NEW DELHI: Finance Minister Nirmala Sitharaman is likely to strike a fine balance between being fiscally prudent and growth supportive when she presents her fourth straight budget on Tuesday, which is expected to have plans to boost spending to revive investment and create jobs.
The Budget for the fiscal year starting April 1, 2022 is likely to raise spending on infrastructure to set the economy on a firmer footing.
The stage for the Budget presentation was set by the Economic Survey stating that the government has the fiscal space to do more to support the economy that is forecast to grow at a healthy 8-8.5 per cent growth in the 2022-23 fiscal.
The budget comes days before the first phase of voting in Uttar Pradesh, which along with four other states is going to the polls to elect a new state government.
And naturally, it is expected to contain measures for higher rural and agriculture spending.
Asia's third-largest economy is estimated to expand 9.2 per cent in the fiscal year that ends in March, following a contraction of 7.3 per cent in the previous fiscal.
Analysts said the finance minister will have to strike a fine balance while keeping up the momentum of the country's promising but fledgling economic recovery and tax collections, but at the same time look at bringing in measures to spur demand, create jobs and tackle inflation as the country deals with the ongoing third wave of the Covid-19 pandemic.
While being 'fiscally prudent' as well as 'growth supportive, she is widely expected to continue growth agenda via higher capex allocation, which will accelerate the investment cycle and employment while at the same time taking a fiscal conservatism approach.
With a goal to reach a USD 5-trillion economy by FY25, capital expenditure allocation is expected to continue to remain higher while healthy tax revenues and mega disinvestment pipeline may help contain the fiscal deficit to 5 per cent in FY23.
The buoyancy in tax revenues, relatively contained spending and higher nominal GDP growth is expected to have contained the fiscal deficit in the current fiscal to 6.3 per cent, below the projection of 6.8 per cent.
Within infrastructure segment, higher allocation towards roads, railways and water are expected.
Also, the focus would be on ease of tax compliance, simplification and digitisation as well as ease of doing business.
Measures to support small businesses and the rural economy are also likely to form part of the Budget.
To boost domestic manufacturing, the budget presentation may also touch upon the government's Production Linked Incentive Scheme (PLI) applicable for the telecom, pharmaceuticals, steel, textiles, food processing, white goods, IT hardware and solar sectors.
It is unclear if Sitharaman will tinker with income tax rates but there is an expectation that the exemption limit of Rs 2.5 lakh will be raised.
Sitharaman would use the Budget as the cornerstone to put the economy on an accelerated growth path after the impact caused by the pandemic.
Amendments in the tax law to bring about sustainable growth, infrastructure investment, focus on R&D spending, nurturing incentives to the core sectors, including manufacturing and services, tapping the huge experience of running captive centres are some of the priority items on the agenda of the government.
Some key points from economic survey 2021-22:
It said a strong revival in revenues and the agile fiscal policy approach adopted by the government have created headroom for additional fiscal support, if needed.
The Survey, which is tabled in Parliament a day before the Union Budget, also noted that gross tax revenue during April-November 2021 has grown by 50 per cent year-on-year, while the GST mop up remained above Rs 1 lakh crore mark since July 2021.
"The agile fiscal policy approach adopted by the government, coupled with the buoyant revenue collection received so far this year, has created headroom for taking up additional fiscal policy interventions based on the need of the evolving situation," the Survey said.
Recalling that the fiscal support given to the economy as well as the health response caused the fiscal deficit and government debt to rise in 2020-21, the Survey said so far in 2021-22 there has been a strong rebound in government revenues.
The revenue receipts of the central government during April-November 2021 have gone up by 67.2 per cent (YoY), as against an estimated growth of 9.6 per cent in the 2021-22 Budget Estimates.
The tax collections have been buoyant for both direct and indirect taxes and the impact of Covid second wave on GST collections was much more muted as compared to the first wave.
It said the buoyant direct and indirect tax mop up, along with the non-tax revenue boosted by RBI's surplus transfer to the government, have contributed to the increase in the revenue pool.
