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Economic Survey 2020 Research Team | Posted On Friday, January 31,2020, 05:36 PM

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Economic Survey 2020



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- A Touch on Affordability of Food

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 to Become a $5 Trillion Economy by 2024-25

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.

  • Lack of transport infrastructure leads to problems in supply of raw materials and also movement of finished goods. This leads to farmers getting lesser prices for their produce as there’s poor connectivity on low quality rural roads.
  • Indian Railways transported 120 crore tonnes of freight and more than 840 crore passengers during 2018-19. Indian Railways is the World’s largest passenger carrier.
  • The Economic Survey also said that access to electricity is a must for inclusive growth. All States have reported electrification of all households under the SAUBHAGYA portal.

What India Must Learn from Chinese Model?

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.

See Also: How to Get Rich in New Year 2020?

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.

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More Documents Needed to Open a Restaurant Than Buy a Pistol

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.

India’s GDP Has Not Been Overestimated:

The Economic Survey 2020 states that there’s no evidence of mis-estimation when it comes to India’s GDP growth.

India’s Banking Benchmark

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.

Ease of Doing Business

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:

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.

Increase the Efficiency of Public Sector Banks       

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:

  • Fintech must be used across Banking Functions.
  • Employee Stock Options or ESOPS to encourage efficiency.
  • Big Data, Artificial Intelligence and Machine Learning to improve lending decisions.

See Also: Tips To Get Wealthy in New Year 2020

Health Score Method to Detect Warning Signals in NBFCs

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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