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Chapter 1 & 2
Economic Survey (ES) is an important document not only for the policy makers but
also for the aspirants like you. You can find questions from Economic Survey in all
major examinations like RBI Grade B, NABARD, UPSC and State PSCs. Continuing in
our series of RBI Grade B at GradeUp, we will provide you gist of chapters of Economic
Survey – Volume 1 & 2. Since this is a summary, we will be highlighting important
points considering RBI Grade B exam. We sincerely believe that this summary will be
self-sufficient.
• Real GDP for 2017-18 is expected at 6.75% as against CSO estimates of 6.5%
• Nominal GDP growth for 2017-18 is estimated at 10.5 percent, compared with
the CSO’s 9.5 percent estimate
• Real GDP for 2018-19 is expected at 7-7.5%
• The ES talks about the tackling the menace of Twin Balance Sheet Problem
(TBS) and on the 4 R’s of the TBS –
▪ Recognition – As last year, it was advanced further
▪ Resolution – Indian Bankruptcy Code (IBC) has provided a resolution
framework that will help corporates clean up their balance sheets and reduce
their debts
▪ Recapitalization – Govt. already announced package of about 1.2 percent of
GDP
▪ Reforms – An ongoing task
• The reason why Indian Economy decoupled in first half of year 2017-18 was
▪ Tightening of Monetary Conditions
▪ Demonetization
▪ Teething difficulties in the new GST regime
▪ High and Rising Real Interest Rates
▪ Overhang from TBS problem
▪ Sharp fall in certain food prices leading to decrease in agricultural incomes
▪ Increase in oil prices by 16%
• In the second half of the year, the economy witnessed robust signs of revival as
the shocks began to fade, corrective actions were taken, and the synchronous
global economic recovery boosted exports
▪ FDI increased by 20%
▪ India jumped 30 slots to reach at 100 in Ease of Doing Business Report.
▪ Sovereign Ratings improved after nearly 14 years.
• Challenges in front of the Government
▪ The need to stabilize GST implementation and expand the tax base;
▪ privatize Air-India;
▪ Stave off any nascent threats to macroeconomic stability, notably from
persistently high oil prices, and sharp, disruptive corrections to elevated asset
prices

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▪ rationalize government resources, redirecting them away from subsidies

towards private goods and services at low prices
▪ to control macroeconomic vulnerabilities on oil prices, rise as both fiscal and
current accounts deteriorate on oil price rise

• Contingent Liabilities have added about 5% of GDP to total Government Debt

since 2000-01
• 10.1 Million tax filers and 1.8 Million new additional tax payers were added
compared with 6.2 million in the preceding six years post GST & Demonetization
• Climate change may reduce the farm incomes by 20-25%
• Rs.6000 Crore package was given to Apparel Sector in 2016 including rebates
on state levies to offset indirect taxes levied by the states
• Global GDP accelerated to 3.6% in 2017 as compared to 3.2% in 2016. Forecast
of growth of 3.9% in 2018
• Rapid growth and ultra-low interest rates have produced record high bond prices
and stock market valuations, both at the same time (unique to Indian Economy)
• New evidence that suggests formal sector employment is substantially greater
than hitherto believed:
▪ Formal Employment is 31% or 7.5 Crores of non-agricultural workforce
according to social security (EPFO etc.) perspective
▪ It is 54% when calculation is done on tax perspective
▪ Taking all these into account, and adding back government employment, the
formal nonfarm payroll from a tax definition is estimated at 12.7 million. This
implies that nearly 53 percent of the non-agricultural workforce (240 million)
is in the formal sector.
• A $10 per barrel increase in oil prices

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▪ decreases the growth by 0.2-0.3%

▪ Increases the Wholesale Price Index (WPI) inflation by 1.7%
▪ Increases Current Account Deficit by $9-10 Billion
• India now has 28 lakh crore (1.8% of GDP) of less cash and 3.8 lakh crores of
less high denomination notes (2.5% of GDP)
• Overall revenue expenditure growth by the central and state governments at
remains strong at 11.7percent (April to November).
• CAD expected to be 1.5% to 2% of GDP in 2018-19
• GDP deflator is expected to grow by 3.6 percent for 2017-18, somewhat higher
than the CSO’s forecast of 2.8 percent
• FOREX - $432 Billion as on December 2017
• Personal Tax collections expected at 2.3% of GDP in 2017-18
• Fiscal Deficit – Rs. 6.1 lakh Crores as on November 2017
▪ Rs. 80,000 Crore of Fiscal Deficit or 0.5% of GDP as capital provided too PSU
Banks
• Net Market Borrowing = Fiscal Deficit – National Small Savings Fund net
flows
• National Family Health Survey is conducted by Ministry of Health and Family
Welfare. First survey was in 1992-93 and the latest survey is the 4th survey –
2015-16. The findings are as shown in the picture below:

▪ 16.3 lakhs houses completed under Prime Minister Awas Yojana – Gramin
▪ More than 30 million UJJWALA connections were given and 79% consumers
were reported for the purpose of refills.
▪ Distribution of GST base among the states is closely linked with their GSDP
▪ There is a strong correlation between Exports and the State’s Standard of
Living
▪ Internal Trade between the states is 60% of the GDP
▪ Size of formal sector = 13% of total firms in private non-agricultural sector
but 93% in terms of total revenue.

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• Based on GST Data:

▪ Companies engaged in B2B (Business to Business) have the largest share in
terms of revenue
▪ Companies engaged in B2C (Business to Consumer) have the smallest share
in terms of revenue
▪ 1.6 Million taxpayers are under Composition Scheme (where the current
threshold is 1.5 Crores and pay a small tax of (1%, 2% or 3%) are not eligible
for Input Tax Credit (ITC)
• Maharashtra, UP, Tamil Nadu and Gujarat are the states with greatest number
of GST registrations.
• UP and WB have largest increase in the tax base
• Total Tax Base Revenue Wise is
▪ Maharashtra – 16%
▪ Tamil Nadu – 10%
▪ Karnataka – 9%
▪ UP – 7%
▪ Gujarat – 6%
▪ Delhi
• Share of Gujarat and Maharashtra tax base under GST has decreased their share
of Manufacturing GSDP (Gross State Domestic Product), however, when
combined with the services, they are gaining under GST
• Distribution of turnover is very skewed
▪ Smallest firms with below threshold (revenue) account for 32% of total tax
liability.
▪ Largest firms account for less than 1% of firms but 66% in terms of total
turnover and 54% in terms of tax liability.

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• Export - Import Data:

•Largest Importing States are:

• States with Largest Internal Trade Surplus are:

• Top 1% firms account for only 38% exports in India as compared to 72% in
Brazil, 68% in Germany, 67% in Mexico and 55% in USA showing that in India,
MSMEs play an important role in bringing FOREX
• Top 5% firms account for only 59% exports in India as compared to 91% in
Brazil, 86% in Germany, 91% in Mexico and 74% in USA showing that in India,
MSMEs play an important role in bringing FOREX
• Top 25 % firms account for only 82% exports in India as compared to 99% in
Brazil, 98% in Germany, 99% in Mexico and 93% in USA showing that in India,
MSMEs play an important role in bringing FOREX

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• Indian Export Structure is egalitarian in nature.

• About 0.6 percent of firms, accounting for 38 percent of total turnover, 87
percent of exports, and 63 percent of GST liability are what might be called in
the “hard core” formal sector in the sense of being both in the tax and social
security net.
• At the other end, 87 percent of firms, representing 21 percent of total turnover,
are purely informal, outside both the tax and social security nets.
• Around 12 percent of firms, accounting for 41 percent of turnover, 13 percent
of exports, and 37 percent of tax liabilities are in the tax net but not the social
security net.
• Finally, less than 0.1 percent of firms accounting for about 14 percent of
turnover are in the social security net but not in the GST net.
We hope that you are religiously following our RBI Grade B series. This is one of the
summaries, many more to come. If you have any questions, please let us know in
the comments section.
Keep revisiting this post in case you want to revise the Economic Survey.

Chapter 3, 4 & 5
Economic Survey (ES) is an important document not only for the policy makers but
also for the aspirants like you. You can find questions from Economic Survey from in
all major examinations like RBI Grade B, NABARD, UPSC and State PSCs. Continuing
in our series of RBI Grade B at GradeUp, we will provide you gist of chapters of
Economic Survey – Volume 1 & 2. Since this is a summary, we will be highlighting
important points considering RBI Grade B exam. We sincerely believe that after
reading this 3-4 pages summary, you won’t need to read from actual ES or through
any other website.
This will be followed by some questions so that it is easier for you to remember.
Please keep revisiting this post in case you want to revise the Economic Survey.
• Investments are measured by Gross Fixed Capital Formation, that is, the net
increase in physical assets (investment minus disposals) within the
measurement period. It does not account for the consumption (depreciation) of
fixed capital, and also does not include land purchases. It is a component of
expenditure approach to calculating GDP.
• Ratio of GFCF to GDP
1. 2003 → 26.5%
2. 2006 → 35.6% (highest)
3. 2017 → 26.4%
• Ratio of Gross Domestic Savings to GDP
1. 2003 → 29.2%
2. 2007 → 38.7%(highest)
3. 2017 → 29%
• Reasons for decline:

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1. Due to slow private investments

2. Household savings are moving from currency and bank deposits towards
market instruments viz. shares and debentures (a phenomenon that has been
helped by demonetization)
• 1% decline in investment rate is expected to dent the growth by 0.4%-0.7%
• Reason of Slow Private Investments
1. Balance-sheet Related – Many companies had to curtail their investments
because their finances are stressed as the investments they undertook during
the boom have not generated enough revenue to allow them to service the
debts they have incurred
2. Balance sheet related declines are much more difficult to reverse
• India’s Investment decline from balance sheet is unusually large compared to
other balance sheet cases in the world
• Investment slowdowns are more detrimental to growth than saving slowdowns
• To mobilize savings and boost investments, Govt. has taken steps like attempts
to unearth black money and encouraging the conversion of gold into financial
saving or even courting foreign saving.
• Advanced countries collect a substantially higher proportion of their taxes as
direct taxes than the emerging markets. Unlike in other countries India’s
reliance on direct taxes seems to be declining.
• India stands out as a country where the second tier (states) generates a very
low share of its revenue from direct taxes: about 6 percent in India compared
to 19 percent in Brazil in 2016 and a hefty 44 percent in Germany.
• India’s Rural Local Governments (RLGs) depend largely on the resources from
the centre and state governments because the states have not devolved enough
taxation powers to the Panchayats. Their reliance on own resources is just 6
percent compared to 40 percent for third-tier governments in Brazil and
Germany. The permissible taxes for panchayats include property and
entertainment taxes but not land taxes or tolls on roads
• Indian panchayats raise about 4 percent of their overall resource envelope in
the form of direct taxes, compared with about 19 and 26 percent in Brazil and
Germany respectively.
• India’s Urban Local Governments (ULGs) have emerged more fiscally
empowered than Rural Local Governments (RLGs) so far in India. ULGs own
revenues as a share of total revenues are actually higher than Brazil and
Germany. However, their direct tax share (about 18 percent of total revenues)
is only marginally lower than Brazil (19 percent) and somewhat lower than
Germany (26 percent)
• A LOW EQUILIBRIUM TRAP - An equilibrium desired by all actors with higher
tiers (both Centre and states) using their devolution powers to control and
influence lower levels; and the latter, unable and unwilling to tax their proximate
citizens, need outside resources even if they are not always untied.
• Economic convergence is defined as the process of poorer countries “catching-
up” with richer countries and closing gaps in standards of living.

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• In 1960, India was a low-income country with a per capita income (in 2011
purchasing power parity (PPP) terms) of $1,033. This was equivalent to about
6 percent of U.S. per capita income at the time. However, India attained lower
middle-income status in 2008 and today has a per capita income of $6,538,
which is 12 percent of the U.S.. If per capita income in India grows at 6.5 percent
per year, India would reach upper-middle income status by the mid -to-late
2020s.
• Low-Income “trap” - When for a longer period of time many poor countries were
not catching up at all and were growing more slowly than richer countries.
• Middle-Income Trap – When Middle Income countries would grow more slowly
than what would be expected given their level of income (i.e., slower than richer
countries), impeding the transition from middle income to high income status.
• Reasons for Middle Income Trap –
1. As countries attained middle income status, they would be squeezed out of
manufacturing and other dynamic sectors by poorer, lower-cost competitors.
2. They would lack the institutional, human, and technological capital to carve
out niches higher up the value-added chain.
• 1980 to 1997, the era of divergence in which low-income countries fell further
behind;
• 1998 to 2007, an early period of convergence running from the East Asian
financial crisis until the Global Financial Crisis; and
• 2008 to 2017, the most recent period of “late convergence.”
• Late Convergence Stall with respect to India is because of 4 reasons:
1. Hyperglobalization repudiation
Early convergers benefited from the process of rapid globalization or hyper-
globalization, reflected in dramatic increases in the world trade-GDP ratio.
Example – China, Japan, South Korea. This globalization has led to a backlash
in advanced countries reflected in the decline in world trade-GDP ratios since
2011. Over time, the world is becoming more equal in the distribution of the
underlying output. That is the consequence of convergence. Therefore, if there
is convergence, the gravity model suggests there will also be increased trade.
The current process of convergence continues and adds another country
equivalent, the distribution of world output will become even more dispersed.
2. Thwarted structural transformation: good growth and sustainable
growth
Thwarted Structural Transformation - Shift from informal, low productivity
sectors to ones that are marginally less informal/more productive is called as
Thwarted Structural Transformation.
Good Growth - good growth comprises of growth accounted for by labor share
shifts into good sectors (like manufacturing) and their productivity growth
India is experiencing both of these i.e. thwarted structural transformation and
lack of good and sustainable growth.