The gross tax revenue during April-November 2021 has registered a growth of over 50 per cent in YoY terms.
This performance is strong not only over the corresponding period of the previous year but also when compared to the pre-pandemic levels of 2019-20.
The corporate tax collections have been buoyant, registering a 90 per cent growth during April-November 2021 over the year-ago period.
It said the ongoing improvement in revenue performance during the current year can also be attributed to increased tax compliance enabled by various tax administration and policy reforms implemented by the government in the past few years.
The revenue collection from customs during April to November 2021 has registered a growth of almost 100 per cent, while the revenue from excise duties have grown 23.2 per cent year on year.
The non-tax revenue collections up to November 2021 registered an YoY increase of 79.5 per cent.
This increase was driven by dividends and profits, which stood at Rs 1.28 lakh crore against BE of Rs 1.04 lakh crore.
The key component of dividends and profits during this period was Rs 99,000 crore surplus transfer from RBI to the central government.
"The strong revival in revenues also provides government with fiscal space to provide additional support as well, if necessary," the Survey said.
With the revival of the economy, the Goods and Services Tax (GST) has emerged as a buoyant source of revenue for both the Centre and the States.
The GST collections for the Centre were 61.4 per cent of BE during April to November 2021.
Gross GST collections, Centre and States taken together, were Rs 10.74 lakh crore during April to December 2021, which is an increase of 61.5 per cent over April to December 2020 and 33.7 per cent over April to December 2019.
The Survey, which projected economic growth of 8-8.5 per cent for next fiscal beginning April 1, also said that as the economy grows further, the revenue collection from all the sources is expected to be more robust which will help strengthen the fiscal position on one hand, and create fiscal space on the other.
"Thus, it is expected that reaching the budget estimate for fiscal deficit during 2021-22 will not be a concern for the Central Government. A robust economic growth path and various tax policy and administration reforms undertaken over the last few years will be fundamental in sustaining the buoyant revenues in the medium term, and thus, be on track with the fiscal path outlined by the Medium-Term Fiscal Policy Statement," the Survey said.
The government has budgeted fiscal deficit at 6.
8 per cent of GDP in current fiscal ending March 2022.
The indirect tax receipts have registered a YoY growth of 38.
6 per cent in the April-November period.
The rise in imports of goods and services ensued due to the recovery in both manufacturing sector and consumption demand, have led to a rise in customs collection.
In continuation with the Government's emphasis on providing a more transparent, efficient and tax-payer friendly tax administration and improving taxpayer convenience, several initiatives have been launched by the Government.
These will also ensure promotion of investment and employment generation.
The income tax department has also taken various measures for ease of compliance for taxpayers, brought in faceless procedures to promote transparency, reduced compliance requirements, besides undertaking various measures to curb tax evasion and promote the widening of tax-base.
The Railways is set for a jump in its allocation with the Economic Survey 2021-22 pushing for a rapid growth in Capex for the national transporter to make it future-ready and engine of national growth.
The survey said the influx of funds is needed to not only meet the passenger demand but increase the modal share of railways in freight to 40-45 per cent from the present 26-27 per cent as laid down by the National Rail Plan.
The NRP lays down the road map for capacity expansion of the railway network by 2030 to cater to growth up to 2050.
"The target of 40-45% modal share for railways is necessary from the perspective of sustainability and also from the national commitments made globally for reducing emission levels. Unlike growth, which is linear, capacity grows in surges (sawtooth curve) depending on project completion timelines," the survey said.
According to the National Rail Plan, the freight ecosystem is expected to grow from the present level of 4700 MT to 8200 MT by 2030.
"The next 10 years will see a very high level of CAPEX in the railway sector as capacity growth has to be accelerated such that by 2030 it is ahead of demand. Up to 2014, CAPEX on railway was barely Rs 45,980 crore per annum and consequently the railway was characterised by high levels of inefficiency and highly congested routes unable to meet the growing demand," it said.
