Highlights of Economic Survey 2006-07
New Delhi: The highlights of the Economic Survey 2006-07 presented by Finance Minister P Chidamabaram to the Parliament on Tuesday are as follows:

• GDP to grow 9.2 pc; to touch Rs28,44,000 crore in 2006-07
  
• Inflation at 6.7 pc on February 3 a matter of concern
  
• Govt's top priority: Growth without high inflation
  
• Risks: volatile oil prices, delays in WTO talks
  
• Risks: Global macroeconomic imbalances
  
• Priorities: Making growth inclusive
  
• Priorities: Fiscal prudence, high investment
  
• Priorities: Improving govt intervention in critical areas such as education and health
  
• Priorities: Subsidies to be targeted
  
• Agriculture to grow 2.7 pc; share in GDP dips to 18.5 pc
  
• Industry to grow at 10 pc; share in GDP up to 26.4 pc
  
• Services to grow at 11.2 pc; share in GDP rises to 55.1 pc
  
• 10th plan average GDP growth at 7.6 pc vs targeted 8 pc
  
• Average inflation in 52 weeks ending Feb 3 at 5 pc
  
• Food items, wheat, pulses, sugar driving inflation
  
• In industry, mining, gas and power issues of concern
  
• Current account deficit at $11.7 billion in H-1 of FY07
  
• Exports up 36.3 pc to $89.5 bn in April-Dec 2006-07
  
• Capital flows strong, FDI up 98.4% in Apr-Sept 2006-07
  
• FIIs sellers in H-1, but likely to be positive in H-2
  
• Core sector growth 8.3% vs 5.5% in Apr-Dec 2006-07
  
• Infrastructure to require $320 bn in 11th plan
  
• Public sector to fund 60 per cent of infrastructure
  
• Fiscal deficit budgeted at 2.8 pc in 2006-07
  
• Tax-GDP ratio rises to 11.2 pc FY07 vs 10.3 pc in FY06
  
• Personal income tax mop up rose 30.3 pc in Apr-Dec FY07

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Survey: Economy on high growth path
New Delhi: The prominent theme of the Economic Survey 2006-07 presented to the Parliament on Tuesday by the Finance Minister, P. Chidambaram is that the economy has moved on to the path of high growth from the phase of moderate growth.

The survey says there are signs of industrial resurgence, with the industrial sector growing from a low of 2.7 per cent in 2001-02, moving up to 7.1 and 7.4 per cent in 2002-03 and 2003-04, accelerating to 9.5 per cent in the next two years to touch 10 per cent in the current fiscal. Also, the growth impulses within industry seem to have spread to manufacturing.

It said the current growth phase is marked by the high rate of investment, measured in terms of gross domestic capital formation that has steadily climbed from 31.5 per cent in 2004-05 to 33.8 per cent in 2005-06.

Also the generally sluggish infrastructure index grew 8.3 per cent in April-December 2006, up from 5.5 per cent in the same period of the previous year; the public sector turned its dissavings into positive savings and the corporate sector reported a sharp increase in savings at 8.1 per cent in 2005-06, which helped it to finance a large part of its investment in the ongoing capital-expenditure cycle.

Capital inflows into the country have also remained strong and even domestic flows to the capital market have been high. Initial public offerings grew 30.5 per cent in calendar year 2006 to Rs1,61,769 crore and on an average, there have been six IPO issues per month.

According to the survey, the economic growth is sustainable for many reasons. First, the high growth from a growing number of the population in the working age group would lead to a rise in savings. Second, efficiency improvements in the economy since 1999-2000 reinforce the confidence in the high-growth phase. Third, opening up of new avenues in services, beyond IT and IT-enabled services, bolster confidence in the high growth rate.

Another positive factor is the low possibility of an `overheated' economy, typified by a strained labour force and capital stock. This can be obviated through rapid growth in capacity addition through investments. Moreover, the moderate merchandise import growth rules out indications of overheating.
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Survey: Poverty down
The Survey also revealed that the incidence of poverty is down to about 22 per cent in 2004-05 from 26.1 per cent in 1999-2000, as per the NSSO's 61st round large-scale sample survey on household consumer expenditure.

On the issue of inclusive growth, the survey emphasises that putting more people in productive and sustainable growth seems to be a solution but adds that inclusive growth cannot come without growth itself.

As for the downsides, the survey notes that risks for a sustained high growth could be from rapid unravelling of global macro-economic imbalances, volatile oil prices and delays in the completion of the Doha Round. "But, for the present, they appear to be limited," assures the survey.
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Survey: Power situation grim
New Delhi: The Economic Survey has said that the power situation in the country is serious as only half the targeted increase in generation capacity during the 10th Plan is expected to come up. The total losses of state utilities on the other hand rose to over Rs26,000 crore in 2006-07.

With fuels prices rising, along with a serious shortage of gas, power generation from a large number of power stations across the country has been hit badly, the Survey said. The 10th Plan capacity addition would fall short by 43 per cent at 23,250 MW against the targeted 41,110 MW, it said.

The Survey noted that during the current fiscal, gross subsidies increased by over 10 per cent to Rs40,131 crore while the rate of return of utilities deteriorated to a negative 27.4 per cent, from a negative 24.8 per cent in 2005-06.

It said State Electricity Boards and utilities' were in a financial mess, with total commercial losses rising to Rs26,150 crore in 2006-07, from Rs21,110 crore last year.

The Survey is, however, optimistic of the losses declining to Rs21,391 crore next year.

The Survey stressed on the need to carry forward distribution reforms, and said: "Unless effective steps are taken to slash transmission and distribution losses from 40 per cent to 15 per cent, the electricity situation will not improve."

It also said there was a shortfall of gas supply to power stations that was affecting power generation in a big way.

Of the gas-based capacity of 13,582 MW, power plants generating 10,999 MW are suffering from fuel crunch.

Higher prices of liquid fuels including naphtha and diesel have also resulted in generation losses at hybrid power plants, the Survey said.

During the April-October period, generation loss due to gas supply shortages was estimated at 18.43 billion units.

According to the Survey's provisional estimates, the power sector is expected to import 7.4 million tonnes of coal in the current fiscal.

The Survey said that formation of a strong national grid was a "flagship endeavour."
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Special duty waiver on handsets made in SEZs removed
New Delhi: The Government has withdrawn the exemption of 4 per cent special additional duty on handsets manufactured in Special Economic Zones. A number of companies including Nokia and Samsung have started manufacturing handsets in the country while others like Motorola and Sony Ericsson are in the process of setting up a plant.

According to the Indian Cellular Association which represents the interests of handset manufacturers, the notification will jeopardise the plans of these companies as it would eliminate the cost difference between imported handsets and those manufactured at the SEZs.

Handset manufacturers have requested the Communication Ministry to intervene. "At a time when the UPA Government is promoting manufacturing in India, this step will jeopardise plans made by a number of companies. This anomaly needs to be rectified," said N.K. Goyal, chairman Emeritus, Telecom Equipment Manufacturers Association of India
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FDI inflows increase 6-times to $2.04 bn in Dec'06
New Delhi: There was a nearly six-fold increase in Foreign Direct Investment (FDI) inflows in December 2006 at 2.04 billion dollars as against 350 million dollars in the same month in 2005.

According to the government this was the highest ever FDI inflow into the country in a single month.

Total FDI inflows for April-December 2006 stood at 9.3 billion dollars, as compared to 3.5 billion dollars in the corresponding period last fiscal.

India is likely to receive 12 billion dollars of FDI during the current financial year as compared to 5.5 billion dollars in the previous fiscal, he said.
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