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3. Human capital regression

Rapidly improving human capital–– healthy individuals, including all women,
with the basic education to continually learn and adapt––will be key to
sustaining India’s dynamic growth trajectory.
The Learning Poverty Headcount (LPC) simply measures the number of children
who do not meet the basic learning benchmark, whereas the Learning Poverty
Gap (LPG) additionally takes into account how far each student is from the
benchmark. In other words, the LPG measures the gap between the basic
learning benchmark and the average scores of those students who did not meet
the benchmark.
India’s absolute LPC is between 40 and 50 percent: in other words, roughly 40-
50 percent of children in rural India in grades 3 to 8 cannot meet the fairly basic
learning standard. Similarly, the LPG is about 25% for reading and little lower
for math.
If technology going forward is going to be even more human capital intensive
as current trends suggest, the wedge between the opportunities offered to the
future labor force and the capabilities to take advantage of them will widen even
further.
4. Climate change-induced agricultural stress
Rapidly improving agricultural productivity––against the headwinds of climate
change and water scarcity––will be another key to achieving good growth and
hence sustainable growth. Indian agricultural productivity growth has been
stagnant, averaging roughly 3 percent over the last 30 years. Climate change
raises temperatures and the variability of rainfall, farmer revenues could decline
by up to 20 percent to 25 percent in non-irrigated areas
We hope that you are religiously following our RBI Grade B series. This is one
of the summaries, many more to come. If you have any questions, please let us
know in the comments section.

Chapter 6 & 7

Economic Survey (ES) is an important document not only for the policy makers but
also for the aspirants like you. You can find questions from Economic Survey from in
all major examinations like RBI Grade B, NABARD, UPSC and State PSCs. Continuing
in our series of RBI Grade B at GradeUp, we will provide you gist of chapters of
Economic Survey – Volume 1 & 2. Since this is a summary, we will be highlighting
important points considering RBI Grade B exam. We sincerely believe that after
reading this 3-4 pages summary, you won’t need to read from actual ES or through
any other website.
This will be followed by some questions so that it is easier for you to remember.
Please keep revisiting this post in case you want to revise the Economic Survey.
Chapter 6 is on Climate, Climate Change, and Agriculture. Therefore, it is important
to understand the concept of Indian Agricultural Seasons – Rabi and Kharif

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BASIS FOR
KHARIF CROPS RABI CROPS
COMPARISON
Kharif crops can be described Rabi crops are the crops that
as the crops which are sown are sown after the end of the
Meaning
with the beginning of the rainy monsoon, i.e. during the winter
season. season.
Major Crops Rice, jowar, bajra, etc. Wheat, barley, etc.
Sowing month June - July October - November
Harvesting
September - October March - April
month

• Indian Agricultural Sector Statistics:

o Size of Agriculture Sector in India
In terms of GDP - 16 percent
In terms of employment 49 percent
o Agricultural Growth Rates :
Period before Green Revolution: less than 2 percent
Period until 2004 : growth of 3 percent
Period after the global agricultural commodity surge: 3.6 percent
o 52 percent (73.2 million hectares area of 141.4 million hectares net sown
area) of it is still un-irrigated and rainfed.
o The average increase in temperature between the most recent decade and
the 1970s is about 0.45 degrees in the kharif and 0.63 degrees in the rabi
seasons.
o Rainfall decline over time from the 1970s to the last decade
kharif rainfall by 26 millimeters
rabi rainfall by 33 millimeters
average declined by about 86 millimeters
• Real agricultural growth since 1960 has averaged about 2.8 percent in India.
China’s annual agricultural growth over the long run has exceeded that of India
by a substantial 1.5 percentage points on average
• Positive Signs:
o Volatility of agricultural growth in India has declined substantially over time
(but still not comparable with China): from a standard deviation of 6.3
percent between 1960 and 2004 to 2.9 percent since 2004 – in simpler
terms, Indian Agriculture has become more robust.
• India is moving towards extreme weather conditions as :
o There is a rise in the number of days with extremely high temperatures and
a corresponding decline in the number of days with low temperatures.
o The proportion of dry days (rainfall less than 0.1 mm per day), as well as
wet days (rainfall greater than 80 mm per day) has increased steadily over
time.