"Post 2014, a conscious effort was made to improve the railway sector by substantially increasing the CAPEX. The CAPEX outlay for 2021-22 is Rs 2,15,000 crore which is more than five times the 2014 level."
"As more projects are taken on hand and several sources of capital funding are developed, the CAPEX will increase further in coming years and the railway system will actually emerge as an engine of national growth," it said.
Survey 2022 has also said that while air passenger traffic is gradually reaching the pre-pandemic levels, Indian Railways passenger traffic is still much below the pre-pandemic levels, according to monthly data.
In 2021-22 (till December), total freight loading by Indian railways was 1,029.94 million tonnes (MT) which is 18.37 per cent higher than 870.08 MT during the same period in 2020- 21.
Indian railways recorded almost 16 per cent increase in freight loading as compared to the corresponding period during the pre-pandemic year (2019-20), where the freight loading was 888.88 MT.
The Economic Survey 2021-22, tabled by Finance Minister Nirmala Sitharaman in Parliament, expects the economy to grow by 9.2 per cent during the current financial year, indicating a recovery to the pre-pandemic level.
The economy had contracted by 7.3 per cent in 2020-21 on account of impact of Covid and subsequent nationwide lockdowns to check the spread of coronavirus.
Over Rs 1,500 crore has been paid to more than 1.2 lakh depositors of defaulting banks under the Deposit Insurance and Credit Guarantee Corporation (DICGC), since it came into existence in 1961, as per the Economic Survey 2021-22 tabled in Parliament on Monday.
The deposit insurance coverage that began with Rs 1,500 in 1961, was raised gradually to Rs 1 lakh in 1993.
The amount remained static thereafter till 2020.
After the announcement in the Union budget 2020-21, the deposit insurance cover was increased from Rs 1 lakh to Rs 5 lakh per depositor per bank.
The Deposit Insurance and Credit Guarantee Corporation (Amendment) Act, passed by Parliament in 2021, made significant changes in the landscape of deposit insurance in India.
Under the Act, the Corporation is liable to pay the insured deposit amount to depositors of an insured bank.
Such liability may arise when an insured bank undergoes liquidation, reconstruction or any other arrangement under a scheme, and merger or acquisition by another bank.
"Since the Act came into force, over Rs 1,500 crore has been paid to over 1.2 lakh depositors against their claims, as of early January 2022," the survey said.
With deposit insurance coverage of Rs 5 lakh per depositor per bank, the number of fully-protected accounts stood at 247.8 crore at end-March 2021, constituting 98.1 per cent of the total number of accounts at 252.6 crore, as against the international benchmark of 80 per cent.
In terms of amount, the total insured deposits stood at Rs 76.2 lakh crore at end-March 2021, constituting 50.9 per cent (up from about 30 per cent under Rs 1 lakh cover) of the total assessable deposits (Rs 149.7 lakh crore) as against the international benchmark of 20-30 per cent.
India's space regulator has received close to 40 proposals from the private sector and academia for activities ranging from manufacturing of launch vehicles and satellites to earth observation applications, the Economic Survey said on Monday.
The Economic Survey 2021-22, presented by Finance Minister Nirmala Sitharaman in Parliament, said with the recently undertaken policy initiatives and private sector participation, the Indian space sector is expected to capture a larger share of the global space economy, which was close to USD 447 billion in 2020.
At present, India accounts for only about two per cent of the space economy, much behind the major players - the US and China.
It said more than 100 start-ups were working in the space sector, with 47 start-ups registering with the government in 2021 itself.
President Ram Nath Kovind also acknowledged the achievements in the space sector in his address to the joint sitting of both the Houses of Parliament.
"Space sector has now been opened up for private sector, providing a horizon of endless possibilities. The formation of IN-SPACE last year is one such important step to enhance India's space capabilities," Kovind said.
In June 2020, the government opened up the space sector to allow participation of private firms in the entire gamut of space activities.
