Economic Survey 2021 Unveils ‘Bare Necessities Index’

The Economic Survey for 2020-21, unveiled by finance minister Nirmala Sitharaman, on January 29, 2021, has painted an optimistic picture, with the government forecasting economic growth of 11 per cent for the fiscal year 2021-22, amid the country launching a nationwide Coronavirus vaccination drive. The government also chose the survey, to announce the launch of its Bare Necessities Index (BNI), a barometer to gauge the availability of basic necessities such as housing, water, sanitation, electricity and clean cooking fuel, to live a decent life in the world's second-most-populous country.

The BNI summarises 26 indicators on five dimensions, viz., water, sanitation, housing, micro-environment and other facilities. The index has been created for all states for 2012 and 2018, using data from two NSO rounds, viz., 69th and 76th, on drinking water, sanitation, hygiene and housing conditions in India.

“Compared to 2012, access to ‘the bare necessities’ has improved across all states in the country in 2018. Access to bare necessities is the highest in states such as Kerala, Punjab, Haryana and Gujarat while it is the lowest in Odisha, Jharkhand, West Bengal and Tripura,” the survey noted.

“Access to ‘the bare necessities’ has improved disproportionately more for the poorest households, when compared to the richest households across rural and urban areas. The improvement in equity is particularly noteworthy, because while the rich can seek private alternatives, lobby for better services, or if need be, move to areas where public goods are better provided for, the poor rarely have such choices,” it said.

"In order to improve access to ‘the bare necessities’, successive governments have made constant efforts. The network of schemes designed to deliver these necessities include inter-alia the Swachh Bharat Mission (SBM), the National Rural Drinking Water Programme (NRDWP), the Pradhan Mantri Awas Yojana (PMAY), the Saubhagya and Ujjwala Yojana," it said. 

In rural India, the highest access to bare necessities in 2018 was recorded in Punjab, Kerala, Sikkim, Goa and Delhi, while the lowest was in Uttar Pradesh, Madhya Pradesh, Bihar, Jharkhand, West Bengal, Odisha, Assam, Manipur and Tripura, the survey showed.

Emphasising the role of government-sponsored schemes in fulfilling housing needs, the survey also noted the progress made under prime minister Nardendra Modi’s pet project, the Pradhan Mantri Awas Yojana (PMAY). According to the survey, 109.2 lakh houses had been sanctioned under the PMAY-Urban mission, as on January 18, 2021. Out of these, the ground-breaking ceremony for 70.4 lakh houses had been done, while 41.3 lakh flats had been built since the inception of the scheme in June 2015.

Since 2014-15, approximately 1.94 crore rural houses have been constructed. Of these, 1.22 crore houses had been constructed under the revamped PMAY-G scheme and 0.72 crore under the erstwhile Indira Awas Yojana scheme. The government plans to construct 2.95 crore homes in two phases under the rural chapter of the PMAY programme.

“The access to housing has improved in all states, except for urban areas in a few states. The inter-state disparities have also declined, as the states having low levels in 2012 have gained more. However, the gaps in the levels across states have been large, especially in rural areas. The improvement in access to housing has also been disproportionately greater for the lowest income group when compared to the highest income group, thereby, enhancing equity in access to housing in 2018, vis-à-vis 2012,” it said.

That the road to recovery would be a long one, is also indicated in the fact that despite predicting a ‘V-shaped’ economic recovery, the survey cautioned that it would take at least two years, to attain pre-pandemic gross domestic levels. It, however, said that India’s housing market, a key forward linkage sector for steel consumption, saw gradual resurgence from its first quarter trough. Data available with PropTiger.com show that housing sales in India's eight prime residential markets showed an increase of 68% in the October-December period, when compared to the previous quarter in 2020.

The projections of the Economic Survey will form the basis for key numbers when the FM presents the Union Budget 2021-22 on February 1, 2021, in the Lok Sabha. The survey, authored by chief economic adviser Krishnamurthy V Subramanian, also pointed out that India needs to improve its ranking in providing ease of doing business, in terms of property registrations. In the World Bank’s Ease of Doing Business report 2020, India’s ranking in the sub-categories ‘Starting a Business’ and ‘Registering Property’, stood at 136 and 154, respectively.

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Builders Should Allow Prices To Fall To Clear Inventory, Says Economic Survey 2020

Real estate developers in India’s top eight cities were sitting on an unsold stock worth Rs 7.77 lakh crore at the end of 2018, says the Economic Survey 2019-20, presented by Finance Minister Nirmala Sitharaman in the Lok Sabha on January 31. The Survey estimates about 9.43 lakh units with 41 months of inventory overhang stuck in various stages of construction in top eight cities, adding this unsold inventory could be cleared if developers were willing to take a hair-cut by allowing prices to drop.

“The real estate sector, residential property in particular, have been reeling with issues of delayed project deliveries and stalled projects, leading to a built-up of unsold inventory over the years,” says the Survey while pointing out that “housing prices have remained elevated even though growth in prices have fallen sharply since Q1 2015-16 and remained muted since then”.  

