 percent

Fiscal Consolidation

  • Govt. remains committed to fiscal consolidation

  • India can balance short-term imperative of boosting public investment to revitalize growth with fiscal discipline

  • Outlook for external financing is correspondingly favourable

Current Account Deficit

Estimated at about 1.3 percent of GDP in 2014/15 and less than 1.0 percent of GDP in 2015/16

Subsidies

Overhauling of subsidy regime would pave the way for expenditure rationalisation

Liquidity

Liquidity conditions expected to remain comfortable in 2015/16

Taxation

  • Tax base should widen to over 20% from 5.5% now

  • Need to phase out tax exemptions

  • Property taxation an area needing “urgent attention”

  • Higher property tax rates to check realty speculation

  • Higher property tax to improve local govt finances

External Sector

  • Exports may pick up FY17

  • Headwinds to growth may come from weak global demand

  • Export slowdown may continue for a while

  • FTAs leading to higher imports, exports

  • India must plan for major currency readjustment in Asia

  • India compares favourably with peer economies

  • Foreign demand seen weak

Farm Sector

  • India farm growth seen low for second year in a row

  • La Nina to have positive impact on farm

  • Fertiliser subsidy should shift to direct cash transfer

  • Subsidised fertiliser bag purchase cap to improve targeting

  • Must bring urea under Nutrient Based Subsidy programme

  • Need to rationalise fertiliser subsidy based on inputs, crops

  • Need deft supply management as rabi output seen low

Service Sector

Services sector growth in 2015-16 seen at 9.2%

Railway Budget 2016

Union Railway Minister Suresh Prabhu on 25 February 2016 presented the Railway Budget 2016-17 in the Parliament.

Theme of the Budget

  • Overcoming challenges : Reorganize, Restructure Rejuvenate Indian Railways: ‘Chalo, Milkar Kuch Naya Karen’

  • Three pillars of the strategy i.e. Nav Arjan – New revenues, Nav Manak – New norms, Nav Sanrachna – New Structures.

Financial Performance

  • 2015-16: Savings of Rs. 8,720 crore neutralizing most of the revenue shortfall, expected OR 90%;

  • 2016-17: Targeted Operating Ratio (OR) – 92%, restrict growth of Ordinary Working Expenses by 11.6% after building in immediate impact of 7th PC, reductions planned in diesel and electricity consumption, Revenue generation targeted at Rs 1,84,820 crore.

  • 44 new projects valued Rs. 92,714 crores to be implemented this year.

  • By 2020 Rs.4,000 Crores of estimated revenue to be generated.

Investments and Resources

Process bottlenecks overhauled including delegation of powers to functional levels; average capital expenditure over 2009-14 is Rs. 48,100 crore, average growth of 8% per annum.

2015-16 investment would be close to double of the average of previous 5 years.

2016-17 CAPEX pegged at Rs. 1.21 lakh crore; implementation through joint ventures with states, developing new frameworks for PPP, etc.

7 Missions

Railway Minister Suresh Prabhu while talking about his plans to transform Indian Railways also mentioned the 7 “Mission activities – Avataran”

  1. Mission 25 Tonne  – make our infrastructure suitable to carry 25-tonne axle-load.

  2. Mission Zero Accident: Elimination of unmanned level crossings: & introduce TCAS (Train Collision Avoidance System

  3. Mission PACE (Procurement and Consumption Efficiency): This mission aims to improve our procurement & consumption practices to improve the quality of goods and services.

  4. Mission Raftaar: To target doubling of average speeds of freights trains & increasing the average speed of superfast mail/express trains by 25 kmph in the next 5 years.

  5. Mission Hundred: To commission at least a 100 sidings in the next 2 years.

  6. Mission beyond book-keeping: Establish an accounting system where outcomes can be tracked to inputs.

  7. Mission Capacity Utilisation: For making full use of the carrying capacity at Dedicated Freight Corridors.

Each of the ‘mission’ will be headed by a ‘Mission Director, reporting directly to the Chairman, Railway Board. Each Mission will have annual outcome based performance targets.

New Trains & Initiatives

  • Antyodaya Express , Long distance superfast train for unreserved passengers to be started

  • Deen Dayalu coaches for unreserved passengers with potable water & higher number of mobile charging points to be introduced.

  • Humsafar – fully air-conditioned third AC service with an optional service for meals

  • Tejas – Trains to operate at speeds of 130 kmph & above. Will offer entertainment, local cuisine, Wi- Fi, etc.on board.

  • UDAY (Utkrisht Double-Decker Air-conditioned Yatri), double decker trains would be introduced on busiest routes.

  • Aastha circuit trains to connect important pilgrim centres

  • Expanding Sarthi Seva in Konkan Railways for help to senior citizens

  • High speed passenger corridor from Ahmedabad to Mumbai

  • India’s First Rail Auto Hub will be inaugurated in Chennai

  • New freight corridors to come up at Delhi-Chennai, Kharagpur-Mumbai, Kharagpur-Vijayawada.

  • New locomotive factories at cost of Rs 40,000 crore to be setup under the ‘Make in India’

  • Children’s menu, baby foods, changing boards to be made available for travelling mothers.

  • Rail University to be established at Indian Railway Academy at Vadodara.

  • SMART (Specially Modified Aesthetic Refreshing Travel) coaches are to be introduced.It shall offer new amenities including automatic doors, bar-code readers, bio-vacuum toilets, water-level indicators, accessible dustbins, ergonomic seating, improved aesthetics, etc.

  • Rakshak, a device that will intimate about approaching trains will be provided to all gang men.

  • Rail Bandhu magazine shall be made available in all regional languages.

Technology, Cleanliness, Service & Other Initiatives

  • Expansion of Vikalp service – train on demand to provide choice of accommodation in specific trains to wait listed passengers.

  • E-booking of tickets facility

  • Wi Fi facility at 400 stations

  • 17,000 bio-toilets

  • Clean My Coach service by SMS

  • Rail Display Network – GPS based digital displays to provide real time information about upcoming stations shall be installed.

  • 33% sub-quota for women under all reserved categories.