As part of these reforms, the government set up New Space India Limited (NSIL), the country's first public sector undertaking in the space sector, and Indian National Space Promotion and Authorization Centre (IN-SPACe), as the promoter and regulator of space activities in India by non-government and private entities.
The changes in the space sector have now created a demand-driven model wherein the NSIL acts as aggregator of user requirements and obtain commitments.
"The first outcome in this regard came recently to the fore with Tata Sky signing an MoU with NSIL for utilizing the capacity on board the upcoming communication satellite GSAT-24, to be built by ISRO and launched by Arianespace," the survey noted.
It also noted that five private satellites have been tested at ISRO facilities, and four student satellites were launched aboard the PSLV C-51.
"A total of six MoUs have also been signed with private/academic entities for sharing technical expertise and facilities," the survey said.
Across the globe, the trend of space activities is in a state of transition, the survey noted and said from being primarily a government-driven activity, the sector has been witnessing increasing participation of private sector, not only in the traditional vendor role but also in taking up end-to-end space activities.
"With this in mind, the government undertook reforms in space sector in 2020, which envisage the private sector to act as a co-traveller in the exploration of outer space and also in providing space-based services," it said.
As a part of these reforms, the first step taken was empowering NSIL to "own" the operational launch vehicles and space assets of ISRO.
Further, the present supply-based model was changed to demand-driven model, wherein NSIL shall act as aggregator of user requirements and obtain commitments.
The second important step was the creation of IN-SPACe which will act as the promotor and regulator of space activities in India by NGPEs (Non-government/private entities), the survey noted.
This body has been tasked with prioritising the launch manifest as per the requirements of NSIL, ISRO and NGPEs.
It shall also allow utilization of capital intensive DOS-owned facilities at reasonable cost by the private sector, it said.
Another vital step, the survey said, has been in providing a predictable, forward-looking, well defined and enabling regulatory regime for space activities in the country.
The first to be updated were the SpaceCom and SpaceRS policies, further liberalizing the traditional Satellite Communication and Remote Sensing sectors, respectively, thus enabling entrepreneurs and industries to take up end-to-end activities in these domains, it said.
As many as 96 cities across the country have witnessed an improvement in the air quality with the government taking a host of measures, including steps to curtail vehicular emissions, Economic Survey 2021-22 said on Monday.
The government has approved Phase-II of FAME scheme with an outlay of Rs 10,000 crore for a period of five years commencing from April 1, 2019 as part of its efforts to promote electric vehicle adoption and reduce air pollution, the Survey noted.
Out of total budgetary support, about 86 per cent of fund has been allocated for demand incentive so as to create demand for electric vehicles (EVs) in the country, it added.
"This phase aims to generate demand by way of supporting 7,090 e-buses, 5 lakh e-3 wheelers, 55,000 e-4 wheeler passenger cars (including strong hybrid) and 10 lakh e-2 wheelers," the Economic Survey stated.
Permit requirement for electric vehicles has been removed, it added.
"As a result of these initiatives, 96 cities showed a decreasing trend of PM10 concentration in 2020-21 as compared to 2019-20. The number of cities within the prescribed National Ambient Air Quality Standard (PM10 less than 60 µg/m3) also increased from 18 in 2019-20 to 27 in 2020-21," it noted.
However, air pollution remains a major concern, with 36 cities showing an increasing trend in PM10 concentration in 2020-2021 as compared to 2019-2020, it added.
Listing other measures taken to curtail vehicular emissions, the Survey noted that the country has leapfrogged from BS-IV to BS-VI norms for fuel and vehicles since April 2020.
Besides, metro rail networks for public transport have been enhanced and more cities covered, it added.
Cleaner/alternate fuels like CNG, LPG and ethanol blending in petrol have been introduced, the Economic Survey stated.
The government has also brought in stringent emission norms for coal-based thermal power plants, it stated.
Besides, there is ban on use of imported pet coke in the country since July 2018, with exception for permitted processes, it said.
Online continuous emission monitoring devices have been installed in highly polluting industries and brick kilns have been shifted to zig-zag technology to reduce pollution, the Survey noted.
