Economic Survey – Volume 2

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  • Overall macro-vulnerability index (MVI) combines a country’s fiscal deficit, current account deficit, and inflation. The index is thus comparable across countries and across time.
  • In 2012, India was the most vulnerable country as measured by its index value of 22.4, comprising an inflation rate of 10.2 %, a budget deficit of 7.5 % and a current account deficit of 4.7 % of GDP, well above that in the other countries.
  • Turkey in 2014 surpassed India because of high current account deficit (of nearly 8 %).
  • India is still more vulnerable than the mean of countries in its investor rating category (BBB) but is less so than many of its larger emerging market peers.
  • India ranks amongst the most attractive investment destinations, well above other countries. It ranks well above the mean for its investment grade category, and also above the mean for the investment category above it (on the basis of the new growth estimates). Amongst BRICS (and other comparable countries) only China scores above India.
  • India’s overall revenue-to-GDP ratio (for the general government) for 2014 is estimated at 19.5 % by the IMF.


On January 30, the Central Statistics Office released a new GDP series that entailed shifting the base year from 2004- 05 to 2011-12 but also using more data and deploying improved methodologies. New estimates for GDP have been provided for the years 2011-12 to 2014-15.



Since assuming office in May 2014, the new government has undertaken a number of new reform measures whose cumulative impact could be substantial. These include:

•      Deregulating diesel prices, paving the way for new investments in this sector;

•      Raising gas prices from US$ 4.2 per million British thermal unit to US$ 5.6, and linking pricing, transparently and automatically, to international prices so as to provide incentives for greater gas supply and thereby relieving the power sector bottlenecks;

•      Taxing energy products. Since October, taking advantage of declining oil prices, the excise tax on diesel and coal was increased four times. In addition to resulting in collections of about 70,000 crore (on an annualized basis), this action will have positive environmental consequences;

•      Replacing the cooking gas subsidy by direct transfers on a national scale;

•      Instituting the Expenditure Management Commission, which has submitted its interim report for rationalizing expenditures;

•      Passing an ordinance to reform the coal sector via auctions;

•      Securing the political agreement on the goods and services tax (GST) that will allow legislative passage of the constitutional amendment bill;

•      Instituting a major program for financial inclusion—the Pradhan Mantri Jan Dhan Yojana under which over 12.5 crore new accounts have been opened till mid-February 2014;

•      Continuing the push to extending coverage under the Aadhaar program, targeting enrollment for 1 billion Indians; as of early February, 757 million Indians had been bio-identified and 139-Aadhaar linked bank accounts created;

•      Increasing FDI caps in defence;

•      Eliminating the quantitative restrictions on gold;

•      Passing an ordinance to make land acquisition less onerous, thereby easing the cost of doing business, while ensuring that farmers get fair compensation;

•      Facilitating Presidential Assent for labour reforms in Rajasthan, setting an example for further reform initiatives by the states; and consolidating and making transparent a number of labour laws; and

•      Passing an ordinance increasing the FDI cap in insurance to 49 %. Commencing a program of disinvestments under which 10 % of the government’s stake in Coal India was offered to the public, yielding about 22,500 crore, of which ` 5,800 crore was from foreign investors;

·         Passing the Mines and Minerals (Development and Regulation) (MMDR) Amendment Ordinance, 2015 is a significant step in revival of the hitherto stagnant mining sector in the country. The process of auction for allotment would usher in greater transparency and boost revenues for the States.

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