The annual Economic Survey is a treasure trove of interesting facts and numbers on the state of the Indian economy. The impressive 2008-09 Survey is no exception.
Consider these interesting trends from trade: There?s growing prominence of our Asian neighbours as trading partners. The figures for April-February 2008-09 shows that China has replaced the US as India?s largest trade partner with its share of trade with India now at 8.6% as compared to 8.2% of the US. More striking is the fact that even tiny UAE is set to challenge the US with its share of India?s trade going up to 8.1%.
A similarly remarkable trade related finding of the Survey is the substantial dominance of the coastal states in India?s exports. Numbers collated for 2007-08 showed that Maharashtra and Gujarat accounted for around half of Indian exports with their shares being 27.5% and 21.3% respectively. The next four ranks were cornered by Tamil Nadu (9.1%), Karnataka (9%), Andhra Pradesh (4.6%) and West Bengal (3.5%), all states with a prominent coastline.
The unusual fact in the agriculture sector is that there is a substantial pick up in the output growth rate of commodities considered to be in perpetual short supply: pulses and edible oils. In pulses, growth had first decelerated from 1.5% in the eighties to 0.6% in the nineties, but has now shot up to 3.4% in the current decade. At the same time, the growth rate of dominant agricultural produce like rice and wheat continues to decelerate. Long-term trends show that average growth of rice production has decelerated sharply over the past two decades to 1.9% and 1.4% respectively.
The Survey also highlights the counterintuitive case of domestic food prices rising while international prices are falling. While the fall in global food prices has accelerated from 3.4% in October 2008 to 31.7% in March 2009, food prices in India were increasing in that period: 9.4% to 8.1% being the rates at the two end points. More striking is the finding of the Survey that despite growing competition, after the significant pick up of organised retail, consumer prices have continued to accelerate faster than wholesale prices in a large number of essential products like washing soap, dal, milk, long cloth, dhoti, sari, wheat, mustard oil and ground nut oil.
Outside of agriculture, environment and land acquisition issues have become a major stumbling block for tapping the full potential in important sectors like steel where India has turned from a net exporter to a net importer, despite the advantage of its large iron ore resources. For instance the Survey notes that while the country imported 4.3 million tonnes of steel and exported 4.8 million tonnes in 2005-06, the ratio has altered substantially in 2008-09 with imports touching 5.7 million tonnes and exports going down to 3.7 million tonnes.
Similar constraints have cropped up in the exploitation of the mineral resources, which are very important to the poorer states. In another interesting anomaly, the Survey notes that getting environmental clearance for mining projects was getting many times more difficult than for equally or even more polluting sectors like industry. It notes that during April-February 2008-09 the authorities had cleared only 241 mining projects, held back 102 applications, rejected 137 and transferred 86 cases to other authorities. In sharp contrast in the case of industry, environmental clearance was given to 604 projects while projects pending, rejected or transferred were just 68, 74 and 65, respectively.
And finally, have fiscal policies at last become more inclusive? Perhaps. The survey notes that the share of direct taxes, paid by higher income earners and corporate firms has gone up from 43.3% in 2004-05 to 54.9% in 2008-09, bringing down the share of the indirect tax burden, which affects everyone, including the poorest. The changes on the expenditure side have also been apparently inclusive as the share of central government spending on social services and rural development has almost doubled from 10.8% in 2004-05 to 19.4% in 2008-09.
?p.raghavan@expressindia.com