The government has also also notified six waste management rules covering solid waste, plastic waste, e-waste, bio-medical waste, construction and demolition, waste and hazardous waste, it said.
Besides, extended producer responsibility for plastic and e-waste management has been introduced, it added.
Also, burning of biomass/garbage has been banned, the Survey noted.
Climate finance will remain critical to successful climate action by developing countries, including India, according to the Economic Survey presented by Union Finance Minister Nirmala Sitharaman on Monday.
The Economic Survey 2021-22, tabled in the Lok Sabha ahead of the Union Budget which will be presented on Tuesday, said, "There is a greater thrust on climate action following the announcement of India's target of becoming Net Zero by 2070. Climate finance will remain critical to successful climate action by developing countries, including India."
Prime Minister Narendra Modi, as a part of the national statement delivered at the 26th Conference of the Parties (COP 26) in Glasgow in November 2021, announced ambitious targets to be achieved by 2030 to enable further reduction in emissions.
India has an NDC (nationally determined contribution) under the Paris Agreement to reduce emission intensity of its GDP by 33-35 per cent by 2030 compared to 2005 levels.
It has already achieved 24 per cent reduction of emissions till 2016, as per the third Biennial Update Reports (BUR) submitted to the United Nations Framework Convention on Climate Change (UNFCCC) in 2021.
According to the survey, India's performance on the NITI Aayog SDG (Sustainable Development Goals) India Index has improved from an overall score of 60 in 2019-20 to 66 in 2020-21.
It said the figures "show progress" in India's journey towards achieving the SDGs.
"Despite 2020-21 being a pandemic year, India performed well on eight of the 17 SDGs measured by the NITI Aayog SDG India Index," it said.
"These included: goal 3 (good health and well-being), goal 6 (clean water and sanitation), goal 7 (affordable and clean energy), goal 10 (reduced inequalities), goal 11 (sustainable cities and communities), goal 12 (responsible consumption and production), goal 15 (life on land) and goal 16 (peace, justice, and strong institutions)," it said.
The remaining SDGs are no poverty (goal 1), zero hunger (goal 2); quality education (goal 4); gender equality (goal 5); decent work and economic growth (goal 8); industry, innovation and infrastructure (goal 9); climate action (goal 13); life below water (goal 14); and partnerships for the goals (goal 17).
In September 2015, 193 countries, including India, committed to the SDGs as detailed in the UN resolution, "Transforming our world: the 2030 Agenda for Sustainable Development".
The SDGs comprehensively cover social, economic and environmental dimensions and build on the Millennium Development Goals (MDGs), which covered the earlier 15-year period from 2000 to 2015.
India has been making significant strides in increasing its forest area, ranking third globally in net gain in forest area during the decade (2010-20), it said, adding that going forward, there is a need to improve the forest and tree cover.
"Much of India's increase in forest cover during 2011-21 is attributed to the enhancement in very dense forest cover, which rose by approximately 20 per cent during the period. Open forest cover also improved by seven per cent during the period," it said.
"Going forward, there is need to further improve forest and tree cover. Social forestry could also play a significant role in this regard," the survey said.
It also suggested that states/Union Territories need to improve the management of their ground water resources "through improving their recharge and by stemming their over-exploitation, and to prevent the critical and semi-critical assessment units from further worsening."
The survey observed that climate change-related financial risks pose both micro and macro prudential concerns and that in May 2021, the Reserve Bank of India (RBI) set up a new unit -- 'Sustainable Finance Group' (SFG) -- within its Department of Regulation to effectively counter these risks, and for leading the regulatory initiatives in the areas of sustainable finance and climate risk.
It further said to assess the progress of its regulated entities in managing climate risk, RBI is preparing a consultative discussion paper covering governance, strategy, risk management, and disclosure.
"The discussion paper will sensitise regulated entities to incorporate climate-related and environmental risks in their business strategies, governance and risk management frameworks," it said.
