Finance Minister Nirmala Sitharaman has tabled the Economic Survey 2020 in the Parliament. What’s special about this Economic Survey is a Chinese Formula to create 4 Crore more jobs.
In Economic Survey 2020, FY 2020-21 GDP growth has been pegged at 6-6.5%.
Thalinomics is an exercise which shows the affordability of food in India. The absolute price of a veg thali has decreased since FY 2016. In FY 2019, the price of a veg thali actually saw a hike. Thalinomics shows veg thali affordability increased by 29% from FY06 to FY20. In the non-veg thali the affordability increased by 18% in this period.
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India must spread 100 Lakh Crores in this period (2024-25) on infrastructure to become a $5 Trillion Economy. The lack of infrastructure must not come in the way of India becoming a $5 Trillion Economy.
The Economic Survey 2020 shows the example of China and how India can become a trade super power through exports. From 2001-2006 labor-extensive exports helped China generate 7 crore jobs for workers with primary education.
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Export Growth is a must for job creation in India. The Economic Survey 2020 lays special emphasis on ‘Assemble in India’. This theme would be integrated into the ‘Make in India’ theme. This could raise India’s export market to 3.5% by 2025 and 6% by 2030.
Take the case of India. A boost in exports easily converted 8 Lakh jobs from the informal to formal sector between the year 1999 and 2011. India can easily follow China’s path and cure the problems of its job crisis.
India can easily corner a sizeable share of the Global Export Market. This could create 4 crore jobs by 2025 and 8 crore jobs by 2030. India’s exports would rise to $248 Billion by 2025. This is a quarter of an increase needed to make India a $5 Trillion Economy.
The Economic Survey 2020 states that more documents are needed to open a restaurant than buy a pistol. You need 36 approvals to buy a restaurant in Bengaluru, 26 in Delhi and 22 in Mumbai. The number of documents to get a license to buy new arms and fireworks is just 19 and 12. China and Singapore require just 4 licenses to open a restaurant.
The Economic Survey 2020 states that there’s no evidence of mis-estimation when it comes to India’s GDP growth.
India is the 5th largest economy, yet the banking sector has little to celebrate. India has just one bank in the Global Top 100. Singapore and Sweden which are very small countries have 3 times the number.
India has World-Class airports. Export and Import of electronics through Bengaluru airport has been found to be World Class. Not so lucky at seaports. An apparel consignment from Delhi to US takes around 41 days, with 19 days spent in India alone.
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India’s fiscal deficit could slip to 3.8% of GDP vs the budgeted 3.3%. The economic slowdown has reduced tax revenue collections.
The Government supplies food grains at below market prices to keep food prices artificially low. The Government will cut food subsidy to gain fiscal room. The Government had budgeted 1.84 trillion rupees for food subsidies which make up more than half of India’s 3 trillion rupee subsidy bill.
The food subsidy bill at $26 Billion, exceeds the $24 Billion the Government got in the current year from the RBI.
The Economic Survey 2020 shows that Rs 4,30,000 crores of taxpayer money was invested as Government Equity in Public Sector Banks. In 2019, out of every 1 Re of taxpayer money invested in Public Sector Banks, 23 paise was lost. These are the recommendations for public sector banks:
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Regulators must employ the Health Score Methodology to detect early signs of liquidity issues. This index shows financial fragility in the NBFC sector. Health Score Index ranges between
-100 to + 100 where higher scores show financial stability in the sector.
The Health Score shows key drivers of refinance risk. This is ALM (Asset Liability Mismatch), over-reliance on short-term wholesale funding (This is Commercial Paper) and balance sheet strength of NBFCs.
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