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o States where increase in temperature is felt the most : North-East, Kerala,

Tamil Nadu, Kerala, Rajasthan and Gujarat
o States where increase in temperature is felt the least : Punjab, Odisha and
Uttar Pradesh
o States where extreme rain deficiencies felt the most: Uttar Pradesh, North-
East, and Kerala, Chhattisgarh and Jharkhand.
o States where there is increase in precipitation: Gujarat and Odisha and also
Andhra Pradesh
• The impact of temperature and rainfall is highly non-linear and felt almost only
when temperature increases and rainfall shortfalls are extreme
• Dry Days are defined as days during the monsoon with rainfall less than 0.1
millimeters
• These extreme shocks have highly divergent effects between unirrigated and
irrigated areas - have a much greater effect on unirrigated areas compared to
irrigated areas
o In Irrigated Areas:
When a district is significantly hotter than usual, it results in a 4 percent
decline in agricultural yields during the kharif season and a 4.7 percent
decline in rabi yields.
when it rains significantly less than usual, it results in 12.8 percent
decline in kharif yields, and a smaller, but not insignificant decline of 6.7
percent in rabi yields
Each additional dry day during the monsoon reduces yields by 0.2
percent on average
o In Unirrigated Areas:
When a district is significantly hotter than usual in unirrigated areas, it
reduces yields by 7 percent for kharif and 7.6 percent for rabi
when it rains significantly less than usual, it results in 14.7 percent
decline in kharif yields, and a smaller, but not insignificant decline of 8.6
percent in rabi yields
Each additional dry day during the monsoon reduces yields by 0.3
percent on average
o Crops grown in rainfed areas— pulses in both kharif and rabi—are vulnerable
to weather shocks while the cereals—both rice and wheat—are relatively
more immune
• Overall there are at least three main channels through which climate change
would impact farm incomes :
o an increase in average temperatures
o a decline in average rainfall
o an increase in the number of dry-days
• The impact as per the ES on the effect of temperature and rainfall on Farm
Incomes

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o Extreme temperature shocks reduce farmer incomes by 4.3 percent and

4.1 percent during kharif and rabi respectively
o Extreme rainfall shocks reduce incomes by 13.7 percent and 5.5 percent
during kharif and rabi respectively
o In a year where temperatures are 1 degree Celsius higher farmer incomes
would fall by 6.2 percent during the kharif season and 6 percent during rabi
in unirrigated districts
o In a year when rainfall levels were 100 millimeters less than average, farmer
incomes would fall by 15 percent during kharif and by 7 percent during the
rabi season
o In the absence of any adaptation by farmers and any changes in policy (such
as irrigation), farm incomes will be lower by around 12 percent on an
average in the coming years.
o Unirrigated areas will be the most severely affected, with potential losses
amounting to 18 percent of annual revenue (farm incomes will decline by
12 percent for kharif crops, and 5.4 percent for rabi crops)
o Increase in number of dry days would imply a decrease in farm incomes by
1.2 percent
o Farmer income losses from climate change could be between 15 percent and
18 percent on average, rising to anywhere between 20 percent and 25
percent in unirrigated areas
• Women’s participation in the workforce to the level of men can boost the Indian
economy by 27 percent.
• Economic Survey has used three specific dimensions of gender:
o Agency relate to women’s ability to make decisions on reproduction,
spending on themselves, spending on their households, and their own
mobility and health.
o Attitudes relate to attitudes about violence against women/wives, and the
ideal number of daughters preferred relative to the ideal number of sons
o Outcomes relate to son preference (measured by sex ratio of last child),
female employment, choice of contraception, education levels, age at
marriage, age at first childbirth, and physical or sexual violence experienced
by women.
• Positives:
o On 14 out of 17 indicators relating to agency, attitude, and outcomes, India’s
score has improved over time
o The progress is most notable in the agency women have in decision-making
regarding, household purchases and visiting family and relatives.
o On all but 2 measures, gender indicators improve as wealth increases
o North-Eastern states doing substantially better than the hinterland states
o The median age at first childbirth increased by 1.3 years over ten years

