1. ECONOMIC SURVEY – 2012-13
 Chapter wise discussion
 Data analysis
 Comparison with foreign nations
 Human development
 Target of the economy
 Sector wise discussion
 Balance of payments (BoPs),…

2. CHAPTER – I: STATE OF THE ECONOMY
& PROSPECTS
 The strong post-financial crisis stimulus led to
stronger growth in 2009-10 & 2010-11
 However, the boost to consumption, coupled with
supply side constraints, led to higher inflation
 Monetary policy was tightened
 External headwinds to growth increased
 The consequent slowdown, especially in
2012-13 – affected all sectors of the economy

3. KEY INDICATORS
GDP Growth Rate (MP) 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13
Current Market Prices 16.1 12.9 15.1 20.3 15.1 11.7
Factor Cost (2004-05
prices)
9.3 6.7 8.6 9.3 6.2 5.0
Savings Rate 36.8 32.0 33.7 34.0 30.8 na
Capital Formation 38.1 34.3 36.5 36.8 35.0 na
Food Grains (MT) 23o.8 234.5 218.1 244.5 259.3 250.1
Index of industrial prdn 15.5 2.5 5.3 8.2 2.9 0.7
Inflation (WPI) 4.7 8.1 3.8 9.6 8.9 7.6
Agriculture, Forestry &
Fishing
5.8 0.1 0.8 7.9 3.6 1.8

4. RATIO OF INVESTMENT TO GDP
2006-07 2007-08 2008-09 2009-10 2010-11 2011-12
Gross Capital Formation
(Investment)
35.7 38.1 34.3 36.5 36.8 35.0
Public Sector 8.3 8.9 9.4 9.2 8.4 7.9
Private Sector 26.4 28.1 24.8 25.4 26.5 24.9
Corporate Sector 14.5 17.3 11.3 12.1 13.4 10.6
Household Sector 11.9 10.8 13.5 13.2 13.1 14.3
Gross Domestic Savings 34.6 36.8 32.0 33.7 34.0 30.8
Saving – Investment Gap -1.1 -1.3 -2.3 -2.8 -2.8 -4.2

5. FALL IN THE FRIVATE INVESTMENT
 The reduction in private investment could be
attributed to a number of factors:
1. Increase in policy rates (to combat inflation &
inflationary expectations). b/w March 2010 &
October 2011, the RBI raises the Repo rate by 375
basis points, thus raising the cost of borrowings
2. Lower dd for Indian exports from the rest of the
world
3. Policy bottlenecks such as obtaining environmental
permissions, carrying out land acquisitions

6. CURRENT ACCOUNT BALANCE
ITEMS 2011-12 (USD
BILLION)
2012-13
Exports 158.2 146.5
Imports 247.7 237.2
Trade Deficit 89.5 90.7
Net Invisibles 53.1 51.7
CAD 36.4 39.0
ITEMS AS PERCENT OF GDP
Trade deficit 9.9 10.8
Net Invisibles 5.9 6.2
CAD 4.0 4.6

7. DOMESTIC SAVINGS
 The volume and composition of domestic savings in
India have undergone significant changes over the
years
 The saving rate averaged 18.6% in the 1980s & 23% in
1990s
 The saving rate exceeded 30% for the first time in
2004-05 and has remained above that level ever since
 It peaked in 2007-08 – 36.8% & reached an eight year
low of 30.8 in 2011-12

8. THREE SOURCES OF SAVINGS
 Households – on average – Three-Fourths of gross
domestic savings during the period 1980-81 to 2011-12.
The share declined in recent years – 2004-05 to 2011-12
it averaged 70.1% of total savings
 Private corporate sector – 15% (1980-81 to 2011-12) &
share increased to 23.2% (2004-05 to 2011-12)
 Public sector – 10% (1980-81 to 2011-12) & share
progressively decreasing 6.7% (2004-05 to 2011-12)
 Table – refer – ES – page- 15

9. SOCIAL SERVICES
Expenditure on social services increased considerably
in the 12 plan, with the education sector accounting for
the largest share, followed by health
As a proportion of GDP, expenditure on social services
increased from 5.9% in 2007-08 to 6.8% in 2010-11 and
further to 7.1% in 2012-13
It is lower than in many other emerging & developed
countries and the share of public sector still lower
Based on the methodology suggested by Tendulkar
Committee - % of people living BPL in the country
declined from 37.2% in 2004-05 to 29.8% in 2009-10

