EconomicSurvey 2017-18

Volume II

Government of IndiaMinistry of Finance

Department of Economic AffairsEconomic Division

January, 2018

CONTENTS

Chapter No. Page No. Name of the Chapter

1 An Overview of India’s Economic Performance in 2017-18 1 GDP growth in 2017-18 7 GDP and its Components 9 Savings and Investment 13 Public Finance 14 Prices and Monetary Management 15 External Sector 19 Prospects of Growth for 2018-19 19 Sectoral Developments 26 Sustainable Development, Energy and Climate Change

2 Review of Fiscal Developments 29 Receipts and Expenditure of Central Government 29 Receipts 31 ExpenditureandDeficits 32 State and General Government 35 Annexure 1 35 Salient Measures under Indirect Taxes during 2017-18 39 Salient Measures Taken on Direct Taxes in the Budget 2017-18 and Thereafter 42 Annexure 2 42 Policy Initiatives on Investment Management in CPSES

3 Monetary Management and Financial Intermediation 44 Monetary Developments during 2017-18 47 Liquidity Conditions and its Management 48 Developments in the G-Sec Market 48 Banking Sector 49 Credit Growth 53 Non- Banking Financial Sector 53 Developments in Capital Market 55 Insurance Sector

4 PricesandInflation 56 Introduction 57 CurrentTrendsinInflation 60 Driversof Inflation 63 State-wiseInflation 66 Trends in Global Commodity Prices 67 EffortstoContainInflation 67 Conclusion

5 Sustainable Development, Energy and Climate Change 68 Sustainable Development Goals 68 National SDG Indicators and Baseline 69 Urban India and Sustainable Development 69 Access to Sustainable Energy 73 International Solar Alliance (ISA) Entered into Force 74 India and Climate Change 76 Current Multilateral Negotiations and Climate Change 79 Way Forward

6 External Sector 80 Global Economic Environment 81 India’s Balance of Payments Developments 87 Composition of Trade 89 Trade Policy 92 Multilateral Negotiations 92 Trade Related Logistics 93 Anti-Dumping Measures 93 Foreign Exchange Reserves 94 Exchange Rate 97 External Debt

7 Agriculture and Food Management 99 Overview of Agriculture and Allied sectors 100 Gross Capital Formation in Agriculture and Allied Sectors 101 Production of Crops 2016-17 101 Kharif Production 2017-18 102 Sowing of Rabi Crops 2017-18 102 Dynamics of Agricultural Growth 104 Cropping Pattern in Indian Agriculture 106 Input Management in Agriculture 111 Mitigating Risks in Agriculture: Crop Insurance and Crop Loss 113 Agricultural Credit and Marketing Initiatives 115 Agriculture Research and Development 116 Food Management 119 The Way Forward

8 Industry and Infrastructure 120 Industry 121 Index of Industrial Production (IIP) 122 Eight Core Industries 123 Corporate Sector Performance 124 Foreign Direct Investment 124 Key Initiatives taken by the Government to Boost Industrial Performance

126 Sector Wise Issues and Initiatives 126 Steel Sector 127 MSME Sector 128 Textiles and Apparels 129 Leather Sector 129 Gems and Jewellery 129 Infrastructure Sector 130 Policy Intervention in the Road Sector 138 Railways 139 Metro Rail System 139 Civil Aviation 140 Shipping 142 Telecom 143 Power 144 Logistics Sector : Exploring the Unexplored 146 Petroleum and Natural Gas 147 Housing for All – Some Issues 9 Services Sector 152 International Comparison 153 India’s Services Sector 153 Services GVA 154 State-Wise Comparison of Services 155 FDI in India’s Services Sector 156 India’s Services Trade 157 Major Services: Overall Performance 159 Major Services: Sector-Wise Performance and Some Recent Policies 159 Tourism 160 IT-BPM Services 161 Real Estate and Housing 163 Research and Development 165 Space Services 10 Social Infrastructure, Employment and Human Development 167 Trends in Social Sector Expenditure 167 Education for All 171 Progress in Labour Reforms 173 Political Empowerment of Women 175 Health for All 183 Swachh Bharat Mission (Gramin) 185 The Way Forward

