Access To Bare Necessities Has Improved: Economic Survey 2021
When compared to 2012, the level of access to bare necessities that Indians enjoy, has improved, says the government’s pre-budget Economic Survey, unveiled by the finance minister on January 29, 2021. The survey also said that the world’s second most populous country would grow at a rate of 11 per cent in FY22.
The government chose to launch its ‘Bare Necessities Index (BNI)’ in its Economic Survey 2021. The BNI summarises 26 indicators on five dimensions, viz., water, sanitation, housing, micro-environment and other facilities. The index has been created for all states for 2012 and 2018 using data from two NSO rounds, viz., 69th and 76th, on drinking water, sanitation, hygiene and housing conditions in India. Citing the findings of the BNI, the survey also noted that there have been improvements across various dimensions.
Drinking water: According to the survey, for example, access to drinking water to households in most of the states had improved in 2018 compared to 2012, in rural, as well as urban areas.
Sanitation: Access to sanitation has improved in all states in rural areas and for most of the states in urban areas in 2018 compared to 2012. The survey also noted that regional disparity in access to sanitation had declined, as the states having low access to sanitation in 2012 had gained more. The level of access to safe sanitation had increased in the lowest income group.
Housing: The survey noted that the improvement in housing index indicated improvement in access to housing and reduction in inter-states disparities, with disproportionate benefits for the lowest income group in 2018 vis-à-vis 2012.
Micro-environment: The economic survey also noted improvement in the micro-environment for all states in 2018, except for Assam in rural areas and Odisha and Assam in urban areas, as compared to 2012. Here also the improvement was especially in the lowest income quintile.
Other facilities: The survey observed improvement in access to other facilities, such as the availability of kitchen, kitchen with a water tap, good ventilation in the house, access to bathrooms, electricity use and type of fuel used for cooking.
While lauding the role of the various government-funded schemes in bringing about this positive change, the survey noted the progress made under the government’s ambitious project, Housing for All by 2020.
According to the survey, 109.2 lakh houses had been sanctioned under the PMAY-Urban mission, as on January 18, 2021. Out of these, the ground-breaking ceremony for 70.4 lakh houses had been done, while 41.3 lakh flats had been built since the inception of the scheme in June 2015.
Since 2014-15, construction of approximately 1.94 crore rural houses had been completed, out of which 1.22 crore houses had been constructed under the revamped scheme of the PMAY-G and 0.72 crore under the erstwhile Indira Awas Yojana scheme. The government plans to construct 2.95 crore homes in two phases under the rural chapter of the PMAY programme.
The survey also noted that the housing sector in India was headed towards a recovery, after undergoing an extremely tough phase during the April-June period in 2020.
On the monetary policy front, the Economic Survey said that the year 2020 saw improvement in transmission of policy repo rates to deposit and lending rates, as reflected in the decline of 94 bps and 67 bps in weighted average lending rate on fresh rupee loans and outstanding rupee loans, respectively, from March 2020 to November 2020.
The survey will form the basis of the upcoming budget that will be presented by finance minister Nirmala Sitharaman in the Lok Sabha on February 1, 2021.
Builders Need To Reduce Prices To Deal With Inventory: Economic Survey 2020
January 31, 2020: India's real estate developers were sitting at an unsold inventory stock worth Rs 7.77 lakh crore at the end of 2018, and they would have to consider reducing prices in order to breeze through the liquidity crunch, says the Economic Survey 2019-20. The Survey estimates about 9.43 lakh units with 41 months of inventory overhang stuck in various stages of construction in top eight cities.
“The real estate sector, residential property in particular, have been reeling with issues of delayed project deliveries and stalled projects, leading to a built-up of unsold inventory over the years,” says the Survey. “Housing prices have remained elevated even though growth in prices have fallen sharply since Q1 2015-16 and remained muted since then,” it adds.
While stating that the construction sector, including housing, accounts for 8.24 per cent of GDP and employs about 12 per cent of the work force, the Survey acknowledged that easing of credit in the financial sector would be one the government's primary concerns.
According to the Survey, which was presented by Finance Minister Nirmala Sitharaman in the Lok Sabha on January 31, 2020, a day before she presents the Union Budget 2020-21, 90 per cent of the urban population in the country now has pucca (homes built using basic building material) homes. It also indicates the government is on course to meet the ambitious target it set under the Housing for All by 2020 mission.
Chief Economic Advisor Krishnamurthy Subramanian-authored Survey, which acts the government performance report card for the previous year, also talks about launching pro-business policies in order to enable markets and build trust at a time when economic growth has hit a record low. Growth decelerated to 4.5 per cent in the period between July and September, official data show. While acknowledging that growth has bottomed out, the Survey predicted economic growth at 6 per cent to 6.5 per cent in the next financial year starting April 1.
“We welcome the positive outlook of the Survey. However, we strongly advocate that the Central government announce bolder policy and fiscal measures to recover from a sharp economic downturn and somnolent market scenario. The success of economic green shoots lies in connecting the right dots for economic prosperity in an immediate time frame,” said NAREDCO President Niranjan Hiranandani
Ninety per cent households in urban India own pucca homes and the same is true of nearly 78 per cent households in rural areas, says the Economic Survey. The Survey also points out that the government is set to achieve the ambitious target to provide homes to all by 2022, and has already built 47.33 lakh homes under the Pradhan Mantri Awas Yojana-Gramin. Under the urban component, 32 lakh homes have been constructed so far.
Ease of doing business
The Survey highlights the fact that India has jumped 79 positions in World Bank’s Doing Business rankings, improving its ranking from 142 in 2014 to 63 in 2019. The country has progressed on seven of the 10 parameters. The Goods and Service Tax (GST) and the Insolvency and Bankruptcy Code (IBC) top the list of reforms that have propelled India’s rise in rankings. India continues to trail in parameters such as Ease of Starting Business (rank 136), Registering Property (rank 154), Paying Taxes (rank 115), and Enforcing Contracts (rank 163).
India has, however, considerably improved the process to obtain construction permits over the last five years. In 2014, it took approximately 186 days and 28.2 per cent of the warehouse cost to get a construction permit. In 2019, it takes 98-113.5 days and 2.8-5.4 per cent of the warehouse cost for the same.
The Survey says that the Insolvency and Bankruptcy Code (IBC) has improved resolution processes in India compared to the earlier measures. The IBC proceedings take 340 days on an average compared to 4.3 years earlier and resulted in recovery of 42.5 per cent amount involved compared to 14.5 per cent under the earlier law.
While stating that monetary policy has remained accommodative in 2019-20, with a 110 basis points cut from 6.25 per cent in April 2019 to 5.15 per cent in October 2019, the Survey states that monetary transmission has been weak. It notes that credit spread, i.e., the difference between the repo rate and the weighted average lending rate is at the highest level this decade.
To achieve GDP of $5 trillion by 2024-2025, India will spend about $1.4 trillion over these years on infrastructure.
The survey also noted that since the launch of the Smart City Mission in 100 cities, 5,151 projects worth more than Rs.2 lakh crore are at various stages of implementation. A total of 1,290 projects worth Rs 22,569 crore have been completed and are operational.