10. GOVERNANCE ISSUES
 Like programs leakages and funds not
reaching the targeted beneficiaries that
need to be addressed
 Direct Benefit Transfer (DBT) with the help
of the Unique Identification (UID) number
can help plug some of these leakages

11. CHAPTER-II: SEIZING THE DEMOGRAPHIC
DIVIDEND
 India is regarded as a country with “Demographic
Dividend” – its high population in the age group of 15-
64 years (if we miss it – demographic nightmare)
 Productive jobs are vital for growth
 India’s challenge is to create the conditions for faster
growth of productive jobs outside of agriculture,
especially in organized manufacturing and in services,
even while improving productivity in agriculture
 The DD- the fact that India’s dependency ratio – will
come down more sharply in the coming decades

12. SECTORAL CONTRIBUTION TO EMPLOMENT
SECTORS 2000 2010
% IN
MILLION
% MILLIO
N
AGRICULTURE 60 234 51 233
INDUSTRY 16 63 22 102
SERVICESS 24 94 27 121
Labor Force
Participation (%)
60 409 56 473

13. MICRO, SMALL & MEDIUM
ENTERPRISES
 The criterion of investment in plant & machinery is
used to categorize MSMEs
 Micro enterprises – investment ceiling of 25 lakh
 Small enterprises – investment ceiling of 5 crore
 Medium enterprises – investment ceiling of 10 crore
 It is estimated that – MSMEs employ 81 million people
in 36 million units across the country
 Productivity is commensurately lower in India
 World Bank’s “Doing Business 2013” data – India ranks
132 out of 185 countries in ease of doing business

14. CHAPTER-III: PUBLIC FINANCE
 The budget for 2012-13 introduced amendments to the
FRBM Act as part of the Finance Bill
 These amendments contained two important features of
expenditure reforms
1. Introduction of the concept of effective
revenue deficit, which excludes from the
conventional RD, grants for the creation of capital
assets
2. Introduction of the provision for ‘Medium Term
Expenditure Framework Statement’ in the FRBM
Act

15. FORMS OF DEFICITS IN PF
 RD = total revenue expenditure – TR receipts
 BD = total expenditure – total revenue
 FD = TE – (revenue receipts + non-debt creating
capital receipts)
 FD = Budget deficit + borrowings (that part of the govt.
expenditure which is financed out of borrowing)
 Primary Deficit = FD – interest payments
 Monetized Deficit means the extent to which the govt.
borrows from the RBI and not from the market. RBI prints
fresh currency which monetize the economy by bringing
more money into circulation – called deficit financing

16. CURRENT ACCOUNT DEFICIT (CAD)
 It is defined as deficit b/w receipts on account of trad
& invisibles and payments on account of trade &
invisibles in the BoPs account of the country
 TWIN DEFICIT
An economy is deemed to have a Twin Deficit if it has
CAD and Fiscal Deficit

17. FISCAL INDICATORS
YEAR RD FD PD RD AS %
of FD
2004-05 2.4 3.9 o.o 62.3
2008-09 4.5 6.0 2.6 75.2
2009-10 5.2 6.5 3.2 81.0
2010-11 3.2 4.8 1.8 67.5
2011-12 3.4 4.6 1.6 74.4
2012-13 3.5 5.1 1.9 68.2

18. FRBM ACT, 2003
 In the Fiscal Responsibility & Budget Management Act
made obligatory for the govt. to reduce its RD & FD
 Reduction beginning from 2004-05
Yearly reduction from 2004-05
2008 -09
RD 0.5% of GDP 0
FD 0.3% 3%
By 2016-17 bring down (FRBM amendments) 2016-17
FD 3%
RD 1.5%
ERD 0

19. RECEIPTS & EXPENDITURE OF THE CENTRAL GOVT
As % of GDP 2007-
08
2010-11 2011-
12
2012-13
Revenue receipts 10.9 10.1 8.8 9.3
Tax revenue 8.8 7.3 7.4 7.7
Non-tax revenue 2.1 2.8 1.4 1.6
Revenue expenditure 11.9 13.4 12.2 12.8
Interest payments 3.4 3.0 3.0 3.2
Capital receipts 3.4 5.2 5.2 5.5
Capital expenditure 2.4 2.0 1.8 2.0