Liquidity concerns have acted as a drag real estate growth, and the government is committed to address the issue as it created the road map for the next fiscal that starts on April 1, shows the Centre’s Economic Survey 2019-20,

While starting that growth has bottom out ─ it fell to 4.5 per cent in July-September quarter ─ the Survey projected India's economic growth at 6 per cent to 6.5 per cent in the next financial year.

The Survey, which highlights the fact that the government is inching closer to meet its housing for all by 2022 target, also says that 90 per cent of urban households and nearly 78 per cent of rural households have a pucca home ─ a term used to refer to the homes built with basic building materials.

Coming a day ahead of the Union Budget 2020-12, the Survey also highlights the fact that India improved its position in the World Bank’s Ease of Doing Business rankings, jumping from 142 in 2014 to 63 in 2019.  

Laying emphasis on pro-business policies that would enable markets and ‘trust’, the Survey also said the government must use its strong mandate to deliver expeditiously on reforms, which will enable the economy to strongly rebound in 2020-21.

The two-volume Survey also highlights that fact that infrastructure building would be the key to India becoming a $5 trillion economy by 2024-2025. With that goal, the Centre will spend about $1.4 trillion on infrastructure over these years.

Despite the recurring reminders, banks have failed to transfer the benefits of policy action to borrowers, says the Survey. While highlighting that there has been a 110-basis-point reduction in the repo rate between Aril and October last year, from 6.25 per cent in April 2019 to 5.15 per cent in October 2019, the Survey notes that the difference between the repo rate and the weighted average lending rate is at the highest level this decade.

Key Highlights of the Survey

Smart city mission: 5,151 projects worth more than Rs.2 lakh crore are at various stages of implementation. 

Insolvency and Bankruptcy Code: Resolution in average 340 days on as compared to 4.3 years earlier; recovery of 42.5 per cent amount as compared to 14.5 per cent earlier.

Construction permits: Takes 98-113.5 days and 2.8-5.4 per cent of the warehouse cost for the same to get construction permit now.

Goods and Service Tax: Propelled India’s improvement in ease of doing business ranking

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Project Delays Major Cause of Concern For Housing Infra, Notes Economic Survey 2019

The Centre’s Economic Survey for 2018-19, which was tabled by finance minister Nirmala Sitharaman in the Rajya Sabha on July 4, 2019, notes project delays as ‘one of the important concerns’ in India’s real estate sector. The same issue is a major hindrance in the way of infrastructure building in India, it says. “One of the important concerns in the real estate sector is the legal battle being fought by homebuyers against the builders for delaying projects,” the survey authored by Chief Economic Adviser Krishnamurthy V Subramanian reads. The same issue is a major hindrance in the way of infrastructure building in India, the survey noted.  

"One of the challenges facing this sector is to devise a comprehensive resolution/settlement option for projects which are either stuck-up mid-way or wherein the arbitral disputes/ claims have not been settled," it says. The survey says that the real estate law has already been launched to address homebuyers’ concerns. "The RERA is one of the significant reforms implemented in the real estate sector. The core objective of this transformative legislation is to ensure regulation and promote the real estate sector in an efficient and transparent manner and to protect the interest of homebuyers," it says. The survey notes that 30 states/union territories have notified ruled under the Act while 28 states/union territories have set up real estate regulatory authorities. "North-eastern states (Arunachal Pradesh, Meghalaya, Nagaland and Sikkim) are under process to notify the rules under the RERA," it adds. Now, there is the need is to establish an institutional mechanism to deal with the time-bound resolution of disputes in the infrastructure sectors, it says. 

Growth story 

“In a fast-moving world to maintain its growth momentum, India has to develop its industry and infrastructure,” the survey says. The survey highlights the fact that while growth in the services sector declined marginally to 7.5 per cent in 2018-19 from 8.1 per cent in 2017-18 “due to deceleration in the growth of sub sectors,” the financial services, real estate and professional services sector, grew at 7.4 per cent in 2018-19 as compared to 6.2 per cent in 2017-18. The country's growth for 2019-20 has been projected at seven per cent on the back of the anticipated pickup in investment and consumption. 

Other key highlights of the Economic Survey 2019 

Insolvency cases: Of the 14,000 applications filed with the IBC, 20 per cent are from the real estate sector.  

PMAY-U: So far 4,427 cities/towns have been included under the Pradhan Mantri Awas Yojana-Urban.  

Smart Cities Mission: All 100 cities have incorporated special purpose vehicles, city-level advisory forums, and appointed project management consultants. "Significant progress has been made with respect to the implementation of projects pertaining to integrated command and control centres, smart roads, smart water, solar rooftops and vibrant public spaces," the survey says. 

Swachh Bharat Mission: Within five years of the launch of SBM, household access to toilets has increased to nearly 100 per cent in all states, says the survey. 

Road network: Road construction in kms grew at 30 kms per day in 2018-19 as compared to 12 kms per day in 2014-15.