Concerns with Recent Economic Trends

What is the issue?

Income growth in India is being dominated by sectorssuch as finance, insurance, real estate and defence.

What is the recent trend in the economy?

• Various productive sectors have grown in terms of real value added since 2011-12, since when the new series of national income data are available.
• The FIRE sector (finance, insurance, real estate along with other professional services) increased by 22 per cent between 2011-12 and 2017-18.
• Value added in manufacturing rose by nearly 18 per cent, based on data from corporate industry rather than the industrial production index.
• Services have accounted for around 54 per cent of GDP in the last few years.
• Rearing of livestock has grown in terms of real value added and thereby enabled some increase in farm incomes over the period.
• By 2016-17, income from livestock accounted for 30 per cent of agricultural incomes.

What are the concerns with recent trend?

• FIRE, professional services, and defence sector accounted for 67 per cent of the growth in national value added since 2011-12.
• In fact, 43 per cent of the GVA growth came from only the latter two sectors a worrying trend indicative of a bubble economy.
• Core and basic industries like electricity, gas, water supply and other utility services increased by only 2 per cent over the entire period.
• In India growth rate of national income is given much importance, and checking fiscal and monetary indicators with respect to the value of the national product.
• India cares much less about the quality of that growth, or even its sectoral distribution.
• The latter is more important, both for the conditions of people and the overall health of the economy now and in the future.
• The services sector still cover only around a quarter of employment and the bulk of those jobs are in low paid and productivity services rather than the professional services.
• It shows that the service-led trajectory of the Indian economy continues, while employment and infrastructure have lagged behind.

What are the concerns of agri sector?

• The value added in agriculture, forestry and fishing went up by only 14 per cent.
• It is clear that crop production has generally languished since 2011-12, falling sharply for two years after 2013-14 and recovering only to that level in 2016-17.
• The value added in crop production has similarly been stagnant, and in 2016-17 was still slightly below the level reached in 2013-14.
• Even though livestock rearing is seen an increase, it is still well below the growth of incomes in other sectors.
• Crop production and real incomes from cultivation are both stagnating in a way that suggests real crisis and distress in rural areas.
• Thus the livestock economy has become a mainstay for farmers to enable them to survive, needs to be protected and nurtured.

Source: Business Line