20. SOURCES OF TAX REVENUE: % OF
GROSS TAX REVENUE
KINDS OF
TAXES
1990-
91
2007
-08
2008-
09
2009-
10
2011-12 2012-13
DIRECT 14 49.9 52.8 58.9 56.3 52.4
PIT 17.3 17.5 19.6 17.6 17.6
Corporation
Tax
32.5 35.3 39.2 38.6 34.6
INDIRECT
TAX
86 47.0 44.5 39.2 42.6 46.8
Customs 17.6 16.5 13.3 16.3 17.3
Excise 20.8 17.9 16.5 17.5 18.0
Service Tax 8.6 10.1 9.4 8.8 11.5

21. TWO SPECIFIC MEASURES
 Aimed at expanding the direct tax base in the budget for
2012-13
1) Introduction of the provisions of GAAR in the IT
Act
2) Extending the provisions of Alternate Minimum
Tax (AMT)
 Shome Committee – related to GAAR
 Direct Benefit Transfer (DBT) – introduced on Jan 2013 –
designed to improve targeting, reduce corruption,
eliminate waste, control expenditure & facilitate reforms

22. 14th FINANCE COMMISSION
 Constituted on 2nd Jan 2013
 Awarding period – 2015-2020
 Chairman – Dr. Y.V. Reddy – former RBI Governor
 Other Members
1) Abhijit Sen,
2) Sushma Nath
3) Dr. M. Govind Rao
4) Dr. Sudipto Mundle

23. CHAPTER-IV: PRICES AND MONETARY
MANAGEMENT
 Inflation in protein foods, particularly eggs, meat &
fish and fruits and vegetables has persisted because of
 Changes in dietary habits
 Supply constraints

24. RESIDEX
 The rising share of urban population from around 17% in
1951 to 30% in 2011 and to an expected 50% by 2040
 In 2005-06 – NHB (1988) – came into effect from – 2007
 Trend of price movements in residential property on a
comprehensive scale
 The RBI’s monetary policy stance - focus on the twin
objectives :
 Containing inflation (price stability)
 Facilitating growth

25. REVISION IN POLICY RATES
Effective date
Repo
rate
Reverse
RR
CRR SLR MSF
24/4/2010 5.25 3.75 5.75 25
09/5/2011 7.25 6.25 6 24 8.25
17/4/2012 8 7 4.75 24 9
29/1/2013 7.75 6.75 4.25 23 8.75
09/2/2013 7.75 6.75 4 23 8.75

26. KEY MONETARY POLICY
INDICATORS
 BANK RATE OR DISCOUNT RATE POLICY
 Bank rate is the rate at which the central bank re-discounts the
eligible bills or makes advances against approved securities. It is
alternatively called as discount rate. In simple words bank rate is
the rate of interest charged by the central banks while providing
financial accommodation to commercial banks.
 CASH RESERVE RATIO (CRR)
Every commercial bank is required by law or custom to maintain
a minimum percentage of deposits with the central bank. The
minimum amount of reserve with the central bank may be either
a percentage of its time and demand deposits separately or of
total deposits. This is insisted up on to ensure the solvency and
liquidity of the commercial bank

27. KEY RATES
 STATUTORY LIQUIDITY RATIO (SLR)
 SLR is one of the major quantitative credit control
instruments. SLR is the mandate for banks that they
must keep with itself a stipulated proportion of their
total demand and time deposits in the form of liquid
assets, namely; cash, gold and approved securities,
mostly government securities.

28. SHORT TERM MEASURES
 REPO RATE
 Repo rate is the rate imposed by the central bank up
on the commercial banks when they borrowed money
from the central bank. In other words, repo rate is the
rate at which the central bank lends to banks.
 RESERVE REPO RATE
 Reverse repo rate is the rate offered by the central bank
when the commercial banks parked their excess
money with the central bank or it is the rate offered by
the central bank to banks for parking funds with it

29. MARGINAL STANDING FACILITY
(MSF)
 Scheduled Commercial Banks have been allowed to
borrow overnight at their discretion, up to 1%
(currently 2%) of their respective net demand & time
liabilities (NDTL) at 100% base points above the repo
rate
 Commenced from 09/5/2011
 Bank Rate = MSF (RBI announced on 13th Feb, 2012)

30. CHAPTER – V: FINANCIAL INTERMEDIATION
 Banks use their deposits for advancing credit or for
making investment in govt. & other securities
 The ratio of their investment in approved securities to
aggregate deposits has remained range bound at
around 30%, significantly higher than the minimum
SLR
 The higher allocation to govt. securities may be either
because of a higher risk perception or non-availability
of quality lending opportunities to the private sector or
both.