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• Negatives:
o On 10 of 17 indicators, India has some distance to traverse to catch up with
its cohort of countries.
Women’s employment has declined over time - from 36 percent of
women being employed in 2005-06 to 24 percent of women being
employed in 2015-16. Possible reasons for this as per ES are:

insufficient
There is the more
availability of the
general
types of jobs that
phenomenon of a U-
higher education the structural women say they
shaped behavior of
Increased incomes of levels of women also transformation of would like to do—
female labor force
men allows Indian allow them to Indian agriculture regular, part-time
participation with
women to withdraw pursue leisure and due to farm jobs which provide
respect to
from the labor force, other non-work mechanization steady income and
development. India
thereby avoiding the activities all of which results in a lower allow women to
is on the downward
stigma of working reduce female labor demand for female reconcile household
part of the “U” but
force participation agricultural laborers duties with work—
even more so than
and types of sectors
comparable
that draw in female
countries.
workers

nearly 47 percent of married women do not use any contraception (also

a reason of population explosion) and of those who do, less than a third
use female controlled reversible contraception
They have little control over when they start having children, but only
seem to have control over when they stop having children.
o Southern states such as Andhra Pradesh and Tamil Nadu fare worse than
expected given their level of development
o 63 million “missing” women – Due to sex selective abortion
o 21 million “unwanted” girls – Due to Son Meta preference
o The sex ratio of last birth is biased against females and is lower by 9.5
percentage points in 2015-16 in comparison to other countries
• Son Meta preference - Parents adopting fertility “stopping rules” , i.e. having
children until the desired number of sons are born.
• If wealth increases by one standard deviation in India, in 15 out of 17 cases,
gender indicators(like Involved in decisions about their own health, Earning
more than or equal to husband, Median age at first marriage etc.) are more
responsive than they are in the typical country (15 out of 17 coefficients in
column 2 are positive)
• The sex ratio is the ratio of males to females in a population. The biologically
determined natural sex ratio at birth and of last child is 1.05 males for every
female.

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o Meghalaya stands out as an ideal state because both sex ratio at birth and
sex ratio of last child are close to the benchmark
o States such as Kerala do not seem to practice sex selective abortions since
their sex ratios at birth are close to the biological benchmark but indicate
some son “meta” preference (skewed SRLC).
o Punjab and Haryana, on the other hand, exhibit extremely high son
preference and meta preference – the overall sex ratios are significantly
above the biological benchmark, and the sex ratio of the last child is heavily
male skewed, implying parents are unlikely to stop after having a daughter
• Stopping Rules - having children till a son is born and stopping thereafter, i.e.
Families where a son is born are more likely to stop having children than families
where a girl is born which is proved by the following statistics:
• Sex Ratio by Birth when Child is not the Last
o the sex ratio of the first child for families that have strictly more than 1 child
is 1.07
o the sex ratio of the second child for families that have strictly more than 2
child is 0.86
• Sex Ratio by Birth when Child is the Last
o the sex ratio of the last child for first-borns is 1.82, heavily skewed in favor
of boys compared with the ideal sex ratio of 1.05
o This ratio drops to 1.55 for the second child for families that have exactly
two children
• Reasons for son preference:
o Patrilocality - women having to move to husbands’ houses after marriage
o Patrilineality - property passing on to sons rather than daughters
o Dowry - which leads to extra costs of having girls
o Old-age support from sons and rituals performed by sons
We hope that you are religiously following our RBI Grade B series. This is one of the
summaries, many more to come. If you have any questions, please let us know in
the comments section.

Chapter 8 & 9
Economic Survey (ES) is an important document not only for the policy makers but
also for the aspirants like you. You can find questions from Economic Survey from in
all major examinations like RBI Grade B, NABARD, UPSC and State PSCs. Continuing
in our series of RBI Grade B at GradeUp, we will provide you gist of chapters of
Economic Survey – Volume 1 & 2. Since this is a summary, we will be highlighting
important points considering RBI Grade B exam. We sincerely believe that after
reading this 3-4 pages summary, you won’t need to read from actual ES or through
any other website.
This will be followed by some questions so that it is easier for you to remember.
Please keep revisiting this post in case you want to revise the Economic Survey.