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Acknowledgements

The Economic Survey is a result of teamwork and collaboration. Contributions to the Survey from the Economic Division and Officeof CEAinclude:ArchanaMathur,SanjeevSanyal,H.A.C.Prasad,A.S.Sachdeva,RajasreeRay,ArunKumar,AntonyCyriac, P.K. Abdul Kareem, Ashwini lal, Ashutosh Raravikar, Nikhila Menon, Abhishek Acharya, Rajani Ranjan, Dharmendra Kumar, Aakanksha Arora, Rabi Ranjan, Dipak Kumar Das, M. Rahul, Abhishek Anand, Kanika Wadhawan, Sonal Ramesh, Khayi Leishingham, Gaurav Katiyar, Neeraj Srivastava, Vijay Kumar Mann, Riyaz Ahmad Khan, Salam Shyamsunder Singh, Md. Aftab Alam, Pradyut Kumar Pyne, Narendra Jena, Parveen Jain, Subhash Chand, Rajesh Sharma, Amit Kumar Kesarwani, Mritunjay Kumar, Rangeet Ghosh, Kapil Patidar, Syed Zubair Husain Noqvi, Rohit Lamba, Siddharth Eapen George, Sutirtha Roy, Shoumitro Chatterjee, Sid Ravinutala, Amrit Amirapu, M R Sharan, Parth Khare, Boban Paul, Gayathri Ganesh, Kishan Shah, Tejaswi Velayudhan, Ananya Kotia, Utkarsh Saxena, Siddharth Hari, Navneeraj Sharma and Rohit Chandra.

TheSurveyhasbenefittedfromthecommentsandinsightsof theHon’bleFinanceMinisterShriArunJaitley.TheSurveysincerely acknowledges the comments and inputs from other Hon’ble Ministers including Shri Suresh Prabhu, Shri Nitin Gadkari, Shri Ravi Shankar Prasad, Shri Dharmendra Pradhan, Shri Piyush Goyal, Shri Radha Mohan Singh, Shri Prakash Javadekar, Shri RK Singh, Shri Jayant Sinha and the Hon’ble Ministers of State for Finance-- Shri P Radhakrishnan and Shri ShivPratapShukla.TheSurveyalsobenefittedfrom insightsof Hon’bleMinistersof StateGovernments includingShriSushil Modi, Shri Haseeb Drabu, Shri T M Thomas Isaac, Shri Manish Sisodia, Shri Yudhvir Singh Malik, Shri Kailash Gahlot, Shri Yunus Khan, Shri K. L. Pawar, and Shri Swatantra Dev Singh.