31. RIDF
 Instituted in the NABARD (12th July 1982) announced in the
Union Budget of 1995-96
 PN – 109
 BASEL – I, II & III
 CRAR
 BASEL III is the new international regulatory framework
designed to correct the deficiencies in regulation that led
to the global financial crisis of 2008
 It seeks higher Capital Adequacy Ratio to meet any
financial exigency
 Implementation of BASEL III norms scheduled to
commence from 1st Jan,2013 and has to be completed by
Jan, 2019

32. RRBs (2nd October, 1975) & CRAR
 With a view to bringing the CRAR of RRBs up to at
least 9%, Dr. K.C. Chakrabarty Committee
recommended recapitalization support to the
extent of Rs.2,200 crore to 40 RRBs in 21 states

33. CHAPTER -VI: BALANCE OF PAYMENTS
(BoPs)
 The twin objectives of safety and liquidity have been
the guiding principles of foreign exchange reserves
management in India
 SDR & Reserve Tranche Position (RTP) - IMF
 SDR – 1969 by IMF to supplement the existing official
reserves of member countries – IMF’s unit of account,
which represents a potential claim on four freely
traded currencies – USD, Pound, Euro & Yen

34. FOREIGN EXCHANGE RESERVES IN
INDIA (USD BILLION)
YEAR FOREIGN EXCHANGE
RESERVES (End March)
1990-91 5.8
1994-95’ 25.2
1999-00 38.0
2007-08 309.7
2008-09 252.0
2009-10 279.1
2010-11 304.8
2011-12 294.4
2012-13 (up to Sept. 2012) 294.8

35. FOREIGN EXCHANGE RESERVES OF
SOME MAJOR COUNTRIES
SL.NO COUNTRY FOREIGN EXCHANGE RESERVES (Dece,
2012)
1 China 3310.0
2 Japan 1304.1
3 Russia 538.6
4 Switzerland 531.7
5 Brazil 373.1
6 Republic of Korea 326.2
7 China P R Hong Kong 305.2
8 India 295.6
9 Germany 259.4
10 Francre 211.0

36. FOREIGN EXCHANGE RESERVES OF SOME
MAJOR COUNTRIES (DECE, 2010)
SL.NO COUNTRY FOREIGN EXCHANGE
RESERVES (Dece, 2012)
1 China 2454.3
2 Japan 1118.8
3 Russia 479.4
4 India 297.3
5 Republic of Korea 293.5
6 Brazil 285.5

37. FOREIGN EXCHANGE RESERVES OF SOME
MAJOR COUNTRIES (Dece,2011)
SL.NO COUNTRY FOREIGN EXCHANGE
RESERVES (Dece, 2012)
1 China 3181.1
2 Japan 1326.1
3 Russia 499.5
4 Brazil 352.0
5 Switzerland 340.6
6 India 296.7

38. EXTERNAL DEBT
 India’s external debt stock at end-March, 2012 stood at
US$ 345.4 billion (Rs. 1,765,333 crore)
Table: Composition of External Debt
Sl.no component March 2011 Sept, 2012
1 Commercial borrowings 28.9 29.8
2 NRI deposits 16.9 18.3
3 Multilateral 15.8 13.9
4 Bilateral 8.4 7.6
5 Export credit 6.1 5.2
6 IMF 2.1 1.7
7 Rupee debt 0.5 0.4

39. TOTAL EXTERNAL DEBT TO GDP
YEAR TOTAL ED TO
GDP
1990-91 28.7
1995-96 27.0
2000-01 22.5
2005-06 16.8
2009-10 18.2
2010-11 17.5
2011-12 19.7

40. THE CURRENCY COMPOSITION OF INDIA’S
TOTAL EXTERNAL DEBT
SL.NO CURRENCIES % (end Sept.
2012)
1 US Dollar denominated
debt
55.7
2 Indian Rupee 22.9
3 Japanese Yen 8.6
4 SDR 8.1
5 Euro 3.2