15
www.gradeup.co

• Investments in Indian science, measured in terms of Gross Expenditure on R&D

(GERD), which have shown a consistently increasing trend over the years:
O GERD has tripled in the last decade in nominal terms and double in real
terms – from Rs. 24,117 crores in 2004-05 to Rs. 85,326 crores in 2014-
15 and an estimated Rs. 1,04,864 crores in 2016-17.
O As a fraction of GDP, public expenditures on research have been stagnant
– between 0.6-0.7 percent of GDP – over the past two decades.
▪ It is well below that in major nations such as the US (2.8), China (2.1), Israel
(4.3) and Korea (4.2).
▪ East Asian countries like China, Japan, and Korea, have seen dramatic increases
in R&D as a percentage of GDP as they have become richer. India, on the
other hand, has only seen a slight increase.
O Public expenditure is dominant, although its share has come down from
three-fourths of all expenditures to about three-fifths
• India’s spending on Medical Research is very low (reflected by spending on
Indian Council of Medical Research (ICMR)) considering severe health
challenges.
• Some features about Indian R&D:
O The government is the primary source and user of R&D funding – Private
Sector role is very limited.
▪ There are only 26 Indian companies in the list of the top 2,500 global R&D
spenders compared to 301 Chinese companies.
▪ 19 (of these 26) firms are in just three sectors: pharmaceuticals, automobiles
and software
▪ India has no firms in five of the top ten R&D sectors as opposed to China that
has a presence in each of them.
O Government expenditure on R&D is undertaken almost entirely by the
central government – state governments play a very little role.
o Universities play a relatively small role in the research activities of the
country – focus remain on teaching rather than research.
▪ There are less than half as many Ph.D. students in Science, Technology,
Engineering, and Mathematics (STEM) from India in the US as from China.
▪ There has been an increase in Ph.D. enrollments in India. In 2015-16 126,451
students were enrolled in Ph.D. programs in India, of which 62 percent were in
STEM fields
▪ Overall, though, India has far fewer researchers than other countries
• From 2009-2014, annual scientific publications growth was almost 14 percent.
o India is gradually improving its performance as measured by publications.

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▪ This is due to increased emphasis on the number of research publications as an

important determinant of the academic performance of a faculty/scientist being
considered for appointment or promotion.
O The Nature Index (which publishes tables based on counts of high-quality
research outputs in the previous calendar year covering the natural
sciences) – ranked India at 13 in 2017
• India is the 7th largest Patent Filing Office in the World.
o In 2015, India registered 45,658 patents in comparison to China
(1,101,864), USA (589,410), Japan (318,721), Republic of Korea
(213,694), and Germany (91,726).
O Indian residents were granted over 5000 patents in foreign offices in 2015,
the number for resident filings in India was little over 800 – showing the
problem in domestic patent system.
• Problems in Domestic Patent System:
o Stricter examination process
o Severe backlog and high rate of pendency for domestic patent applications
o Due to manpower shortages there is a backlog of almost 2 lakh patents
pending examination
o Patent examination and granting can take 5 or more years
• How to improve R&D Culture in India as per ES
o Improve math and cognitive skills at the school level
o Encourage Investigator-led Research
▪ A step in this direction occurred in 2008, with the establishment of the Science
and Engineering Research Board (SERB), a statutory body of DST
o Increase funding for research from private sector as well as from state
governments
▪ Efforts like the 50:50 partnership with SERB for industry relevant research under
the Ucchatar Avishkar Yojana (UAY) is a good example of what could help make
such partnerships fruitful
o Link national labs to universities and create new knowledge eco-systems
o Take a mission driven approach to R&D
• There are today more than 100,000 people with PhDs, who were born in India
but are now living and working outside India (more than 91,000 in the U.S.
alone)
• Missions chosen for their strategic importance and potential for societal impact:
o National Mission on Dark Matter - space missions, quantum computing,
newer solutions to energy problems etc.
o National Mission on Genomics - life-course of biological pathways and
diseases

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o National Mission on Energy Storage Systems - Energy storage technologies

