Finance Minister Arun Jaitley today tabled the Economic Survey 2016-17 Volume-2 in the Parliament. The Survey report focuses on various aspects of the Indian economy and explains at length what the country's economic conditions are and how it is expected to perform.
From structural reforms to the launch of the GST to impacts of demonetisation, it has focused on almost every economic decision including privatisation of Air India and rationalisation of energy subsidies.
In a part of its report, the Economic Survey has explained the current position of Indian economy on overall trade, external debt and inflow of foreign funds under Foreign Direct Investment or FDI.
Reflecting the slowly improving world economic situation, India's exports turned positive at 12.3 per cent in 2016-17. This along with a marginal decline in imports by 1.0 per cent resulted in narrowing down of trade deficit to USD 112.4 billion in 2016-17 as compared to USD 130.1 billion in 2015-16. The current account deficit narrowed down progressively to 0.7 per cent of GDP in 2016-17 from 1.1 per cent of GDP in 2015-16 led by sharp contraction in trade deficit. Economic Survey said that India's balance of payments situation which was benign and comfortable during 2013-14 to 2015-16, further improved in 2016-17 as current account deficits lowered, resulting in further accretion of foreign exchange reserves.
The Survey noted that gross FDI has increased to USD 60.2 billion in 2016-17 from USD 55.6 billion in 2015-16. Net FDI inflows at USD 35.6 billion, however, moderated marginally by 1.1 per cent from USD 36.0 billion in 2015-16. Among the major economies running current account deficit, India is the second largest foreign exchange reserve holder after Brazil with reserves at USD 386.4 billion as on 7th July, 2017.
Most of the external debt indicators of India improved at end-March 2017 compared end-March, 2016. India's aggregate external debt stock at end-March 2017 stood at USD 471.9 billion registering a decline of USD 3.1 billion (2.7 per cent) over end-March 2016. The ratio of external debt to GDP fell to 20.2 per cent from 23.5 per cent, while foreign exchange reserves provided a cover of 78.4 per cent to external debt compared to 74.3 per cent in the previous year. Debt service ratio fell to 8.3 per cent from 8.8 per cent and ratio of concessional debt to total external debt increased to 9.3 per cent from 9.0 per cent. Short term debt (residual maturity) to total external debt fell to 41.5 per cent from 42.7 per cent. Short term debt (residual maturity) to forex reserves also fell to 52.9 per cent from 57.4 per cent. Cross country comparison of external debt indicates that India continues to be among the less vulnerable countries.