The pre-Budget Economic Survey

The pre-Budget Economic Survey, tabled by Finance Minister Pranab Mukherjee on Friday, has pegged the economic growth at 8.75-9.25 per cent for fiscal year 2012 and at 8.6 per cent for the current fiscal. A rebound in agriculture and a continued momentum in manufacturing and private services led to the robust growth.

The survey also said growth in the economy is likely to revert to pre-crisis level by the next fiscal and hinted at a gradual exit from the stimulus. Here's the sector-specific observations of the Economic Survey:

Agriculture
Observing that Indian agriculture is at a 'crossroads', the survey called for a Second Green Revolution with newer technological breakthroughs and higher investment in the sector, even while projecting 5.4 per cent farm growth this year.

It said agriculture and allied sectors would register 5.4 per cent growth this fiscal due to a good monsoon, compared to a mere 0.4 per cent expansion last year.

But the sector needs to grow at 8.5 per cent next fiscal to achieve the targeted 4 per cent growth in the Eleventh Plan (2007-12).

Power
Calling for bold reforms in the power sector, the survey asked the states to reduce subsidies and cross-subsidies on electricity and hike tariffs. It pointed out that India currently has one of the lowest and most uneconomical average electricity tariffs in the world -- 8 cents per unit at the retail level, compared to about 12-15 cents in countries endowed with more coal or gas and 19-10 cents per unit elsewhere.

It also suggested reducing the monopoly of state electricity boards in power distribution by encouraging open sales of the bulk of power supply in the market, which would increase competition.

It pointed out that the transmission and distribution losses in the power sector, at 35 per cent, were among the highest in the world.

Infrastructure
The infrastructure sector needs a whopping Rs. 41-lakh crore investment in the 12th Plan period. Out of the proposed investment, it has been projected that at least 50 per cent would have to come from private sector against about 36 per cent anticipated during the 11th Plan. "The public sector investment would have to increase from Rs. 13,11,293 crore in the 11th Plan to about Rs. 20,49,620 crore," the survey said. 
Services
This sector grew at 9.6 per cent for the current fiscal, lower than the 10.1 per cent expansion in the previous fiscal, though the outlook remains bright. This (9.6 per cent growth) is despite global deceleration in the sector. The growth rate in the current fiscal is expected to be 19.5 per cent for IT-BPO services, 18.5 per cent for exports and 22.8 per cent for domestic IT-related services.
The sector, growing by 10 per cent annually, contributes 55.2 per cent to the GDP and a quarter of total employment. It also contributes over one-third of country's total exports, besides accounting for a higher share in foreign direct investment (FDI).

Industry
India needs a policy to bring another round of multifaceted reforms for the industrial sector to have a sustained double-digit output growth in the medium to long term.
In the short term, the sector is likely to grow at moderate but sustainable rate. Increasing cost of financing and slowdown in foreign equity inflows in the current financial year are causes for concern.

Over the medium to long term, to sustain double-digits output growth and reduce the vulnerabilities of the sector, there is a need to put in place a policy framework for embarking on another round of multifaceted reforms.

Banks
The survey pitched for industrial houses wanting to set up banks and said that they should be given banking licences to promote the goal of financial inclusion. Providing access to banking facility to all citizens is one of the main objectives of the inclusive development agenda, it said.

While providing banking access, the issue of regulatory robustness for the banking sector should not be compromised. "Therefore, the issue of providing eligibility norms for new entities to operate as banks is of paramount importance," it said.

Financial markets
Calling for innovative steps to deepen the capital markets, the Economic Survey has said the government is working on a series of regulatory overhauls to better safeguard the financial sector.

It said the capital markets performed well in 2010, with a record quantum of funds raised in the primary market and the highest-ever levels being reached in the secondary market also.

The survey also said that record foreign inflows helped support the market, while "prudent regulations and institutions protected the economy from the recent global financial shocks and its dynamism is now leading the current recovery."

It also called for innovative solutions to deepen the domestic capital markets and the role of non-bank institutions, especially in corporate bond and debt markets.

Insurance
There will be different set of norms for life and non-life insurance companies for coming out with a public float. It has been proposed that the disclosure requirements for life and non-life companies would be separately mandated given the nature of their respective business. The survey said that investors would be required to be made aware of the financial performance, company profile, financial position, risk exposure, corporate governance and management of these companies.

Port
The average turnaround time of major Indian ports have risen to 4.38 days in 2009-10 as compared to 3.87 days in the previous year, undermining the competitiveness of Indian ports and is a cause of concern.

The cause of further worry is the rise in average turnaround time and average pre-berthing time, and fall in average output per ship-berth-day in 2009-10. Besides, the average pre-berthing waiting time has also increased in 2009-10 to 11.67 hours, against 9.55 hours last year.

As one of the remedial measures, the survey has called for following a holistic approach for improving infrastructure and services at ports through modernization of the systems using latest technology.

It also called for increasing the drafts available at the Indian ports and providing different levels of tariff for different types of vessels or for different cargoes, so as to attract mother ships to berth at Indian ports.

Exports
India's exports will surpass the $200-billion target for the current fiscal and the gradual rollback of stimulus measures is not likely to impact growth of the country's overseas shipments. The outlook for India's trade has brightened with good growth of 29.5 per cent during the April-December, 2010-11. Imports grew by 19 per cent during the period.

Social Schemes
The government needs to work on how to better converge various social schemes without duplication to effectively address the issues of unemployment and poverty.

Focus must also be given to firming up policy structures for effective implementation of programmes as fund allocation increases.

While the government has increased budgetary allocation for anti-poverty and employment generation schemes, the survey said: "Policy structures need to be firmed up to facilitate effective implementation of the programmes and for better results in outputs."

Pension
Parliament should clear the long pending PFRDA Bill. There is need to consider passage of the long-pending Pension Fund Regulatory and Development Authority (PFRDA) Bill in order to give a fillip to regulatory robustness in the pension sector.

It is expected that the success of pension reforms will not only help in facilitating the flow of long-term savings for development, but also help establish a credible and sustainable social security system in the country.