"In line with the international best practices, banks will be guided to adopt a forward-looking, comprehensive, and strategic approach to climate-related risks," the survey said.
With forex reserves of over USD 630 billion and plenty of "policy room" to deal with the situation, India can withstand normalisation of monetary policy by central banks of large economies like the US Federal Reserve, the Economic Survey said on Monday.
The survey noted that due to accretion of large foreign exchange reserves in recent months, vulnerability indicators relating to reserves such as reserves to total external debt, reserves to short-term debt (residual maturity) and reserve cover of imports have shown marked improvement in the first half of the current fiscal vis-à-vis FY 2014, the taper tantrum year.
Taper tantrum phenomenon refers to the situation in 2013 when emerging markets witnessed capital outflows and spike in inflation after the US Federal Reserve started to put brakes on its quantitative easing programme.
The US Federal Reserve has indicated interest rate hikes and other measures aimed at getting inflation under control.
It has officially announced the start of its monetary policy "normalisation" plan.
Another key vulnerability indicator -- net IIP to GDP ratio -- has declined to (-) 11.3 per cent as against (-) 18.2 per cent in the said period, the survey noted, adding the external debt to GDP ratio has also declined since the taper tanrum of 2013.
Besides, it said, India witnessed a current account surplus of 0.9 per cent in the Q1 of 2021-22 on top of similar surplus in 2020-21 after a gap of 17 years.
On the other hand, it said, India experienced the highest ever current account deficit of 4.8 per cent of GDP in 2012-13 on the back of an equally large deficit of 4.3 per cent during the previous year (2011-12).
Evidently, the Indian economy has exhibited greater resilience so far to the current episode of taper.
In the immediate aftermath of the taper tantrum in 2013, it said, India experienced portfolio outflows aggregating to Rs 79,375 crore from capital markets, including Rs 19,165 crore from equity markets and Rs 60,210 crore from debt markets during May 23-August 30, 2013.
The latest announcement of reduction in asset purchases on November 3, 2021 by the US Federal Reserve had relatively muted impact on portfolio flows, it said, adding the total portfolio outflows amounted to Rs 34,178 crore, comprising Rs 29,168 crore from equity markets and Rs 5,010 crore from debt markets during the period November-January 20, 2022.
"While acknowledging India's transformation from being among the Fragile Five countries in the wake of the earlier episode to the 4th largest forex reserve holder during the current episode, Indian economy stands guard with an added advantage of plenty of policy room for manoeuvring as the process of normalisation of monetary policy by systematically important central banks takes hold," it said.
In response to the pandemic, since June 2020, the US Federal Reserve had been buying USD 80 billion of treasury securities and USD 40 billion of agency mortgage-backed securities each month.
In late July 2021, the survey said the US Federal Reserve signalled that it would start reducing the volume of its bond purchases later in the year.
On November 3, 2021, it said, the Federal Open Market Committee unanimously voted to scale back its asset purchases.
In line with this, the Reserve Bank of Australia (RBA) has also abandoned its yield curve target.
As yields on government debt climbed, the RBA chose not to intervene to defend its target of 10 basis points for debt maturing in April 2024.
Bank of Canada has gradually tapered its asset purchases in recent months.
"Thus, the long-awaited taper process has commenced by the systemically important central banks, renewing thereby an element of interest - within the academia and policy circles - in the potentially destabilising spill-over impact on the emerging market and developing economies as also for India," it said.
The Indian aviation sector has started to rebound with accelerated pace of COVID-19 vaccine roll-out and easing of travel restrictions globally, stated the Economic Survey released on Monday.
In 2021, the Centre took various initiatives to boost the aviation sector which included calibrated opening of the domestic sector as the first wave of the pandemic ebbed and introduction of air transport bubbles or air travel arrangements with specific countries, it mentioned.
"The domestic traffic in India has more than doubled from around 61 million in 2013-14 to around 137 million in 2019-20, registering a growth of over 14 percent per annum," said the Economic Survey released by the Centre.