TheSurveybenefitedfromthecommentsandinputsfromofficials,specificallyNKSingh,RajivKumar,AjayTyagi,PKSinha, Nripendra Misra, P K Mishra, Hasmukh Adhia, Subhash C. Garg, Ajay Narayan Jha, Rajiv Kumar, Arvind Mehta, Rajiv Mehrishi, Viral Acharya, Bibek Debroy, Ramesh Chand, Pronab Sen, TCA Anant, Surjit Bhalla, Rathin Roy, Ashima Goyal, Ratan Watal, Amitabh Kant, Aruna Sundararajan, Susheel Kumar, Vanaja N Sarna, Arun Kumar, Durga Shanker Mishra, Preeti Sudan, U P Singh, Injeti Srinivas, C. K. Mishra, Amarjeet Sinha, Parameswaran Iyer, Rajiv Nayan Choubey, Kapil Dev Tripathi, Shobhana K Pattanayak, Ajay Kumar Bhalla, Aruna Sharma, Rita A Teaotia, Jitendra Shankar Mathur, Ashwani Lohani, Ajay Bhushan Pandey, Rajeevan, K J Ramesh, Arbind Modi, Gopal Krishna, T R Raghunandan, Nagesh Singh, Alok Srivastava, Vijay Raghavan, Ram Sevak Sharma,Vijay Kelkar, Y V Reddy, Montek Singh Ahluwalia, Isher J Ahluwalia, K L Prasad, Anthony Lianzuala, Ranjeeta Dubey, T V Somanathan, Prakash Kumar, A. Giridhar, Tarun Bajaj, Simanchala Dash, Saurabh Shukla, Debashree Mukherjee, Brijendra Navnit, S P Singh Parihar, Jyotirmoy Poddar, Ashutosh Sharma, Akhil Kumar, Ashutosh Jindal, U. K. Srivastava, Shailendra Kumar Mishra, K. P. Krishnan, M S Sahoo, Nilendu Mishra, Anand Jha, Alok Shukla, Amitabh Kumar, Gulzar Natarajan, T Rajeswari, Prashant Goyal, S Selvakumar, Govind Mohan, Sanjeev Sinha, Amit Mohan Govil, G. D. Lohani, Sanjeeb Patjoshi, K V Pratap, Praveen Garg, Ashutosh Jindal, Urvashi Sadhwani, B K Sinha, U S Kumawat, RK Jain, Dipankar Saha, Anuradha Mitra, Raj Pal, P Sangeeth Kumar, PR Meshram, Nand Lal, SK Sinha, Piyush Kumar, SK Tiwary, Yashvir Singh, Arun Kumar, Vandana Aggarwal, Vyasan R, P K Swain, B N Prusti, Venkatramana R Hegde, Renuka Kumar, Mohit Saxena, Pally Kundu, H. K. Roy, Rajneesh, Shailendra Sharma, Sunil Sharma, Ashwini Kumar, Mahima, Manoj R S, Prasanth V Regy, Rajesh Wadhawan, Pawan Kumar, V Krishnan, Gopal Raman Iyengar, Brahm Yadav, Sivananda Pai, Pulak Guhathakurta, Arvind Srivastava, Rahul Saxena, Mahendra Purohit, Gargi and Preetish Kumar Tripathi, R Sathish, Bailochan Behera, Shobeendra Akkayi, Swati Agarwal, Abhishant Pant, Vijay Kumar, Sushmita Dasgupta, Rajesh Bhatia, Pramod Kumar, David Rasquinha, S. Prahalathan Iyer, Ashish Kumar, Ashish Gupta, Ashwani Gupta, Sarika Madan, Sreejith K B, Neha Srivastava, Shailesh Kumar, Nikita Garg, Anshika Bhatnagar, Sushant Sudan, Neeraj Kumar Sharma, Shalaka Kujur, P.K.Srivastava, V.S. Sehrawat, Arvind Pandey, J Poddar, Gayatri Bhattacharya, Sudipta Bhattacharya, Bipad Bhanjan Pal, Arun Vishnu Kumar, Kaustav, Rajeev Jain, Soumasree Tewari, Madhuchhanda Sahoo.

The Economic Survey team extends its gratitude to The Supreme Court of India, High Courts of Delhi, Bombay, Madras, Calcutta and Allahabad, Income Tax Appellate Tribunals (ITAT), National Green Tribunals (NGT), National Consumer Disputes Redressal Commission (NCDRC), Appellate Tribunal for Electricity (APTEL), National Company Law Appellate Tribunal (NCLAT), Telecom Disputes Settlement and Appellate Tribunal (TDSAT), Intellectual Property Appellate Board (IPAB), Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Justice D K Jain, Justice Swatanter Kumar, Justice Ranjana Prakash Desai, Justice S J Mukhopadhyay, Justice Shiva Kirti Singh, Ravindra Maithani, G D Aggarwal, Sanjeev Kumar Chaswal, Sanjay Parihar, Thiru R. Sakthivel, Mohd. Faiz Alam Khan, P V Ganediwala, Sugata Majumdar, Dinesh Kumar, Y Vaidehi, D Kale, and Laishram Ladusingh.

