The Economic Survey Volume 1 of 2021 was presented by the Union Minister for Finance and Corporate Affairs, Nirmala Sitharaman in the Parliament on 01st February 2021. It was dedicated to the COVID Warriors of the country. In the following finance study notes on the Economic Survey Volume 1, let us learn more about the meaning, importance, highlights, and crucial facts in detail. The Economic Survey Volume 1 of India is a yearly official document released by the Finance Ministry of the government of India. It is presented before Economic Survey Volume 2. It reviews the economic development of the country over the past financial year by providing detailed insights of the agricultural, manufacturing, industrial sectors, etc. It also analyses the macroeconomics of India on a wider scale in the past year to provide an outline to prepare the Union Budget in the next financial year. The Economic Survey Volume 1 of India is an important document for practical purposes as well as a significant topic for the IAS examination. Let’s have a quick look at the vital aspects related to the document.

Economic Survey Volume 1: Important Facts

As the Economic Survey Volume 1 of India is one of the most crucial documents released by the government of India, it contains the most authoritative and updated source of data on the country’s economy. The document provides detailed insights on the state of the economy in the past one year, the key challenges, and their possible solutions.

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Highlights of Economic Survey Volume 1 2021

The Economic Survey Volume 1 2021 was presented by the Finance Minister Nirmala Sitharaman. The theme of the same is “Saving Lives and Livelihoods”. The following are some of the highlights for the year 2021-22:

The economic contraction is projected at 7.7% in the financial year 2021.

1. The GDP growth is estimated at 11% with the farm sector emerging as a saviour.
2. The economy showed a V-shaped recovery supported by the vaccination drive against the COVID-19.
3. As long as the GDP is growing, there is nothing to worry about the debts.
4. The economic survey volume 1 projected imports and exports to decline by 11.3% and 5.8% respectively in the second half of 2021 financial year.
5. India is expected to have a Current Account surplus of 2% of GDP in the financial year 2021, a remarkable growth after 17 years.
6. The document stated that India’s sovereign credit ratings do not reflect its basics, evident from its sovereign default history.

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Healthcare:

1. The country-wide lockdown prevented around 37 lakh new COVID-19 cases and approximately 1 lakh deaths
2. The survey recommended increasing spending on public healthcare to 2.5 – 3% from 1% of GDP.
3. There is a need to harness the potential of telemedicine by investing in health infrastructure and internet connectivity.
4. The document recommended setting up a regulator in the healthcare sector and a rating agency to assess the quality of the healthcare service providers.

Process Reforms

1. The over-regulation in the economy has led to regulations being ineffective despite good compliance with the processes.
2. It is recommended to have more investments in the research and development domain by the private corporations.
3. The survey also suggests that the asset quality review exercise is to be done immediately after the forbearance is withdrawn.
4. Forbearance is the ‘emergency medicine’ that should be discontinued at the first opportunity when the economy shows recovery.
5. It recommends that the banks’ books be cleaned-up to ensure that past mistakes are not repeated in the future.
6. There is a need to augment the legal infrastructure for loan recovery

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Fiscal Developments

1. India adopted a fine-tuning approach best suited for a resilient recovery of the economy from the pandemic effects.
2. India remained the only country to receive equity FII inflows in 2020 among other emerging markets.
3. Compared to 2012, access to the ‘bare necessities’ has improved across all states in 2018 as per the survey.
4. The bare necessities access is the highest in Kerala, Haryana, Punjab, and Gujarat. It is the lowest in Odisha, West Bengal, Tripura, and Jharkhand.

Four Pillar Strategy

1. India adopted the unique four-pillar strategy of containment, financial, fiscal, and long-term structural reforms.
2. Given the evolving economic situation, calibrated monetary and fiscal support was provided.
3. Cushioning the vulnerable in the lockdown and boosting consumption and investment while unlocking, mindful of fiscal repercussions and entailing debt maintenance.

Economic Recovery

1. V-shaped economic recovery after COVID-19 lockdown phase:
2. Since July 2020, a resilient V-shaped recovery has been introduced.
3. The V represents the economic recession and recovery. It is the shape of a chart of economic measures created by economists while examining recessions and recoveries.
4. It is characterized by a sustained and quick recovery in measures of economic performance after a sharp decline in the economy.

Foreign Investment

1. The net FDI (Foreign Direct Investment) inflows of US $27.5 billion during April-October 2020 -14.8% higher as compared to the first seven months of the financial year 2019-20
2. The net FPI (Foreign Portfolio Investment) inflows recorded an all-time monthly high of US $ 9.8 billion in November 2020.

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Farm Laws

1. The survey strongly defended new farm laws in order to improve the lives of small and marginal farmers in India.
2. The policies are designed mainly to benefit the farmers that constitute around 85% of the total number of farmers who are suffering the ‘regressive’ market regime by the APMC (Agricultural Produce Market Committee)

India & Innovation

1. For the first time since the inception of the Global Innovation Index, in 2007, India entered the top 50 innovating nations. It ranked first in Central and South Asia, and third amongst lower middle-income countries.
2. India’s GERD (Gross Domestic Expenditure on Research & Development) is lowest amongst the top 10 economies.

Vocational Courses & Skill Development

1. As part of the centre government’s flagship skilling scheme Pradhan Mantri Kaushal Vikas Yojana 3.0, the vocational courses will be rolled out phase-wise in schools for classes 9 to 12 in order to provide students with skill development.

Debt Sustainability & Growth

1. In the Indian economy, growth results in debt sustainability but not essentially vice-versa.
2. Debt sustainability depends on the ‘IRGD’ (Interest Rate Growth Rate Differential, which is the difference between the growth rate and the interest rate.
3. Negative IGRD in India is due to much higher growth rates rather than lower interest rates.
4. As far as the Indian economy is considered, the debt sustainability will not result in becoming an issue even in the worst case scenario.

Bare Necessities Index (BNI)

1. It has been developed as a means of evaluating economic development using the ‘basic needs’ technique. It sets minimum standard quantities of 26 basic necessities like food, clothing, water, shelter, sanitization, housing, etc.
2. The BNI has improved across all states in the country in 2018 as compared to 2012.

Education

1. India has attained a literacy level of around 96% at the elementary school level
2. In rural India, the percentage of enrolled children from government and private schools owning a smartphone increased to 61.8% in 2020 from 36.5% in 2018.
3. A total of 92 courses have been started and 1.5 crore students are enrolled under the Swayam Massive Open Online Courses (MOOCs).
4. The Manodarpan scheme for psychological support has been covered under the Atma Nirbhar Bharat Abhiyan.

Importance for Exams

The Economic Survey Volume 1 is an important source not only for the Government Exams perspective but also for the various government schemes.

1. The document discusses all the prominent government initiatives along with their explanations.
2. The Survey not only analyses but also provides reasons for many issues taking place currently.
3. It contains in-depth knowledge of the current government policies and programs.
4. UPSC Exam aspirants must not miss reading the Economic Survey Volume 1 if they are eager to clear the exam as many questions are directly related to the document.
5. The important and relevant facts covered in the document help candidates prepare for the General Studies Paper III.
6. The survey as well provides economic growth forecasts, justification, and detailed reasons as to why it believes the economy will expand faster or decelerate.

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