to provide round-the-clock electricity to villages using off-grid renewable
energy systems
o National Mission on Mathematics - Improve India’s human capital and
research profile in mathematics within a decade
o National Mission on Cyber Physical Systems - Artificial Intelligence,
Machine Learning, Big data Analytics, Block Chains, Expert Systems,
Contextual Learning going to integration of all of these with intelligent
materials and machines, control systems, sensors and actuators, robotics
and smart manufacturing
o National Mission on Agriculture - Improving Indian agricultural productivity
• Areas to improve for improving Ease of Doing Business
o Courts Pendency Position-
▪ Pendency of economic cases in court - there is a high level of pendency across
the six tribunals, estimated at about 1.8 lakh cases
▪ Compared to 2012, there is now a 25 percent increase in the size of unresolved
cases
▪ The average age of pending cases across these tribunals is 3.8 years
▪ The total backlog in High Courts by the end of 2017 as per the National Judicial
Data Grid was close to 3.5 million cases
▪ The average duration of pendency is arguably the worst of most cases, nearly
4.3 years for 5 major High Courts
▪ The average pendency of tax cases is particularly acute at nearly 6 years per
case
o Reasons for Pendency
▪ Burden from Expansion of Discretionary Jurisdictions - economic and
commercial cases are usually complex, require economic expertise in their
handling and disposal, and hence, require more judicial time.
▪ Articles 226 and 227 of the Constitution of India empower High Courts with
carefully circumscribed writ jurisdiction – Pendency of Writ Petitions belonging
to Articles 226 & 227 cases is one million -i.e. 50-60% of total backlog - average
pendency fluctuating between 3-10 years
▪ Burden from Original Side Jurisdiction - the High Court, and not the relevant
lower court, transforms into the Court of first instance for some civil cases –
30% for Delhi HC
• The average pendency of civil suits at the Delhi High Court is 5.84 years
• The average pendency of civil suits at the lower courts of Delhi is 3.66 years
▪ Expansion of Special Leave Petition (SLP) Jurisdiction – Article 136 empowers
any party to approach the Supreme Court directly from any court or tribunal

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• Petitions under SLP increased from 25% in 2008 to nearly 40% in 2016
• The Supreme Court of the United States of America and Canada admit 3% and
9% respectively of the cases filed before it
▪ Recourse to Injunctions and Stays - Lengthy interim orders, ex parte ad interim
stays, increasing rate of pendency of cases at final arguments, and few final
judgments in IPR cases are common traits of IPR practice across different
High Courts
o Cost of Pendency
▪ The project costs (stocks) of stayed projects—at the time they were originally
stayed—amounted close to 52,000 crores
▪ The Ministries of Power, Roads and Railways have been the hardest hit - project
costs have increased by close to 60 percent given the average duration of stay
• Facts on cases related to Government Tax Collections
o

o The success rate of the Department at all three levels of appeal-- Appellate
Tribunals, High Courts, and Supreme Court-- and for both direct and
indirect tax litigation is under 30%
o The Department unambiguously loses 65% of its cases.
o The Department is the largest litigant - Department’s appeals constitute
nearly 85% of the total number of appeals filed in the case of direct taxes.
▪ Of the total number of direct tax cases pending by the quarter ending March,
2017, the Department initiated 88% of the litigation at ITATs and the Supreme
Court and 83% of the litigation pending at High Courts
o Litigations involving both direct and indirect taxes at the quarter ending
March, 2017 amounted to nearly 7.58 lakh crores, over 4.7 percent of GDP
o Direct Taxes - As of March 2017, there were approximately 1,37,176 direct
tax cases under consideration at the level of ITAT (income Tax Appellate
Tribunal), High Courts and Supreme Court
▪ Just 0.2% of these cases constituted nearly 56% of the total demand value
▪ 66% of pending cases, each less than Rs. 10 lakhs in claim amount, added up
to a mere 1.8% of the total locked-up value of pending cases

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o Indirect Taxes - As of the quarter ending March 2017, a total of 1.45 lakh
appeals were pending with the Commissioner (Appeals), CESTAT, HCs and
the SC together valued at 2.62 lakh crores.
• Nearly 30% of a case’s life is taken up by formal proceedings like service of
summons and notices
• The higher judiciary is currently operating at 63.6% of existing capacity.
• How to improve the present condition of judiciary as per ES:
o For a smooth contract enforcement regime, it may be imperative to build
capacity in the lower judiciary to particularly deal with economic and
commercial cases, and allow the High Courts to focus on streamlining and
clarifying questions of law.
o Amendments to the Code of Civil Procedure, Commercial Courts Act and
other related commercial legislations should be considered
o Train judges, particularly in commercial and economic cases by judicial
academies
o Downsizing or removing original and commercial jurisdiction of High
Courts, and enabling the lower judiciary to deal with such cases
o The tax department exercising greater self-restraint by limiting appeals,
given its low success rate
o Greater provision of resources for both tribunals and courts.
o Creating more subject-matter and stage-specific benches that allow the
Court to build internal specializations and efficiencies in combating
pendency and delays
o Reducing reliance on injunctions and stays.
o Improving the Courts Case Management and Court Automation Systems
We hope that you are religiously following our RBI Grade B series. This is one of the
summaries, many more to come. If you have any questions, please let us know in
the comments section.

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