The Economic Survey team is also grateful for comments and inputs from numerous academics and practitioners: Lord Nicholas Stern, Lord Adair Turner, Josh Felman, Justin Sandefur, Divyanshi Wadhwa, Rakesh Banerjee, Nandan Nilekani, Seema Jayachandran,RinkuMurgai,AbhijitBanerjee,EstherDuflo,FredericoGil Sander,PunamGupta,FabianoSilvio

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3MMA 3 Month Moving AverageAAY Antyodaya Anna YojanaARM Additional Resource MobilizationASEAN Association of South East Asian NationsASER Annual Status of Education ReportAT&C Aggregate Technical and CommercialBCM Billion Cubic MeterBE Budget EstimatesBPCL Bharat Petroleum Corporation LimitedBRICS Brazil, Russia, India, China and South

AfricaCAA&A Controller of Aid Accounts and Audit CAD CurrentAccountDeficitCAG Comptroller and Auditor General of IndiaCAGR Compound Annual Growth RateCBR Cultivated Biological ResourcesCFPI Consumer Food Price IndexCGA Controller General of AccountsCGST Central Goods and Services TaxCIC Currency in CirculationCIRP Corporate Insolvency Resolution Process CLSS Credit Linked Subsidy Scheme CoC Committee of Creditors COP Conference of PartiesCPI Consumer Price IndexCPI (AL) Consumer Price Index (Agricultural

Labourers) CPI (C) Consumer Price Index (Combined)CPI (IW) Consumer Price Index (Industrial Workers) CPI (RL) Consumer Price Index (Rural Labourers) CRAR Capital to Risk-weighted Asset Ratio CSA Climate Smart AgricultureCSO CentralStatisticsOfficeCTA Customs Tariff ActCV Coefficientof VariationCwP Currency with Public DALYs Disability Adjusted Life Years DARE Department of Agricultural Research and

EducationDBT DirectBenefitTransferDBTL DirectBenefitTransferof LPGDDA Doha Development AgendaDGCI&S Directorate General of Commercial

Intelligence and Statistics

ABBREVIATIONS

DGFT Directorate General of Foreign Trade DIPAM Department of Investment and public

Asset ManagementDIPP Department of Industrial Policy and

PromotionDISCOMS Distribution CompaniesDSIR Departmentof Scientific&Industrial

Research DTA Domestic Tariff AreaEBRD European Bank for Reconstruction and

DevelopmentEFTA European Free Trade AssociationEIB European Investment Banke-NAM Electronic National Agriculture MarketEPCG Export Promotion on Capital GoodsER&D Engineering R&D ETF Exchange Traded FundEU European UnionEWRs Elected Women Representatives FAO Food & Agriculture OrganisationFC Financial CreditorFCI Food Corporation of IndiaFDI Foreign Direct InvestmentFEEs Foreign Exchange Earnings FFPI FAO Food Price IndexFII Foreign Institutional InvestorFIPB Foreign Investment Promotion Board FTAs Foreign Tourist Arrivals FTP Foreign Trade PolicyFY Financial YearGCA Gross Cropped AreaGCC Gulf Cooperation CouncilGCCA Grants for creation of capital assetsGCF Gross Capital FormationGDP Gross Domestic ProductGFCE Government Final Consumption

ExpenditureGFCF Gross Fixed Capital FormationGII Global Innovation Index GNI Gross National IncomeGNPA Gross Non-Performing AdvancesGPI Gender Parity IndexGSDP Gross State Domestic ProductGST Goods and Services Tax

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GSVA Gross State Value Added GT Gross TonnageGVA Gross Value AddedGW GigawattHFCs Housing Finance Companies HFCs HydrofluorocarbonsHPCL Hindustan Petroleum Corporation LimitedHPI Housing Price IndexHYVs High Yielding VarietiesIBC Insolvency and Bankruptcy Code ICAR Indian Council of Agricultural ResearchIGS The International Ground Station IGST Integrated Goods and Services TaxIMF International Monetary FundIPO IndianPatentOfficeIPP Intellectual Property ProductsIPR Intellectual Property Rights IPU Inter-Parliamentary Union IRS Indian Remote Sensing ISS Interest Subvention SchemeIT-BPM Information Technology – Business