The Survey stated that the Centre in 2021 also took other steps to boost the Indian aviation sector such as disinvestment of Air India, privatisation, modernisation and expansion of airports, boost to the regional connectivity scheme - UDAN and incentivisation of maintenance, repair and overhaul (MROs) operations.
UDAN is a regional airport development program of the Indian government and part of the regional connectivity scheme (RCS) of upgrading under-serviced air routes, it mentioned.
"Till launching of UDAN in 2016, India had 74 airports having scheduled operations," it noted.
However, within four years under UDAN, four rounds of bidding under RCS-UDAN have taken place and 153 RCS airports including 12 water aerodromes and 36 helipads have been identified for operation of RCS flights, it stated.
"During the last four years after commencement of the scheme, 948 valid awarded routes have been allotted to various airlines and out of which 389 RCS routes connecting 62 unserved and underserved airports (including six heliports and two water aerodromes) have been operationalized so far," it mentioned.
With the help of these supportive measures, India's aviation sector is on the path of gradual recovery from the turbulence caused by the COVID-19 pandemic, it stated.
Also, the government has liberalised Drone Rules in August 2021 and released PLI (production-linked incentive) scheme for drones in September 2021, it mentioned.
The Unmanned Aircraft Systems (UAS), also known as drones, offer tremendous benefits to almost all sectors of the economy and can become an important propeller for growth due to their reach, versatility, and ease of use, especially in India's remote and inaccessible areas, it noted.
"The policy reforms will therefore catalyse super-normal growth in the upcoming drone sector.
A resurgence of the sector is foreseen as a result of swift measures adopted by the government and industry," it mentioned.
"With the accelerated pace of vaccine roll-out and easing of travel restrictions globally, Indian aviation sector has started to rebound," it noted.
Despite the travel restrictions, the total passengers carried in October 2021 reached 99.58 lakhs, which was approximately 68 percent of the pre-Covid level of 146.25 lakh, it mentioned.
Air India sale will give a boost to India's privatisation drive, the Economic Survey said on Monday, as it suggested redefining the public sector role in business enterprises to encourage private participation in all sectors.
The government earlier this month handed over ownership rights in national carrier Air India to Tata Group for Rs 18,000 crore.
The amount includes the takeover of the debt burden of Rs 15,300 crore and another Rs 2,700 crore in cash.
"This progress on privatisation of Air India is particularly important, not only in terms of garnering disinvestment proceeds but also for boosting the privatisation drive," the Survey said.
This is the first privatisation in 20 years and will pave the way for the sale of more CPSEs, which are lined up for sale -- BPCL, Shipping Corporation, Pawan Hans, IDBI Bank, Concor, BEM and RINL.
Since 2016, the government has given 'in-principle' approval for strategic disinvestment of 35 CPSEs and/or subsidiaries/ units/ joint ventures of CPSEs and IDBI Bank.
"In order to realise the mission of New, Self-reliant India, there was a need to redefine public sector participation in business enterprises and to encourage private sector participation in all sectors," the Survey said.
The government had last year approved a policy of strategic disinvestment of public sector enterprises that will provide a clear roadmap for disinvestment in all non-strategic and strategic sectors.
The guideline for implementation of new public sector enterprise policy for CPSEs have been notified on December 13, 2021.
"This will help the government to make use of disinvestment proceeds to finance various social sector and developmental programmes while disinvestment shall infuse private capital, technology and best management practices in the disinvested CPSEs," it said.
The new PSE Policy envisages the classification of CPSEs into strategic and non-strategic sectors and exempts certain CPSEs such as those set up as not-for-profit companies from the scope of the policy.
The strategic sectors as per the policy are atomic energy; space and defence; transport and telecommunication; power; petroleum; coal and other minerals; banking, insurance, and financial services.
Under the four broad baskets in which the strategic sectors are classified - i.e. national security, critical infrastructure, energy and minerals and financial services - only a bare minimum presence of CPSEs in the aforesaid strategic sectors is to be maintained.
The non-strategic CPSEs will be privatised or otherwise shall be closed.