41. DEBT OVERHANG PROBLEM
 A sharp depreciation in local currency
would mean corresponding increase in debt
service liability, as more domestic currency
would be required to buy the same amount
of foreign exchange for debt service
payments
 Here the volume of debt would rise in local
currency terms

42. CHAPTER – VII: INTERNATIONAL TRADE
(%) PORJECTIONS
2011 2012 2013 2014
World trade volume (goods & services) 5.9 2.8 3.8 5.5
IMPORTS
Advanced Economies 4.6 1.2 2.2 4.1
Emerging Mkt & developing 8.4 6.1 6.5 7.8
EXPORTS
Advanced Economies 5.6 2.1 2.8 4.5
Emerging Mkt & developing 6.6 3.6 5.5 6.9
Source: IMF, World Economic Outlook Update, January 2013

43. WTO: INDIA’S SHARE IN GLOBAL
EXPORTS & IMPORTS
(%) 2000 2011
EXPORT 0.7 (RANK-31) 1.7 (RANK – 19)
IMPORT 0.8 (RANK-26) 2.5 (RANK-12)

44. INDIA’S SHARE OF SERVICES EXPORTS IN
THE WORLD EXPORT OF SERVICES
YEAR %
1990 0.6
2000 1.0
2011 3.3

45. GOLD IMPORTS & POLICY MEASURES
 Gold is the 2nd major import item after POL
 Highest import from: (2011-12)
1) Switzerland (52%)
2) UAE (17.6%)
3) South Africa (11.5%)
A. To restrict the rising trend in gold imports –
measures; in Budget 2012-13 – import duty on
standard gold & platinum was raised from 2% to
4% & non standard gold–from 5 to 10%
B. On 21 Jan, 2013, the import duty on gold &
platinum was increased from 4% to 6%

46. REGION-WISE SHARE OF INDIA’S
EXPORTS
SL.N
O.
REGION 2000-01 2005-06 2011-12 2012-
13
1 ASIA 37.4 46.9 50.0 50.4
2 AMERICA 24.7 20.7 16.4 19.5
3 EUROPE 25.9 24.2 19.0 18.7
4 AFRICA 5.3 6.8 8.1 9.6
5 CIS &
BALTICS
2.3 1.2 1.0 1.3

47. INDIA’S TRADE SHARE WITH MAJOR
COUNTRIES (SHARE IN TOTAL TRADE)
SL.NO. COUNTRIES 2010-11 2011-12 2012-13 EXPORT/IM
PORTRATIO
(2012-13)
1 UAE 10.72 9.03 9.74 0.92
2 CHINA 9.50 9.52 8.95 0.23
3 USA 7.30 7.46 8.23 1.51
4 KSA 4.04 4.63 5.43 0.28

48. FDI EQUITY INVESTMENTS
The UNCTAD World Investment
Report, 2012 in its analysis of the global
trends and sustained growth of FDI
inflows continues to report India as the
3rd most attractive location for 2012-14

49. FDI EQUITY INVESTMENTS
RANK COUNTRIES
1 MAURITIUS
2 SINGAPORE
3 UK
4 JAPAN
5 US
6 NETHERLANDS
7 CYPRUS
8 GERMANY
9 FRANCE
10 UAE

50. FDI
 Since 2006, India allowed FDI in single
brand retail to the extent of 51%. In Jan, 2012
– the Govt. removed restrictions on FDI in
the single brand retail allowing 100% FDI
 From Sep 2012 FDI in multi brand retail has
been allowed up to 51% under the govt.
route and subject to specific conditions

51. THE TOP 5 STATES IN INDIAA’S EXPORTS
IN 2011-12
1) MAHARASHTRA
2) GUJARAT
3) TN
4) AP
5) KARNATAKA
 While in 2011-12, these five states had
high robust growth (except Gujarat
with 5.5% growth) in 2012-13 all of
them had negative growth.

52. WTO NEGOTIATIONS AND INDIA
 8th Ministerial Meeting – December 2011 – Geneva
 9th Ministerial Meeting – December 2013 – Geneva

53. GANDHIAN STATEMENT
“You live as if you are going to die
tomorrow
and you learn as if you are going
to live forever”