Process Management ITC Input Tax CreditKCC Kisan Credit CardKWh Kilowatt HourLAF Liquidity Adjustment Facility LEB Life Expectancy at BirthLED Light-Emitting DiodeLEO Low Earth Orbit LFPR Labour Force Participation RateLIC Life Insurance Corporation of IndiaLPG LiquefiedPetroleumGasLPI Logistics Performance IndexM/o DWS Ministry of Drinking Water & Sanitation M/o H&FW Ministry of Health & Family Welfare M/oPR Ministry of Panchayati RajM0 Reserve Money M3 Broad money MC11 Eleventh Ministerial Conference MDGs Millennium Development GoalsMEIS Merchandise Exports from India SchemeMEP Minimum Export PriceMIG Middle Income Group MIP Minimum Import PriceMLAs Member of Legislative Assemblies

MMR Maternal Mortality RatioMMT Million Metric TonneMMTPA Million Metric Tonnes Per AnnumMNEs Manufacturing Multinational Enterprises MoEFCC Ministry of Environment, Forest and

Climate Change MPC Monetary Policy Committee MSF Marginal Standing Facility MSME Micro, Small & Medium EnterprisesMSP Minimum Support PriceMSS Market Stabilisation Scheme MT Metric TonneMW MegawattNABARD National Bank for Agriculture and Rural

DevelopmentNAREDCO National Real Estate Development Council NAS National Accounts StatisticsNBFC Non-Banking Financial CompanyNBFCs Non-Banking Financial Companies NCDs Non-Convertible Debentures NCLT National Company Law Tribunal NCT National Capital TerritoryNCW National Commission for WomenNDTL Net Demand and Time LiabilitiesNFC Non Food CreditNFSA National Food Security ActNHA National Health AccountsNHB National Housing BankNHDP National Highways Development ProjectNICRA National Innovations on Climate Resilient

AgricultureNITI National Institution for Transforming India NPAs Non-Performing Assets NSDC National Skill Development Council NSSO NationalSampleSurveyOfficeODF Open Defecation Free OMSS Open Market Sale SchemeOoPE Out of Pocket Expenditure P2P Peer to Peer PA Provisional ActualsPDS ‎PublicDistributionSystemPE Private Equity PFCE Private Final Consumption ExpenditurePL Personal LoanPMAY Pradhan Mantri Awas Yojana PMFBY Pradhan Mantri Fasal Bima Yojana

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PMI Purchasing Manager’s IndexPMKSY Pradhan Mantri Krishi Sinchayee YojanaPOL Petroleum Oil and LubricantsPoS Point of SalePPI Producer Price IndexPRIs Panchayati Raj InstitutionsPSB Public Sector BankPSBs Public Sector Banks PSE Public Sector Enterprise PSF Price Stabilization FundPTR Pupil Teacher RatioPVB Private Sector BankQFI QualifiedForeignInvestorR&D Research and Development RBI Reserve Bank of India RE Revised EstimatesREITs Real Estate Investment Trusts RGI Registrar General of IndiaRMSA Rashtriya Madhyamik Shiksha Abhiyan RoA Return on Assets RoE Return on EquityRRBs Regional Rural BanksRRR Reverse Repo RateRSA Restructured Standard Advances RTE Right to EducationSA Stressed Advances SBM(G) Swachh Bharat Mission (Gramin)SCB Scheduled Commercial Bank SDG Sustainable Development GoalSDGs Sustainable Development GoalsSDR Special Drawing Rights

SEBI Securities and Exchange Board of IndiaSEIS Services Exports from India Scheme SGST State Goods and Services TaxSHG Self Help GroupSLR Statutory Liquidity RatioSRR Seed Replacement RateSSA Sarva Shiksha AbhiyaanSUUTI SpecifiedUndertakingforUnitTrustof

IndiaTAN Tax Deduction Account NumberTB Treasury Bill TPDS Targeted Public Distribution SystemTRAI Telecom Regulatory Authority of India UDAY Ujjwal Discom Assurance YojnaUDISE UnifiedDistrictInformationSystemfor

EducationULBs Urban Local BodiesUN United NationsUNCTAD United Nations Conference on Trade and

Development UNDP United Nations Development ProgrammeUNESCO UnitedNationsEducational,Scientificand

Cultural OrganizationUSD United States DollarUSGS United States Geological SurveyUTs Union TerritoriesVGF Viability Gap FundingVRR Varietal Replacement RateWACR Weighted Average Call Rate WPI Wholesale Price IndexWTO World Trade Organization