"Thus, the policy on public sector enterprises provides a clear path for disinvestment in all non-strategic and strategic sectors and strengthens the idea of Minimum Government, Maximum Governance," the Survey noted.
Stating that there has been an emphasis on disinvestment in the last 5 years, the Survey said that after 2014, the disinvestment policy was renewed with stake sales in PSEs, such as Hindustan Petroleum Corporation Ltd (HPCL), Rural Electrification Corporation Ltd (REC), Dredging Corporation of India Ltd (DCIL), Hospital Services Consultancy Corporation Ltd (HSCC), National Projects Construction Corporation Ltd (NPCC), THDC India Ltd and North Eastern Electric Power Corporation Ltd.
Besides, there have been the successful listing of PSEs like IRCTC, HUDCO, Cochin Shipyard Ltd, General Insurance Corporation, New India Assurance Company Ltd, Mazagon Dock Shipbuilders Ltd (MDL) and RailTel on the stock market.
The farm sector has been resilient to the COVID-19 shock and is estimated to grow at 3.
9 per cent this fiscal, the Economic Survey said on Monday, while suggesting to the government to give priority to crop diversification, allied farm sectors and alternative fertilisers like Nano urea.
The Economic Survey 2021-22 also pitched for increasing agriculture research and development (R&D) and organic farming, besides use of new technologies like drones.
"The performance of the agriculture and the allied sector has been resilient to the COVID-19 shock. Growth in allied sectors including livestock, dairying and fisheries has been the major drivers of overall growth in the sector," the Survey said.
The agriculture sector has experienced buoyant growth in the past two years.
It is estimated to grow at 3.9 per cent during 2021-22, from 3.6 per cent in the previous fiscal, it added.
Stating that the allied agri-sectors are steadily emerging to be high growth segments, the Survey said, "Increasing importance of allied sectors including animal husbandry, dairying and fisheries in growth and income of the farmers indicates that focus needs to shift more towards harnessing the potential of allied activities.
" The latest Situation Assessment Survey (SAS) has also found that the allied sectors have been stable sources of income across groups of agricultural households, accounting for about 15 per cent of their average monthly income.
According to the SAS report 2021, the average monthly income per agricultural household, as per paid out expenses approach, works out to be Rs 10,218, compared to Rs 6,426 as per the last SAS Report of 2014.
With increasing fragmentation of holdings, the Survey said there is also a need to improve productivity of small and marginal farmers through development and implementation of small holding farm technologies.
Urging the government to focus on crop diversification, the Survey said the existing cropping pattern is skewed towards cultivation of sugarcane, paddy and wheat, which has led to depletion of fresh groundwater resources at an alarming rate in many parts of the country.
However, crop diversification can be used as a tool to promote sustainable agriculture, reduction in import dependence and higher incomes for the farmers.
"Crop diversification towards oilseeds, pulses and horticulture needs to be given priority by addressing the core issues of irrigation, investment, credit and markets in their cultivation," it said.
While the government has adopted the use of minimum support price (MSP) as a signal to encourage crop diversification, there is also a need for coordinated action from the state governments to facilitate the shift to high value and less water consuming crops to enable realisation of the objective of doubling farmers' income in a sustainable way, it added.
On R&D in agriculture and allied sectors, the Survey said it can play a major role in realisation of sustainable agriculture practice that efficiently meets the objectives of nutritional security and improvement in farm income.
Research shows that every rupee spent on agricultural research and development yields better returns compared to returns on money spent on subsidies or other expenditure on inputs, it said.
"The increase in agriculture R&D therefore may improve productivity in the crop and allied sectors," it added.
That apart, the Survey said there is a need to explore options and promote use of alternative fertilisers such as Nano urea and organic fertilisers which protect the soil, which are more productive and contribute to higher nutrient use efficiency.
"Focus should be on use of new technology including drones and AI-based decision support systems, reduction in use of chemical fertilizers and use of low-cost organic inputs and supporting start-ups for innovations," it added.